TIDMSTB
RNS Number : 7059S
Secure Trust Bank PLC
08 November 2023
PRESS RELEASE
Secure Trust Bank PLC
LEI: 213800CXIBLC2TMIGI76
8 November 2023
For immediate release
Secure Trust Bank PLC
Capital Markets Day - Pathway to delivery of Medium Term
Targets
GBP4bn loan book ambition
Secure Trust Bank PLC ("STB" or the "Group"), a leading
specialist lender, hosts its Capital Markets Day ("CMD") today and
will provide an update on its V12 Retail Finance business and more
detail on the pathway to achieving the Group's medium term
financial targets.
1. V12 Retail Finance: An emerging powerhouse
Over the last decade, the V12 Retail Finance ("V12") has
delivered significant growth, a structural improvement in its cost
of risk and significant operational leverage on the back of
digitalisation and automation of customer service. V12 has
consistently demonstrated its scalability.
Nick Davies (CEO, V12 Retail Finance) and Andrew Phillips
(Commercial Director, V12 Retail Finance) will provide details on
the strong track record of V12, including the technology platform,
customer experience and the establishment of deep relationships
with retail partners.
Growth track record
V12 has grown lending balances from GBP658m in 2020 to over
GBP1,178m at the end of Q3 2023, representing 79% total growth.
Over the same period, market share has increased from 7.5% in 2020
to 13.2% at H1 2023.
Net interest margin
V12 has a strong track record for passing on changes in cost of
funds, with commercial agreements in place to pass through rate
changes. 40% of retailers receive immediate pricing changes when
market rates change with the remaining 60% of retailers receiving
changes quarterly.
V12 has delivered strong growth in the Furniture category in the
last couple of years which has longer product lead times. As the
market yield curve steepens, a time lag exists before benefitting
fully from pricing increases passed through to retailers. The Group
expects to benefit from the pricing pass through on this category
as the yield curve flattens and then is expected to reduce.
Improved lending quality and lower cost of risk
Management has repositioned the business to serve better
quality, lower credit risk retail segments and customers. This
action structurally lowered the cost of risk for the business as
overall exposure to the provision of interest free credit has
increased to 86% today from 62% in 2019. As a result, the cost of
risk reduced from 3.0% of the loan book in 2019 to 1.6% at H1
2023.
Cost efficiency - Operational leverage
Costs have been tightly controlled while the business has seen
rapid growth in the loan book. Digitalisation has been an important
driver with online account management penetration increasing from
11% of customers in 2019 to 74% today. Calls to the customer
service team reduced by 63% over the same period and average staff
numbers (full-time equivalents) decreased from 230 in 2019 to 224
in H1 2023 while almost doubling the size of the loan book.
Gaining market share
The Group sees the opportunity for V12 to continue growing in
existing and new market segments, gaining market share through
service, technology and overall proposition. V12's ability to
onboard multiple new retailers in an agile and efficient manner, a
key benefit of the technology platform, is an important advantage
compared to some peers. STB believes the opportunity exists to
achieve a 'mid-teens' share of the retail finance market compared
to the current 13.2%.
2. Secure Trust Bank - Medium term targets
Rachel Lawrence, Chief Financial Officer, will provide an update
on the Group's medium term targets and the pathway to achieving a
14%-16% return on average equity. Two refinements are made to the
existing medium term targets:-
-- Loan book growth . Having grown net lending by 45% since the
end of 2020 the Group has an ambition to deliver a GBP4bn loan
book. The Group is removing its current target to grow lending at
15%+ CAGR as it considers a GBP4bn loan book to be a more specific
KPI towards achieving the Group's overall medium term targets. The
Group had spot lending balances of GBP3.2bn at the end of Q3
2023.
-- Cost income ratio . Scaling to GBP4bn of lending and
continued progress on disciplined cost management will allow the
Group to deliver a cost income ratio (CIR) of 44-46%. The Group's
previous target had been for the CIR to be less than 50%. In
addition, Project Fusion, the Group's previously announced cost
optimisation programme, is now expected to deliver GBP5m of
annualised savings by the end of 2024.
Nick Davies, CEO, V12 Retail Finance, said:
"Secure Trust's V12's business can continue to build on its
long-term track record of delivering attractive growth and cost
leverage. The business has increased its market share by over 50%
since 2019 to over 13% today and we have the ambition to get to a
mid-teens market share without compromising our returns.
The strategic repositioning of our business towards lower risk
retail categories, serving prime credit customers, has dramatically
reduced the cost of risk within our loan portfolio."
David McCreadie, Chief Executive Officer, said:
"Secure Trust Bank continues to deliver on its strategic
priorities, and I'm pleased to announce that we are refining two of
our medium term targets at our Capital Markets Day. The Group has a
strong track record of capturing opportunities in challenging
economic conditions and the loan book has grown by 45% since the
end of 2020. That's GBP1bn of net lending growth and so we are well
on our way to delivering a GBP4bn loan book and driving down our
cost income ratio further.
I remain very confident in the Group's ability to deliver on our
14-16% return on average equity target."
Capital Markets Event details
A live webcast of the presentation and slides will be available
at the following link at 11am.
Topic: Secure Trust Bank Capital Markets Day
Time: 8 November, 2023 11am London
Please click the link below to join the webinar:
https://icaew.zoom.us/j/94090922132?pwd=aWFLQmlzMWNET1NNR0lDR3JabkZQZz09
Webinar ID: 940 9092 2132
Passcode: 201446
Presentation materials from the event will be made available
afterwards on the Investor Relations section of our website.
Enquiries:
Secure Trust Bank PLC
David McCreadie, Chief Executive Officer
Rachel Lawrence, Chief Financial Officer
Phil Clark, Investor Relations
Tel: 0121 693 9100
Investec Bank plc (Joint Broker)
Bruce Garrow
David Anderson
Maria Gomez de Olea
Tel: +44 (0)20 7597 5970
Shore Capital Stockbrokers (Joint Broker)
Mark Percy / Angus Murphy (Corporate Advisory)
Guy Wiehahn (Corporate Broking)
Tel: +44 (0)20 7408 4090
Camarco
Ed Gascoigne-Pees
Geoffrey Pelham-Lane
Sean Palmer
securetrustbank@camarco.co.uk
Tel: +44 (0)7591 760844
The person responsible for the release of this announcement on
behalf of STB is Mark Stevens, Company Secretary.
Forward looking statements
This announcement contains forward-looking statements about the
business, strategy and plans of STB and its current objectives,
targets and expectations relating to its future financial condition
and performance. Statements that are not historical facts,
including statements about STB's or management's beliefs and
expectations, are forward-looking statements. By their nature,
forward-looking statements involve risk and uncertainty because
they relate to events and depend on circumstances that will occur
in the future. STB's actual future results may differ materially
from the results expressed or implied in these forward-looking
statements as a result of a variety of factors. These include
economic and business conditions, risks from failure of clients,
customers and counterparties, market related risks including
interest rate risk, risks regarding market conditions outside STB's
control, expected credit losses in certain scenarios involving
forward looking data, operational risks, legal, regulatory, or
governmental developments, and other factors. The forward-looking
statements contained in this announcement are made as of the date
of this announcement, and (except as required by law or regulation)
STB undertakes no obligation to update any of its forward-looking
statements.
About the Company:
Secure Trust Bank is an established, well--funded and
capitalised UK retail bank with a 71--year trading track record.
Secure Trust Bank operates principally from its head office in
Solihull, West Midlands, and had 858 employees (full--time
equivalent) as at 30 September 2023. The Group's diversified
lending portfolio currently focuses on two sectors:
(i) Business finance through its Real Estate Finance and Commercial Finance divisions, and
(ii) Consumer finance through its Vehicle Finance and Retail Finance divisions.
Secure Trust Bank PLC is authorised by the Prudential Regulation
Authority and regulated by the Financial Conduct Authority and the
Prudential Regulation Authority.
Secure Trust Bank PLC, Yorke House, One Arleston Way, Solihull,
B90 4LH.
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END
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