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Curtis Banks to consolidate gains

The Sipp administrator has pooled assets acquired last year
March 27, 2017

Curtis Banks (CBP) has a plan to offset some of the effects of low interest rates on its income. The Sipp administrator has pooled the assets it acquired as part of the Suffolk Life deal with its existing customer cash balances at Barclays (BARC), where management says they will earn a more attractive interest rate. Operating margins last year dropped to 26 per cent from 35 per cent in the previous year as the lower-margin business was added - the benefit of pooling assets should feed through next year.

IC TIP: Buy at 265p

The vast majority of revenue earned (88 per cent) comes via Sipp management fees. The spate of acquisitions made during the past two years have substantially boosted the numbers. Suffolk Life alone brought 28,000 Sipps and £10bn of assets under Curtis Banks' administration. Organic growth was also solid last year, with around 3,400 new Sipps added, taking the group's total Sipps under management to just shy of 73,000.

The Financial Conduct Authority's decision to increase capital requirements for Sipp providers has been the catalyst for the recent spate of consolidation within the industry. However, chief executive Rupert Curtis says his company, along with the industry as a whole, will now dial down its acquisition activity.

Analysts at Peel Hunt expect adjusted pre-tax profits of £9.9m in 2017, giving EPS of 14.7p (up from £7.1m and 11.1p in 2016).

CURTIS BANKS (CBP)

ORD PRICE:265pMARKET VALUE:£142m
TOUCH:265-275p12-MONTH HIGH:415pLOW: 176p
DIVIDEND YIELD:1.5%PE RATIO:37
NET ASSET VALUE:77p*NET CASH:£332m

Year to 31 DecTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
2012**3.20.73.6na
2013**8.93.011.3na
2014**10.13.16.0na
201517.04.17.13.5
201629.74.57.24
% change+75+10+2+14

Ex-div: 27 Apr

Payment: 12 May

*Includes intangible assets of 47m, or 89p a share **Pre-IPO figures