Full-year performance at Secure Trust Bank (STB) was more impressive than these reported figures suggest. Adjust for the acquisition accounting treatment relating to 2012's purchase of sub-prime loan business, Everyday, and the lender’s underlying pre-tax profit actually rose 52 per cent in 2013 to £25.2m.
That was driven by a 31 per cent jump in the group loan book - significantly reflecting 28 per cent growth in the motor finance book amid a strong car market. But, with economic conditions improving, the personal loan business is also doing well, while last year’s acquisition of retail finance business V12, as well the Everyday deal, will help further bolster growth and drive diversification.
The bad debt charge, however, jumped 75 per cent to £15.6m, although that largely reflects loan growth and the impact of Everyday - sub-prime operations typically carry relatively higher impairments. Operating expenses jumped 56 per cent as well, to £45.8m, but that’s largely down to the cost of hiring more staff as the business grows. The cost-to-income ratio actually fell six percentage points to 59 per cent.
Broker Canaccord Genuity expects adjusted EPS of 135p for 2014 (from 118p in 2013).
| SECURE TRUST (STB) | ||||
|---|---|---|---|---|
| ORD PRICE: | 2,775p | MARKET VALUE: | £433m | |
| TOUCH: | 2,704-2,850p | 12-MONTH HIGH: | 2,975p | LOW: 1,750p |
| DIVIDEND YIELD: | 2.2% | PE RATIO: | 36 | |
| NET ASSET VALUE: | 301p | |||
| Year to 31 Dec | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|
| 2009 | 8.1 | 46 | nil |
| 2010 | 8.7 | 50 | nil |
| 2011 | 7.3 | 40 | 4.2 |
| 2012 | 17.2 | 109 | 57 |
| 2013 | 17.1 | 78 | 62 |
| % change | -1 | -28 | +9 |
Ex-div: 9 Apr Payment: 9 May | |||
