Illustrates how jumpy and sensitive the market is right now.
The ham-fisted way the run up to the budget is being handled by this inept bunch doesn't help. |
Secure Trust Bank PLC Vehicle Finance Update
28 October 2024
"The Court of Appeal has held that motor dealers acting as credit brokers owe certain duties to disclose to their customers commission payable to them by lenders and obtain the customers' informed consent, and that lenders will be liable for dealers' non-compliance. This sets a higher bar in relation to commissions than had been understood to be required across the vehicle finance industry, before the Court of Appeal's decisions. These decisions relate to commission disclosure and consent obligations, which go beyond the scope of the current FCA discretionary motor commissions review.
STB is assessing the potential impact of the decisions, as well as any broader implications, pending the outcome of the appeal applications. The Company will update the market, if and as appropriate." |
Holding statement came out at lunchtime... |
Car finance would be my guess, Lloyds issued a statement this morning, future litigation and compensation |
anyone know why the big fall today?
No RNS, or other news that I can find. |
Silly for lots of reasons. |
a comparison of STB shares with the shares of another lender, MFX.
=========
btw
another company doing lending in the UK, lse:stb
..it has a p/e of ~6, double the p/e of 3 for MFX.
I guess that MFX perhaps deserves a lower p/e because with a cap. value of only £18m many institutions/fund surely are not able to own any shares in MFX, (& some PIs avoid companies with such a small cap. value) whereas STB has a cap. value of ~£150m, where many institutions/funds are allowed by their own rules to invest.
but being half price in comparison, that looks way overdone imo.
------
How do STB & MFX compare for growth
2019 & 2023. Revenue
(data taken from financial summary page of advfn)
STB. £165m. £185m. % increase = 1.1
MFX £26.7m. £53.3m % increase = 2.0
(revenue 2023/revenue 2019)
(MFX. doubling the revenue in 4 years, impressive)
For revenue growth MFX wipes the floor with STB, yet the p/e of MFX is half that of STB !
Doesn't make sense imo.
imo either STB is too expensive or MFX is too cheap ! |
Unlikely, not worth taking the risk not to mention a good team should have enough personal integrity not to.
Not intended to be a jab at the current UK Gov team but some might think otherwise. |
"During this time, we've built strong relationships with both management teams and PE houses, allowing us to work on complex transactions and be a true advisor to all involved.''
Wonder if they secured share options as part of funding the P.E. deals? |
Maybe that’s a good sign they are clawing back the adjustment in the last results! Bodes well. |
Good to see the MD of the savings and vehicle finance division has bought a few shares.. |
Very civilised discussion board ladies and gents, most impressed! |
Looks like Lord Lee's message is beginning to sink in here with the Chairman also buying, however it was the absence of non-exec buying that he was mostly aiming at.. |
Good to see a buy today which is chairman related (confidence building) :-
Secure Trust Bank PLC ("STB" or the "Company") announces that Jim Brown, Chairman, has notified the Company that Kiripaka Capital Limited, a person closely associated to him, purchased a total of 17,000 Ordinary Shares of 40p each ("Shares") in the Company, at an average price of £8.2882 per share on 15 August 2024. |
What chance they have an acquisition lined up?
May not even be large. |
I spotted the body language too. I was left with the impression that there's something materially relevant not overtly ventilated publicly if avoidable |
Lord Lee is exactly right. The board need to be clearer, NEDS should be invested. The presentation didn’t inspire confidence, body language was off, constant hand fiddling and looking down. If it were an interview you wouldn’t give them the job.
Every year there seems to be an issue lately which is why we are where we are.
Be nice to have a positive update one day. |
34ad, I guess I am talking about our focus on things that will move earnings and share price. If they committed to a volume by a fixed date it would worry me. If pink is right about their discipline, then they are anyway doing what I mentioned as best practice, and the 4bn will come when it comes.
Another reason an absolute target is a bit pointless is that 3 years of, say, 7% inflation and 9% nominal growth would get us there much quicker (all else equal).
And another is the loan mix issue. |
I think any decision on share buy backs should be driven by market price at the time. At the current price, at a point where excess cash is available, buy backs seem like a no brainer. I may be wrong but I suspect that by the time we get to the £4 billion loan book, c£80m PBT and the business is kicking off significant levels of excess cash, there will be an upward rerating of the shares anyway. So with a depressed share price I'd be in favour of buy backs, otherwise allocating cash between a sensible level of portfolio growth and a healthy dividend would be the way forward imho. Excess cash, if we get there, will be a very nice debate to have! |
Banks that go for growth tend to regret it if they let their lending standards drop to get there. That's down to growth rate. The faster they want to get there the more the temptation.
I trust this management to get there and maintain discipline. If it takes a little longer than ideal so be it.
I don't have a problem with a £5Bn target with delayed gratification, all else being equal.
Once they have the formula proven, don't self limit.
Our entire country tends to self limit. |
"So I really wouldn't focus on the £4bn target."
STB management are focused on it, their plans are based on it, and I don't think that's going to change. Parallel discussions may be interesting but won't lead anywhere.
Trying to sway what they will do once they get to that target seems like a realistic goal. I don't want a £5B loan book target to be announced. |
 Buffett's longer post has it right, in my view. Banks that 'go for growth', regret it more often than not. So I really wouldn't focus on the £4bn target. I don't think they should have such a target (though it is an improvement on the previous even more aggressive growth targets). At any point in time the bank can invest its marginal capital (assuming it is not bouncing off regulatory minima) in div, buyback or new loans. If we ignore divs (for a bunch of reasons) I want the bank to compare the realistic profitability of the other two options. This requires loan rate, matching deposit rate and realistic cross-cycle credit risk assumptions. If there is a massive market opportunity, which can certainly happen for a very small bank like STB where a sliver of the market could actually provide a rich seam, then great, and we might see a couple of years of 15%+ loan growth, absorbing net profits (and maybe even pressuring the div short term). On the other hand if competition has increased (with likely impact on both margin and credit risk), then I would prefer the bank to shrink (that part of) its balance sheet. Net profit can be retained for future growth, div smoothing or buybacks.
STB barely knows what the competitive environment is going to be like in 6-12 months' time let alone beyond, so loan growth targets are actually a bit silly.
What is true, however, is that very small companies in the UK (particularly post the Kay review) are ignored, so critical mass is perceived as important to get institutional investment, hence management trying to flag "we are going to get bigger, honestly". In reality of course what we want is bigger at the bottom line rather than the top.
Riverman mentions the 'too small to be profitable' argument, and that can certainly be true, particularly due to regulations that cause fixed sunk costs. I think OSB/Charter Court was partly about this issue. We should ask management about this angle, as it may be a key driver to merging/selling the business. Oaknorth may be the exception that proved the rule..... |
I think that is a very good idea. The business should kick off significant levels of cash at a 4 billion portfolio with the lower cost structure so the board will have to decide how to deploy it. I hope they will do so in the way you suggest. |
Get to £4B loan book and then aggressive dividends/buybacks. If the market won't value them properly then they need to make it so shareholders receive good returns irrespective of market valuation. |
Customisable watchlists with full streaming quotes from leading exchanges, such as LSE, NASDAQ, NYSE, AMEX, Bovespa, BIT and more.
Hot Features
Premium
