Secure Trust Bank Share Discussion Threads

[archy147] 18/5/2023 10:09

Thanks for the responses.

I would happily buy the bonds if I could see them available for sale, but sadly cannot.

That leaves me with the question of whether to top up on the shares. Looks to me they are trading on a ridiculously low PE (under 4!?) which suggests any risk here is well priced in.

[spooky] 18/5/2023 10:01

13% is a lot to be paying, even for subordinated debt. Gives you a clear indication of what the market thinks about the credit risk here. Can also be an opportunity in the debt and/or equity if you disagree and are proven to be correct. That's what a market is all about.

[buffett4] 18/5/2023 09:54

Excellent update. Key risk in this economic environment is bad debts so very pleased to see low, stable arrears coupled with increased lending. I have been actively buying and the spread seems to come in at around 1.5% which is higher than I would like but since my holding period is 10 years plus it is of little consequence. I really like this business but I also couldn't understand the cost of the bonds at 13%, seemed on the high side to me, you would have thought they could borrow at lower rates. Anyhow it only represents a small proportion of their overall borrowing, the bulk being customer deposits at much lower rates, so I'm not overly concerned.

[p1nkfish] 18/5/2023 09:53

This is a bargain and App to pay now ready.

[p1nkfish] 18/5/2023 09:51

The bonds can be paid off earlier as soon as credit conditions relax. I can't imagine them seeing the full 2033 redemption date.

[archy147] 18/5/2023 09:43

Spooky what is your point, are you saying that's a high rate to be paying?

Or are those bonds we can buy perchance ?

[asagi] 18/5/2023 08:56

I bought mine yesterday at 635p so I think that the advertised spread is misleading.

Asagi (long STB)

[spooky] 18/5/2023 08:49

13.0% Fixed Rate Callable Subordinated Notes due 2033, hmmmm.

[p1nkfish] 18/5/2023 08:28

Reads very well and a strong hand on the tiller. Good. Undervalued and decent dividend.

[archy147] 18/5/2023 07:50

Indeed not a bad update at all, crazy to think this is trading around Covid lows. What a bargain!

(Agree about the spread though that is irritating, something you have to swallow if buying in).

[cfro] 18/5/2023 07:33

That's not too shabby for a Q1 trading update.

[muffster] 10/5/2023 10:09

Crazy spread.

[buffett4] 04/5/2023 12:05

I have been watching STB over the years and from what I can see it appears to be a well run, stable bank. I have had dealings with them in my work life and the culture within the bank seems to be one of 'protect the bank.' The active businesses all seem to be in attractive sectors, prime and near prime car finance, prime retail credit, invoice discounting and property finance. Funding in the form of shareholders equity and customer deposits seems secure. I read the dividend investors blog and thought it was excellent. His main concerns are that the net interest margin has reduced from 15% to 6% over the last decade. Personally I'm not overly concerned by this since it just reflects the move to a more volume/prime business model, 6% remains healthy. The other primary concern is that although the bank has been trading 75 years, the current business units have only been trading 15 years and have experienced rapid expansion in that time. I think that is a fair concern, lending businesses can go wrong in a big way, very quickly. However, to counter that everything I see from them indicates caution in their lending approach. In car finance for example they completely stopped lending during covid until the outlook became clearer. Logically we are likely to see an increase in bad debts given the increased cost of living, nevertheless I have been buying recently at these prices. I do not understand the valuation- how can a stable bank making c£40-£50 million pre-tax profit per annum with shareholders funds of c£300 million be worth £120 million. My outlook is long term so I plan to hold for 10 year plus so be interesting to see how the bank develops over this time frame. Please note this is just my opinion, I could be wrong.

[caughster12] 02/5/2023 17:58

Anyone concerned about this with what happened at FRC in America?

[1tx] 27/4/2023 19:48

Ended up more or less even allowing for ex divi...

[p1nkfish] 27/4/2023 10:41

Some "sell in May and go away" might also start to show itself.
No rush for the door today, selling at low volume. Just few buyers.

[p1nkfish] 27/4/2023 10:34

It does and every chance some had a tight stop-loss around the dividend amount vs yesterday close and were taken out this morning.

Terry Smith (an example) and others are giving banks a wide berth across the board. It all adds up to being unloved. This has funds and people will still need credit for cars etc etc. So long as they are careful with credit scoring and risk this too will pass and in the meantime there's the dividend.

[cfro] 27/4/2023 09:36

Mustn't dismiss the news coming over from the US - First Republic bank next bank in trouble.

Combine that news with ex-div and that then goes some way to explaining the current price.

[retsius] 27/4/2023 09:12

It`s all very well from CEO telling us how well the bank is doing and all the new exciting strategies, if when you check the share price it is obvious the market is wholly unimpressed, and has been for at least three years.


Absolutely DIRE performance for shareholders for five years.


One wonders, does he ever check the price of STB on a daily basis?

He has to think of how to get the share price moving UP!

R.

[p1nkfish] 27/4/2023 09:09

Volume low so far today vs average.
May have taken out some stops as it dropped by dividend payout amount if some had a tight stop?

[caughster12] 27/4/2023 08:55

Why would it fall today lower than the dividend?

[p1nkfish] 26/4/2023 17:18

Part of the valuation, imho, is the market can't totally fathom out what STB is. This is an off-tilter small bank. It has elements of different bits all mixed in. UK focus goes down like a Pb balloon too.

Let's see what ApptoPay can do when applied to their customer base and retail network. > 1500 retailers, > 560 dealers, brokers or internet introducers in the Vehicle Finance business, >1M customers.

So long as they have appropriate risk assessment in place I see this as a really neat place to park some cash and when the market turns (when?) It should get a decent re-rating imho. May be a while but the dividend is pleasant in the meantime and it's not like there isn't risk anywhere else at the moment except cash.

How much lower can it go?

Dyor etc. I'm often wrong but really interested in STB at this price.

Your capital, your responsibility.

[brucie5] 26/4/2023 16:15

But better dividend here than SUS, right?

[pvb] 26/4/2023 16:15

...Interesting.

A p/e ratio of 2.75 does seem ridiculous.

[1tx] 26/4/2023 15:51

Perhaps in the longer term if performance of STB & the general economy improves we could see takeover/merger prospects if the share price continues to remain at a low level both on PE & against book value of assets.There is concern generally at the moment re bad debt on consumer loans however this may be overdone.Certainly S&U where I am also a shareholder & is perhaps somewhat less "upmarket" than STB seems confident.