Secure Trust Bank (STB) has grown in market capitalisation from close to £100m when it listed in 2011 to more than five times that today. It's achieved that by riding the cyclical upturn in niche areas of unsecured consumer lending, more than quadrupling its lending balances and hence underlying profits. Just don't tell chief executive Paul Lynam he runs a 'challenger bank'.
Last year demand for consumer credit remained strong, pushing underlying profit up by almost a third to £33.3m. Personal lending, motor and particularly retail finance - where the bank offers unsecure lending to fund shopping sprees - each grew their revenues strongly over the period.
But now the group's growth prospects are also tied up with the success of its nascent small- and medium-sized lending business, launched last year with funds from a £50m share placing. That capital investment is now complete, and Secure Trust's real estate lending balance was already £134m at the year-end. In asset financing, however, profits will be subdued this year as its strategic partnership with specialist lender Haydock Finance gets off the ground. This business line is expected to reach standalone profitability in 2016.
Broker Canaccord Genuity expects adjusted EPS of 164p this year, compared with 156p in 2013.
| SECURE TRUST (STB) | ||||
|---|---|---|---|---|
| ORD PRICE: | 3,000p | MARKET VALUE: | £546m | |
| TOUCH: | 2,951-3,024p | 12-MONTH HIGH: | 3,009p | LOW: 2,245p |
| DIVIDEND YIELD: | 2.3% | PE RATIO: | 25 | |
| NET ASSET VALUE: | 686p | |||
| Year to 31 Dec | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|
| 2010 | 8.7 | 50 | nil |
| 2011 | 7.3 | 40 | 4.2 |
| 2012 | 17.2 | 109 | 57.0 |
| 2013 | 17.1 | 78 | 62.0 |
| 2014 | 26.1 | 122 | 68.0 |
| % change | +53 | +56 | +10 |
Ex-div: 16 Apr Payment: 15 May | |||
