While the high street banks continue to struggle with various legacy issues, specialist lender Secure Trust (STB) is making impressive progress. Underlying pre-tax profit at the half-year stage jumped 48 per cent year on year to £15.2m.
That significantly reflected a 22 per cent leap in the size of the loan book to £448m, helped by strong credit demand in a recovering economy. The motor finance operation - Secure's largest business - performed especially well, with pre-tax profit up 22 per cent to £128m. The personal finance operation, meanwhile, grew profits by 16 per cent to £84.1m, and Secure is also preparing to enter the SME lending market. The Everyday sub-prime lending unit saw profits grow by a more sedate 7 per cent to £85.3m. But growth there could pick up as the FCA's new regulatory regime forces many of the payday-type lenders to withdraw.
Secure has the capital to support further growth, too. After factoring in this month's £48.8m placing, its Basel III-basis common equity tier one capital ratio has reached a hefty 31 per cent. Still, operating costs rose 16 per cent, mainly because of a rising headcount.
Broker Oriel Securities expects full-year pre-tax profit of £25m, giving EPS of 117p (from £17m and 78.6p in 2013).
SECURE TRUST BANK (STB) | ||||
|---|---|---|---|---|
| ORD PRICE: | 2,305p | MARKET VALUE: | £408m | |
| TOUCH: | 2,300-2,325p | 12-MONTH HIGH: | 2,975p | LOW: 2,100p |
| DIVIDEND YIELD: | 2.7% | PE RATIO: | 23 | |
| NET ASSET VALUE: | 358p | |||
| Half-year to 30 Jun | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|
| 2013 | 6.2 | 30.5 | 15 |
| 2014 | 11.4 | 53.6 | 16 |
| % change | +84 | +76 | +7 |
Ex-div: 20 Aug Payment: 19 Sep | |||
