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| Share Name | Share Symbol | Market | Stock Type |
|---|---|---|---|
| Secure Trust Bank Plc | STB | London | Ordinary Share |
| Price Change | Price Change % | Share Price | Last Trade
|
|
|---|---|---|---|---|
| 0.00 | 0.00% | 684.00 | 10:13:09 |
| Open Price | Low Price | High Price | Close Price | Previous Close |
|---|---|---|---|---|
| 684.00 |
| Industry Sector |
|---|
| BANKS |
| Top Posts |
|---|
Posted at 02/3/2024 19:56 by apple53 MrScruff,I agree this is a great opportunity for investors. I don't agree with your view on rates or growth etc., and I wrote the following to remind myself of history and the investment case for these banks. Higher rates tend to benefit earnings, though much higher rates are typically thought likely to increase bad debt charges. Materially higher rates and a high recession risk is normally enough to hit multiples. [it is important you don't have silly regulators that require you to buy reams of government bonds at low interest rates - this is what killed SVB and, arguably, First Republic]. Overall, though, there isn't really any correlation between rates and multiples. 'Any growth' doesn't tend to drive the share price violently up. Balance sheet growth requires capital, and more than it used to under Basel 1/2. In the case of STB the drive for rapid growth probably hit the share price, as it required a dividend cut, and also because some shareholders are rightly scared of rapid growth in bank balance sheets. One of the clearest correlations (with causation) in banking is rapid growth and subsequent high (sometimes disastrous) bad debts. Bank investors 'normally' like modest balance sheet growth, faster growth in fee income, a low level of dealing income and an expectation of a falling cost income ratio. Historically, banks have traded at 8-15x forward eps. It is only in the past few years that 5x earnings has been considered normal, and this in Europe, but not the US, where 9-12x is more typical. What is doubly weird about the ridiculously low multiples is that UK banks are much much safer than they used to be. Equity capital ratios are 2.5-4x higher than in the noughties. [There is a downside to this - RoEs are lower, and incremental growth needs more incremental capital]. They are also encouraged to ex-ante provision (which is good as it helps to smooth provisioning across the cycle). Overall CoE should be lower. None of this means that banks are immune to property market collapses. Some (US) banks are over-exposed to commercial property (NYCB). This has been the cause of most bad debt crises (as opposed to the liquidity crisis post-Lehman). Resi mortgages are also at risk from a big increase in unemployment, double digit interest rates, 40% falls in value (each in isolation) or a milder combination of the 3. The other risk to banks is social media, which magnifies problems that used to swept under the carpet, such that issues which might have been manageable with a couple of year's retained earnings can now be enough to cause a run. STB is probably the weirdest example (and could be the cheapest bank in the developed world), but OSB stands out even more. STB is tiny; OSB merely small. STB is building a growth track record; OSB already has one. STB is modestly profitable; OSB is very profitable (for a modern bank). STB is modestly at risk from an increase in bad debts; OSB is highly cushioned - it has SUCH a low cost income ratio that its leverage to an increase in bad debts is almost the lowest in the industry. If it was 10x the size and based in the US it would trade at twice the valuation or more. I have no idea when this situation will 'normalise', but in the mean time these banks need to buy back their stock (and I would happily forgo some yield to fund this). |
Posted at 05/2/2024 23:14 by apple53 His focus on dividend cover is interesting. In a sense it's quite an outdated concept, but more importantly he failed to note the reason for the modest divvy - the 'pivot' to growth, which obviously need(ed) a larger proportion of retained earnings. It is also true that the capital environment has been a moving feast.To his 2 reasons for poor performance since £12 (banks out of favour and small caps out of favour) I would add 3, which were specific and catalytic: -The pivot to growth - actually not that conservative at the time and scared some investors. -The concomitant dividend 'cut' - The poor application, and misunderstanding by investors, of ex-ante provisioning, such that we went from large Covid provisions, to zero (approx, and from memory) and back up to 'normal' (actually high as ex-ante provisioning 'punishes' balance sheet growth). He amusingly raised unsecured lending but then gave 2 examples of secured - I think he meant 'niche retail' rather than unsecured. Most importantly, he didn't mention that the low divvy gives them more scope for buybacks, which is what they should be doing at 60% discount to NAV. |
Posted at 11/11/2023 17:42 by jaknife Brucie5,For the long term I am definitely a value/GARP investor. For the short-term I am happy to be long or short depending on what's going to make me money. JakNife |
Posted at 10/11/2023 12:28 by davidosh Jak actually covered Secure Trust on the Mello BASH at our last event and thinks it is a BUY. He is a very astute investor and certainly not just adept at shorting.I have followed this company and invested last week. I also invited the management team to come and present at MelloLondon at the end of this month. There will be 40 companies there to meet and watch presentations. |
Posted at 09/11/2023 15:10 by tomps2 Secure Trust Bank (STB)CapitA Pathway to delivery of the Medium Term Target of a £4bn loan book. The day focussed on V12 Retail Finance, referred to as ‘An emerging powerhouse’. V12 is delivering significant growth, structural improvement in its cost of risk and significant operational leverage and scalability through digitalisation of customer service. Then, Rachel Lawrence, CFO, went on to provide an update on the Group’s medium term targets. The event was opened by Lord Forsyth, Chairman, with David McCreadie, CEO providing an introduction and closing summary, followed by analyst and investor questions. Video: Podcast: |
Posted at 09/11/2023 14:17 by cfro Yesterday's presentation up on their website. Here's the link:Good opening speech by Lord Forsyth. Making it clear they are NOT a challenger bank and he doesn't think the progress and future growth is reflected in the market price. They have changed advisors and new PR in order to get the story out to a wider audience. |
Posted at 18/8/2023 12:33 by red ninja In Shares Magazine this week :-Secure Trust Bank is cashing in helping consumers get what they want Despite its strengths this specialist lender remains deeply unloved and undervalued Thursday 17 Aug 2023 Author: Ian Conway Great Ideas Investors who are risk-averse and prefer to avoid small-cap stocks may want to stop reading here, but for those with a nose for value and an appetite for contrarianism we think there is a lot to like about specialist lender Secure Trust Bank (STB). To say the stock is unloved is an understatement, as one look at the share price performance over the last five years demonstrates. Secure Trust Bank provides retail finance and vehicle finance for consumers as well as property and commercial finance. Its retail finance arm arranges and administers finance and loans for well-known national brands and retail partners across the UK, helping shoppers buy the things they want. In the first half of this year, the bank grew its retail loan book by 12% or £614 million and increased its market share to 12.9% from 11.4% six months earlier. In vehicle finance its V12 ‘product hub’ allows dealers to buy, sell and finance used vehicles, while its Moneyway finance arm has hundreds of thousands of happy customers across the UK. Lending increased by 18% or £250 million in the first half as the used car market soared and the bank grew its dealer and broker relationships. The real estate finance business offers loans to experienced developers of residential and commercial schemes as well as professional landlords, and grew its loan book by 10% or £250 million in the first half, while commercial lending was flat as the bank made a strategic shift towards lower-yielding but lower-risk financing. On the whole, therefore, the bank increased its loan book in three of four of its large addressable markets while staying disciplined in terms of risk, and reported a net interest margin of 5.4%, which the high-street giants would kill for given they are expecting to report an average margin of just over 3% this year. Even though it took an impairment charge of £7.2 million for non-recoverable loans in the first half, which management says is unique and relates to a long-standing commercial debt, pre-tax profit of £16.5 million was almost flat implying underlying earnings grew by 15%. With no write-offs in the second half, profits are expected to increase ‘significantly So why does STB trade on 0.4 times 2023 book value, 3.6 times earnings and a dividend yield of 7.5% with the dividend four times covered? ‘The market is valuing the shares as though the company has serious balance sheet issues, which we do not agree with’, says Shore Capital. We can only concur. |
Posted at 09/7/2023 14:51 by 1tx Unfortunately there is a "problem" with STB which I have mentioned before which means that the share price is likely to continue in an ever downward trend.It is quite simple almost nobody is interested in buying the shares.When STB was split out of Arbuthnot Latham (ARBB) the very canny Sir Henry Angest the controlling shareholder in ARBB managed to sell its shares to institutional investors at prices up to around £19 sadly perhaps the company did not live up to expectations & in addition interest in investing in smaller newcomer banks also declined.The net result is that the original investors have taken a cold bath. Whilst STB is a very well managed business & is profitable and has a credible business plan.It has failed to build any rapport with its shareholder base & realise that it now has one third the market value it original had;to maintain its value it has to attract private investors to replace original institutions.The management seems quite happy to manage this business to benefit themselves & its employees forgetting that shareholders who put up the original capital now have an investment worth about a third of the money originally invested.... |
Posted at 14/6/2023 12:00 by brianblu Terrible spread here puts investors off |
Posted at 26/4/2023 12:03 by 1tx As far as I can see STB is turning itself into a mini Close Bros concentrating on Car & Vehicle finance,private & business & larger item consumer credit eg ebikes & furniture via its V12 Finance Company and secured business lending.The businesses being sold or run off are the mortgage and loan books which if memory is correct were acquired cheaply post the banking crisis when STB was owned by Arbuthnot Banking ARBB.On reflection I suspect STB had little alternative but to increase dividend cover due to the requirement to have additional capital cover.I note that its former owner Arbuthnot raised additional capital the other day unlike STB it has a controlling shareholder,Sir Henry Angest,who was able to put in nearly 60% of the new capital. The problem for STB is that when it was spun out of what is now Arbuthnot & in subsequent share sales by them the shares were all bought by institutional buyers mainly at prices between £15 & £20+.All these buyers are out of pocket and it has not attracted private investors to any degree partly because the sector is out of favour but partly also because STB has a management who don't really have a major shareholding in the business & perhaps do not consider the interests of shareholders.But presently at around £120m or so market value it is too small to attract further institutional interest & does not attract private investors either.Hence its ever falling share price.... |
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