Secure Trust Bank Share Discussion Threads

[bones] 07/11/2023 13:07

It’s all about the bad debt provisions in retail tomorrow I think. If they are under control in the context of a worsening consumer environment, that should be positive.

[wallywoo] 07/11/2023 12:01

Watching this one closely. Coiled spring, imho. Waiting for tomorrow's lift off!!!

[cfro] 03/11/2023 16:08

Ameriprise must be selling below what they paid for them originally surely?

Makes you wonder if there isnt some distressed selling going on by them. They might be in a bit of schtuck perhaps..

[catabrit] 03/11/2023 10:43

We must not forget the big seller in the background, Ameriprise.

[p1nkfish] 03/11/2023 09:45

Agreed but not easy when fighting sentiment and ebbing money flows in the sector.

New Advisor might be onboarded at bottom.

Time for a change anyway.

[red ninja] 03/11/2023 07:59

The old advisor was not exactly successful in selling the STB story.
Maybe the new ones can do better.

[p1nkfish] 03/11/2023 07:11

Out with the old Acvisor.

[wallywoo] 03/11/2023 06:38

After the disaster at Metro Bank, fear is ruling these smaller cap banking stocks. Fear is the most irrational of emotions, hence the share price here. The poor results from barc, Natwest, Stan, etc just add to the poor sector sentiment.


The event on the 8th November hopefully will provide some balance against that fear as the news and actions from OSB did yesterday. I think and many pundits think stb is unfairly cheap currently. Let's hope we are right!!


In the meantime, stb shareholders will need to hold their nerves, or of course give in to fear. I doubt that there's any real issues with STB but we will have to wait. I bgt in yesterday, risky bottom fishing bet for me!!

[indalo] 02/11/2023 16:30

Interesting to see todays weakness when OSB rallied 15% on a positive trading update. Any insights out there??

[p1nkfish] 27/10/2023 17:08

Very useful NED appointment - Victoria Mitchell - all round relevant experience.

[catabrit] 24/10/2023 11:44

Agree on Strix. I have an amazing filter and so unless something is just ridiculously cheap, I just tend to pass on stuff. I remember Strix getting written up several times on IC and whilst I thought it was an interesting business model with some barriers to entry, it was always efficiently priced with 50/50 odds either way. Now it’s cheaper but I still don’t think the odds are that massively favourable so it’s on the watchlist.

With STB the odds are much more favourable.

[p1nkfish] 24/10/2023 11:30

Whenever I see a recommendation the first thing I do is look at trend, then fundamentals. Strix has been under the cosh for just over 2 years so avoided and will do until I see some change. Currently happy to give up the upside in Strix until change confirmed and that looks like about 80p as a weekly close although that limit is heading down too so could end up < 80p.

Fascinated to see how STB goes through tomorrow onwards. Quite hard to convince the market to sit up and take note but to me it looks in bargain territory.

[catabrit] 24/10/2023 11:07

Just on Ennismore, I like them and think they are some of the best operators around. Particularly in small and mid caps. However, they are just as human as the rest of us and some of their long picks have been massive duds. I always see what they’re up to but I usually put the interesting stuff on my watchlist and wait for a better entry point. Strix is a great example.

[p1nkfish] 24/10/2023 10:58

What happens to the price if they buck expectations and all looks good and under risk control. Current price is ridiculous.

[tomps2] 18/10/2023 12:55

Secure Trust Bank (STB) Capital Markets Day

Wednesday, 8 November, 11:00am

The Capital Markets event will include a deep dive into the Retail Finance division and further detail on the Group’s path to delivery of its medium-term financial targets. Speakers at the event will include David McCreadie, CEO, Rachel Lawrence, CFO, Nick Davies MD of Retail Finance and Andy Phillips, Commercial Director of Retail Finance.

To register for the event in person or virtually, please contact [e-mail]

[jeff h] 14/10/2023 14:07

Trading update is 8th November.

[p1nkfish] 14/10/2023 09:57

Possible Q3 trading update towards end of Oct.

[checkers2] 14/10/2023 09:23

Secure Trust featured in Ennismore September Newsletter:

Secure Trust Bank – UK specialist lender (1.8% NAV)
Secure Trust Bank is a GBP 120m market capitalised UK specialist lender. We wrote about the company back in January
2019 and since then it has generated GBP 145m in net profit and paid out GBP 45m in dividends. Yet the market
capitalisation has fallen by circa GBP 140m in this time, with the share price more than halving. This does leave however
a situation where the stock could double or triple and still not look overvalued. On our expectations it is now trading on
a ridiculously low 3.5 times earnings multiple and 67% discount to tangible book.
Since we last wrote there has been a change of both CEO and CFO in 2021 and 2020 respectively and a strategic move to
scale up the business via growth in some new markets as well as gaining from some competitors leaving the market. This
has led to an increase in the loan book to GBP 3,200m at an annualised growth rate of circa 15% over the last 18 months
to June 2023.
The loan book proportions by segment haven’t changed so much. Retail Finance and Real Estate are now even more
important being 75% of the total book, each amounting to around GBP 1.2bn. As a reminder the Retail segment lends across various consumer products including furniture, electronics and sports season tickets growing at almost 30% in the
first half of the year with over 85% in interest-free lending with much of the income paid by the retailer. Obviously growing at this rate, we are very cognisant of credit risk so it has been very positive to see provision rates not move substantially in a period of increasing economic difficulties for the consumer. Secure Trust via its V12 brand has been assisted in its growth due to some banks pulling out of the market, perhaps due to its fairly niche size and increased technology requirements. We believe their market share now to be in the low to mid-teens for new lending. The Real Estate segment’s loan book is now mainly lending to residential investment and development, and due to the interest rate environment, is growing much slower than Retail Finance at around 7% but continues to show very low impairments which is testament
to its conservative lending with an average Loan-to-Value of around 56%.

One negative has been the Vehicle finance segment (circa 15% of the book) which has not grown as much as the company
would have hoped as the prime/Personal Consumer Plan offering on their new platform has taken longer to scale via
dealers than they expected. We believe they do have some mitigating factors though, with the recent historically unusual
behaviour in used car values due to new car supply issues as well as different dynamics in car values for electric versus
traditional engine making it harder to price correctly in a new lending subsegment. The plan is to put all of their lending
propositions on one platform by the end of year which should help them to gain more traction with their dealer channel
to market. The Commercial Finance segment, circa 10% of the loan book, is mainly factored receivables helping smaller
companies working capital situation and very short duration lending with typically very low write offs. Similar to Real
Estate there has been limited loan book growth currently.
Optically overall the revenue margin on its loan book has decreased in the last five years by around 230bp to around 5.8%.
However, the company has continued to move up the credit quality scale in its market positioning which is not being fully
shown in its results due to accounting standards requiring premeditative provisioning for the loan book leading to only
40bp of improvement to 1.4% in that time. Overall, this has led their return on average equity to fall from 13.1% in 2018
to, we expect, a not disastrous but unimpressive just over 10% for 2023. They target a substantially higher figure, around
15%, in the medium term. We expect the return to be close to 12% next year as we see the increasing benefit of scale
pushing the cost to income ratio to close to 50%, the low end of its 50-55% target.
Given the growth strategy, management are aware that the returns need to step up to fund this strategy and we would
much prefer that its 25% dividend payout policy was changed until their returns are shown to sustainably finance the
greater than 15% loan book growth targets, given their Core Equity Tier 1 capital ratio currently sits around 13%, close to
their internal 12% minimum target, the regulatory minimum is lower at 9.6%. As it stands the company sits on a historic
7% dividend yield which we would expect to increase this year given the dividend policy.
Secure Trust Bank continues to be a fairly niche lender which is underappreciated by the market. Over the last few years,
it has become more prudent on its lending book which we believe will lead to more consistent profitability in the future.
They have also invested in technology which should enable good quality lending growth in Retail and Vehicle Finance with
increasing scale leading to higher group returns. It was also positive to see the CEO David McCreadie buying GBP 176k of shares in August at current levels. Putting the business on 9 times earnings and around tangible book for 2024 leads to upside of over 200% over the next 15 months.

[34adsaddsa] 03/10/2023 11:47

I've just read them. I'm not surprised that a growth strategy during a pretty grim economic environment is unloved by the market.

I wonder if a private equity outfit might be interested. Perhaps Pollen Street.

[apple53] 29/9/2023 06:31

34ad please see my posts 532 and 539 (and some earlier) re switch to growth strategy which obviously needs more capital to maintain capital ratios as the balance sheet grows

personally I also want to see some buybacks

[34adsaddsa] 29/9/2023 00:42

Why do they pay out so little of the profit? What's happening to the rest of the cash?

[red ninja] 09/9/2023 11:43

Secure Bank Trust in the 5/9/23 FT



My dividends strategy continues to deliver
Highly depressed markets have thrown up very attractive yields

"A balanced portfolio — without overdiversifying — is something to aim for. I selected 16 stocks with a weighting to large caps, all offering a dividend yield of 5 per cent or more. As a “core” there was a three-unit holding in each of Aviva, Legal & General and M&G, all on yields of at least 8 per cent. Then five two-unit holdings — British American Tobacco, Phoenix, Primary Health Properties, Secure Trust and Taylor Wimpey — again juicy yields averaging about 7 per cent. 

This portfolio should deliver a near 8 per cent dividend yield overall. Even if a couple of holdings were to disappoint, the projected income should still be very satisfying.

The first two need little introduction; PHP, despite its debt, should be well capable of at least maintaining dividend payments given its rent flow, effectively underwritten by the government. Niche lender Secure Trust has to be outstandingly cheap — I note that the chief executive has just made a notable purchase — and land banked and cash-rich Taylor Wimpey presents an excellent buying opportunity when we must be at, or near, the bottom of the housebuilding cycle."

[p1nkfish] 09/9/2023 10:56

Nice one b4.

A company that is not out to impress in the short term but ploughs ahead and executes.

The metrics speak for themselves, markets cycle irrespective.

A long hold for me.