Don't be fooled by the sharp drop in headline half-year profits at Secure Trust Bank (STB) - that reflects a one-off £8.9m fair valuation gain in the prior year's figures. Underlying pre-tax profit actually grew 37 per cent year on year to £10.3m.
That impressive performance - which centres mainly on car finance and personal loans - included a 41 per cent increase in the overall loan book to £365.8m, while customer numbers jumped 64 per cent to 325,052. Moreover, the group's lending operations aren't reliant on raising funds through the wholesale market and are financed by retail customer deposits - in the first half, that balance grew 30 per cent to £386.7m.
However, the current cost of wholesale funding is less than the rates paid to retail depositors. Accordingly, the bank has secured access to cheap funds through the funding for lending scheme and there are plans to accelerate lending to the small- and medium-sized business sector. But management stressed that there's no intention of becoming reliant on wholesale funding. The bank also completed the acquisition of V12 Retail Finance Group and Debt Managers - some cost synergies are expected in the second half.
Broker Canaccord Genuity expects full-year adjusted pre-tax profit of £23m, giving EPS of 113p (from £16.6m and 89p in 2012).
| SECURE TRUST BANK (STB) | ||||
|---|---|---|---|---|
| ORD PRICE: | 2,315p | MARKET VALUE: | £361m | |
| TOUCH: | 2,315-2,350p | 12-MONTH HIGH: | 2,315p | LOW: 1,027p |
| DIVIDEND YIELD: | 2.5% | PE RATIO: | 41 | |
| NET ASSET VALUE: | 346p* | |||
| Half-year to 30 Jun | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|
| 2012 | 12.4 | 82.5 | 14.0 |
| 2013 | 6.20 | 30.5 | 15.0 |
| % change | -50 | -63 | +7 |
Ex-div: 21 Aug Payment: 20 Sep *Includes intangible assets of £10.6m, or 68p a share | |||
