Secure Trust Bank Share Discussion Threads

[catabrit] 31/3/2023 14:32

Hard to resist at this sort of price so after being flukey with top ticking the sales, I’m not going to ride my luck with trying to second guess the bottom. I bought some this afternoon. Really happy to own these down here.

[brad_k] 31/3/2023 14:09

Once again there are far more buys than sells (all those around 672p are buys) and the share price is very slow to respond. Good tight spread at the moment though, less than 2p, which may be encouraging some of the buyers.
So what is holding it down right now, it came down very quickly from 790p?

[p1nkfish] 30/3/2023 17:03

App to Pay can add a bit of growth.
Decent results. No fighting this market, just have to go with it.
Price will reflect results one day, paid to wait until then.

[brucie5] 30/3/2023 12:15

Thanks, apple. All understood.

[apple53] 30/3/2023 12:13

Thank you Brucie. Yes I am/was a specialist, though as I previously mentioned I pre-date the most complex capital calculation methodologies, and also the newish provisioning approaches (though the latter follow the method UBS used in 2000ish when I worked there, ie they are sensibly ex-ante and smooth profits). STB were silly in 2021 - I don't understand why they allowed their provisions to fall to zero.

I have no view on HSBC. STB I can vaguely assess in half an hour; HSBC would take a week to scratch the surface. I covered it a VERY long time ago.

Correct me if I'm wrong, but is the first time STB have led the statement clearly with pre-provision profit data bullet? A good idea.

Quite right cfro. Probably the cheapest healthy bank in developed world? And a growth stock?

Tricky thing is that they can get a better return ploughing capital into buybacks than marginal loan book growth....

[cfro] 30/3/2023 09:54

With earnings per share slightly over 180p, that make the historic PE just 3.8. With a dividend yield of nearly 7% not only is the company conservatively managed but also conservatively valued.

Of course, if the business then grows from here and profits increase then, as apple53 quite rightly points out about the payout ratio, the dividend will increase making the metrics around that even more attractive.

But who's mad enough and stupid enough to risk investing in a bank right now (I am Lol)...

[brucie5] 30/3/2023 08:07

Excellent post apple. You appear to be a bank specialist. Do you have views on HSBC at current levels?

[apple53] 30/3/2023 07:46

Great results at first and second glance (but need to read properly). Unsurprisingly so, perhaps. Analysts will have to upgrade. Probably quite a lot.

Guys, remember dividend is arithmetically determined at 25% of stated eps.

19% loan growth, a) not actually that conservative optically; however as a small bank there is scope to grow quickly while still keeping standards and margins high by cherry-picking in a large forest, b) they need capital to fund growth which was the whole point in changing the dividend policy.

Underlying eps was around 90p in the second half, so well up on H1 as expected.

Now to the important stuff: the underlying profitability jumped c. 20%!
Operating income from 81m in H1 to 88m.
Costs pretty flat hence operating profit (pre-provision) up from 34.8m in H1 to £41.6m in H2.
This meant they had scope to make quite a lot of (anticipatory) provisions and still grow eps (from a low base) rapidly.

I think this will be a slowburn since the headline figures don't appear outstanding on a year-on-year basis.

[brucie5] 30/3/2023 06:41

I make that total dividend for year of 6.8%? Certainly above average, but hardly steep. I guess in current climate this is a sensible and solid income proposition. Upside? Let's see.

[cfro] 30/3/2023 06:32

Great Tomps2, thanks..

Proving itself to be a very conservative run bank with low levels of arrears and well capitalised. (very different from the likes of SVB, Credit Suisse Lol..)

Dividend at 29.1p, i was hoping they would keep the divi above 30p.

[tomps2] 30/3/2023 06:16

Secure Trust Bank #STB FY22 results overview by David McCreadie, CEO
hxxps://www.piworld.co.uk/company-videos/secure-trust-bank-stb-full-year-2022-overview-march-2023/

PTP +28.1% (pre impairments) £76.1m
Total PTP £44m (cf £36.6m)
19.1% growth in lending balances to £2.9bn
500bps improvement in cost income ratio to 55%
Tot divi for yr 45.1p
Outlook in line

[apple53] 29/3/2023 21:51

I put some lengthy posts up a month or so ago about fundamental reasons for share price performance (magnified by institutional sellers etc.), and I repeat here the conclusion that I think H2's eps ought to significantly beat the underlying 69p of H1 (I suggested closer to 100p). The biggest impact should be the choices they make around cautionary bad debt provisions (rather than driven by actual impairments).

We really ought to look beyond eps to underlying profitability (and then pick a cross-cycle bad debt charge to get to eps). Underlying means pre-provision, which they don't easily provide, but in H1 it was 35m up from 28m in H1 2021 (and 31-32m in H2). NII will definitely be higher in H2 than H1, while expenses might grow a bit and fees and other income could be a bit volatile.
I will be looking at the underlying profitability to get a sense of the scale of eps upgrades into 24-25.

[apple53] 29/3/2023 18:36

I don't mind a muted response tomorrow. I haven't been able to buy back what I sold at £8, as I put it in things that are flat or down!
This probably means it'll pop tomorrow as the analysts all realise they downgraded too much.....

[retsius] 29/3/2023 16:32

Results tomorrow but don’t hold your breath, seems to disappoint its shareholders no matter the results.
R.

[catabrit] 29/3/2023 12:00

Didn't those guys pay quite a big premium to TBV though? I bought Arbuthnot in 2016 actually because its look through equity exposure to STB put a negative EV on the rest of the business.

[1tx] 29/3/2023 11:03

Whilst recent market sentiment to banks & consumer lenders has not helped matters.The major reason for the fall in STB share price was the dismal results for the first half of the 22 financial year announced in early August.The decision to have a four times covered dividend did not help matters either.

Virtually everybody who has held STB for any period longer than a few months has lost money and those institutions who bought shares when it was floated out of Arbuthnot ARBB & in subsequent placings of ARBB's remaining holdings have made a massive loss.Most still hold the stock they bought,it is not easy to sell in large amounts unless there is a willing buyer.STB may be a bit undervalued but there is in my opinion a problem with the company.STB is not "connected" to its shareholders with smallcap companies you need directors who have a meaningful interest in the company & are interested in maintaining & improving value for shareholders.STB is run by managers for managers.

[catabrit] 28/3/2023 15:14

Yeah this is a classic case of suffering from the wider fears that are so prevalent elsewhere. I literally top-ticked (seldom happens) this and sold at 780 bid or whatever it was. Nothing to do with valuation and prospects and more to do with opportunity cost and wanting to be prepared for anything that followed the banking collapse in the US. I think you just need to be patient. It’s a really frustrating market. So much of what I’m following has trended back down again. My selling has been amazing but my buying this year has been patchy at best. I’m underwater on a lot of new purchases.

STB will come good. I’m tempted to buy it again on continued weakness as it’s a great little company with a great risk reward.

[p1nkfish] 28/3/2023 15:08

If the conditions are as I believe, with credit tightening and STB having cash, the lower price just means a higher yield for buyers - TBD.

People will still need finance but the cost isn't coming down. Sad state of affairs.

[retsius] 28/3/2023 14:44

22k buys/11k sells today: and the price drops 4%.

You couldn’t make it up!
R.

[p1nkfish] 18/3/2023 08:05

Credit conditions are tightening. STB having that cash means they are ready. The rest comes down to risk management. There will be no lack of demand imho. I rate him as CEO.

Worse places to park cash.

[cfro] 18/3/2023 07:17

More good news yesterday with the buy back of the Tier 2 bonds.


"We are pleased to have completed the bond refinancing and expansion of our capital base. With our enlarged regulatory capital base, we are strongly positioned to continue to help consumers and businesses fulfil their ambitions and to scale our business."


A confident statement from the CEO David McCreadie. Doesn't sound like a bank in trouble or with any links to SVB.

[p1nkfish] 17/3/2023 11:29

They have funding in place, they have their own channels to market, that market will ebb and flow but is not going away.

I think most of their fate is in their own hands.

As credit dries up (it is happening even with the big banks, lending criteria tightening) credit costs rise and thats profit to STB. They don't need to rule the world, just have cash available at a profitable margin. They now do and the price of that capital is fixed to STB but rising to their target markets.

Do I have it wrong?

That 13% for the £90M doesn't look too high. They landed it at a good time to do so. Lucky?

[catabrit] 17/3/2023 11:17

I want to believe you p1nk. But I don't think you can ignore the contagion risk from a share price perspective. Obviously if we have a major run / meltdown, it will affect all financial companies (some more than others). But the entire banking sector will be on watch until things normalise. I think you're right in that it will recover and march onwards but I highly doubt it will de-couple from events taking place across the pond. I could be wrong.

[apple53] 15/3/2023 21:26

Saudis have a regulatory limit it seems. Initially I thought SNB stood for Swiss National Bank and I DID get worried.

STB held up well initially (often the case) and I did sell some around 800p to buy heavily sold stuff. Sadly the oversold stuff kept going down so I'm barely better off. As usual I should sell for cash initially. Then I potentially could have bought back below 730p.

Big question is how will it respond to full year results.

[p1nkfish] 15/3/2023 19:00

STB tarred with the same brush but different target market, management, etc. etc.

To be expected. Will recover and march onwards.