Secure Trust Bank - Good news as flagged
Secure Trust Bank (STB) reported H121 PBT of £30.7m, boosted by a net impairments reversion of £1.1m (vs a net charge of £19.8m in H220). The good news on provisions had been previously flagged by management. Loan arrears have remained lower than expected and most borrowers have returned from payment holidays. Loan demand is picking up and loans grew 1.3% (core division loan growth of 2.6%) in the six months to 30 June 2021. STB also announced a new 25% payout dividend policy along with a surprise 20p interim dividend. This policy better matches the bank’s growth strategy of organic and opportunistic acquisitions. We have raised our FY21 earnings forecasts to reflect lower impairments while trimming FY22 EPS by 11% (ROE forecast 9.5%) to reflect higher costs as the bank expands. Our fair value has edged to 2,234p from 2,163p per share.Secure Trust Bank is involved in banking and financial services. Co.'s segments are: real estate finance, which include residential and commercial investment and development loans; asset finance, which include loans to small and medium sized enterprises; commercial finance, which include invoice discounting and invoice factoring; personal lending, which include unsecured consumer loans; motor finance, which include hire purchase agreements; retail finance, which include point of sale unsecured finance; and residential mortgages, which is for the self-employed, contract workers. As of Dec 31 2017, Co. had total assets of £1.89 billion and total customers deposits of £1.48 billion.
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