Secure Trust Bank Plc · LSE:STB
Secure Trust Bank — H1 2016 Earnings Presentation
33 slides from Secure Trust Bank's earnings presentation, Jul 19, 2016
Slide 1: 2016 Interim Results – 19th July 2016
2016 INTERIM RESULTS – 19th July 2016
Slide 2: Introduction & Business Review
INTRODUCTION & BUSINESS REVIEW PAUL LYNAM | Chief Executive Officer
Slide 3: H1 2016 Highlights
H1 2016 Highlights Continued growth, building blocks laid for next phase in evolution Delivery of proven strategy Special interim dividend of 165p declared in June Loan book up 51%* to £1.1bn Retained equity per share since IPO has Book diversified with SME business now increased from £1.66 to £12.5
Slide 4: Sale of Everyday Loans Group (ELG)
Sale of Everyday Loans Group (ELG) Broadens the range of strategic options available and accelerates organic growth in Motor, Retail and SME lending books Transaction completed as planned Generated a final post tax gain on disposal of £116.8m In addition to the gain, STB’s H1 2016 results include EL
Slide 5: Change in Major shareholder June 2016
Change in Major shareholder June 2016 Divestment of shares held by Acceleration of future growth Arbuthnot Banking Group opportunities Continuation of demerger process which has been Secure Trust Bank is seeking to move to a Premium on-going since 2011 IPO Listing on the Main Market of the London Sh
Slide 6: Premium Listing on London Stock Exchange
Premium Listing on London Stock Exchange Progress and expected timeline Process to seek a Premium Listing commenced directly after Arbuthnot Banking Group share sale No further capital expected to be raised as part of the listing process Sponsor and Reporting Accountant appointed Expected to complet
Slide 7: Strategic goals
Strategic goals 1. Organic growth 2. Diversification 3. M&A activity 7
Slide 8: Strategy
Strategy Very significant shareholder value created since 2011 IPO 300 280 £205.1m capital generated since IPO 260 Consistently strong dividend 240 payment pattern 220 200 Capital remains strong with Common 180 Equity Tier 1 ratio of 20.1% 160 140 Leverage ratio of 15.8% well above the PRA minimum £
Slide 9: Continued growth in loan book with increased diversity
Continued growth in loan book with increased diversity Consumer Finance Business Finance 48% of lending assets (H1 2015 59%) 47% of lending assets (H1 2015 37%) Personal Lending Motor Finance Retail Lending Real Estate Finance Asset Finance Commercial Finance (H1 2015 excl. ELG) Fixed rate, fixed te
Slide 10: Response to Brexit Challenges
Response to Brexit Challenges Strength in Capital base Secure Trust Bank (STB) is one of the UK’s most strongly capitalised banks with a Proforma CET1 ratio* of 20.1% as at 30 June 2016 STB is well positioned to navigate uncertainties arising from the EU referendum and pursue strategic priorities Mi
Slide 11: Sustainable positive progress
Sustainable positive progress Continuing Operations H1 2016 H1 2015 Total Lending assets £m £m £m Gross interest income 60.6 44.2 Interest expense (11.1) (8.3) 1200 GROWTH 51 Net interest income 49.5 35.9 ON H1 2015 EXC. ELG OF % Impairment losses (13.3) (8.0) 1000 Reported PBT 12.5 10.4 Underlying
Slide 12: Customer feedback and awards
Customer feedback and awards V12 PLD Customer feedback from Customer feedback from (99% positive in past six months, (98% positive in past six months, 98% positive in past year) 96% positive in past year) Was very pleased with how easy the process was. I have used the organisation twice now and on e
Slide 13: Customer feedback and awards
Customer feedback and awards Motor Finance Customer feedback from (96% positive in past six months, 96% positive in past year) he service from the company was excellent. Would T recommend the company to friends and family. xcellent service, informed of each step of process E and any questions I had
Slide 14: Business to business feedback
Business to business feedback ‘‘ ‘‘ ‘‘ Motor Finance Commercial Finance V12 Throughout our six year partnership, The team at Secure Trust Bank, Tredz has grown considerably Moneyway has developed a deep led by John Bevan, demonstrated over the last 3 years and we have strategic understanding of Ston
Slide 15: Financial Review
FINANCIAL REVIEW NEERAJ KAPUR | Chief Financial Officer
Slide 16: Summary income statement
Summary income statement Strong growth in earnings Continuing Operations £m H1 2016 H1 2015 % change 38% increase in net interest income • Strong growth in Consumer lending and new SME Net interest income 49.5 35.9 38% lending businesses Net fee, commission and other income 7.8 6.9 13% Impairment lo
Slide 17: Sale of Everyday Loans Group (ELG)
Sale of Everyday Loans Group (ELG) Impact of the sale Continuing operations Total STB H1 2016 ELG H1 2016 H1 2016 Profit & Loss £m Net interest income 60.6 11.1 49.5 Net fee income 7.8 - 7.8 Total operating income 68.4 11.1 57.3 Loan impairment charges (15.9) (2.6) (13.3) Costs (37.5) (6.0) (31.5) P
Slide 18: Profit bridge
Profit bridge Underlying continuing PBT of £17.4m, an increase on H1 2015 of £6.1m (54%) 20 15 £m 10 5 0 STB ELG STB Subsidiary Share Group STB Underlying STB V12 Share Net ABG Current Bonus Other items Additional STB ELG STB Reported PBT Continuing consolidation Option Recharges Continuing Continui
Slide 19: Income bridge
Income bridge* Increase on H1 2015 of £16.8m on a continuing basis £16.8m 78 74 70 £m 66 62 58 54 50 H1 2015 Real Estate Commercial Asset Personal Motor Retail Other H1 2016 £52.5m Finance Finance Finance Lending Finance Finance £(1.2)m £69.3m £5.9m £1.2m £2.9m £(1.1)m £2.8m £6.3m *Income before int
Slide 20: Income analysis
Income analysis Total income through continuing lending and transactional channels is analysed as follows: H1 2016 H1 2015 £4.1m £2.9m Real Estate Finance £1.8m £14.0m £4.5m £8.1m Asset Finance £3.4m £0.6m Commercial Finance £2.1m Personal Lending £0.5m Motor Finance £3.5m £16.6m £69.3m £69.3m £52.5
Slide 21: Balance sheet summary
Balance sheet summary Customer loans £m Continuing Operations H1 2016 H1 2015* up 51% to £1.1bn Cash and balances at central banks 141.8 100.4 Customer deposits Loans and advances to banks 19.1 21.2 up 40% to £1bn Debt securities held to maturity 19.8 7.0 Customer numbers Loans and advances to custo
Slide 22: Lending bridge
Lending bridge Increase on H1 2015 of £276m 1200 +£276m 1100 1000 900 800 700 £m 600 500 400 300 200 100 0 Reported ELG Continuing Real Estate Asset Commercial Personal Motor Retail DMS and H1 2016 H1 2015 £(105.3)m H1 2015 Finance Finance Finance Lending Finance Finance Other £1,128.3m £852.3m £747
Slide 23: Customer loan progression
Customer loan progression Growth of 51% on H1 2015 excluding ELG 1200 1100 1000 900 800 700 600 £m 500 400 300 200 100 0 FY 2013 H1 2014 FY 2014 H1 2015 FY 2015 H1 2016 Personal Lending ELG Motor Finance Retail Finance Real Estate Finance Asset Finance Commercial Finance DMS and Other 23
Slide 24: Deposit progression
Deposit progression Increase on H1 2015 of £208m, weighted towards term deposits* 1100 1000 900 800 57.0% 700 61.7% £m 600 56.6% 500 54.4% 400 44.3% 45.4% 300 39.2% 35.0% 200 38.7% 47.4% 46.7% 39.4% 100 8.3% 7.9% 6.2% 4.7% 3.8% 3.3% 0 FY 2013 H1 2014 FY 2014 H1 2015 FY 2015 H1 2016 *Presented on a t
Slide 25: 2016 Outlook
2016 Outlook Managing economic and regulatory challenges Continuing sustainable growth path • STB’s strong capital and liquidity base, enhanced through the • Considerable activity planned for the existing book including: ELG sale, will protect the Bank against an uncertain economic • Continuing to i
Slide 26: Summary
Summary Proven strategy continues to generate momentum 51% Loan book increase over H1 2015 (excluding ELG) Continuing to deliver strong PBT and shareholder value since IPO Continuing to meet commitment to sustainable growth STB’s strong capital and liquidity base, enhanced through the ELG sale, will
Slide 27: Appendices
© Secure Trust Bank ightforward transparent bankin. APPENDICES
Slide 28: Business finance
Business finance 600 500 400 Business Finance H1 2014 H2 2014 H1 2015 H2 2015 H1 2016 300 £m Revenue £m 0.4 2.2 9.2 15.1 19.3 200 Impairments £m - - (0.3) - (0.2) 100 Loan book £m 12.5 143.3 312.4 468.0 528.5 0 H1 H2 H1 H2 H1 2014 2014 2015 2015 2016 Loan book 28
Slide 29: Business finance
Business finance Business overview – Business overview – Business overview – Real Estate Finance Commercial Finance Asset Finance Supports “SMEs” over a financing Provides a full range asset based Supports “SMEs” to acquire term of up to 5 years with prudent lending solutions including invoice comme
Slide 30: Consumer finance
Consumer finance 800 700 600 500 Consumer Finance H1 2014 H2 2014 H1 2015 H2 2015 H1 2016* 400 £m Revenue £m 41.4 48.8 54.4 61.0 54.8 300 Impairments £m (6.2) (8.8) (10.8) (14.0) (15.7) 200 Net loan book 303.2 342.2 399.2 460.4 541.9 100 (exc. ELG) £m 0 ELG loan book £m 85.3 93.9 105.3 114.3 - H1 H2
Slide 31: Consumer finance
Consumer finance Business overview – Personal Lending Business overview – Motor Fixed rate, fixed term unsecured personal loans, with a Prime lending product offering greater participation 12-60 months duration across the risk curve Advances from £1,000 to £15,000 Maximum loans of £25,000 with finan
Slide 32: Strategy continues to deliver
Strategy continues to deliver Maximise shareholder value: To maximise shareholder value through To protect the reputation, integrity and To ensure that the fair treatment of strong lending growth by delivering great sustainability of the Bank for all of our customers is central to corporate culture
Slide 33: Forward looking statements
Forward looking statements This document is a summary only of certain information contained in the announcement dated 19th July 2016 and should be read in conjunction with the full text of the announcement. This document contains forward looking statements with these forward looking statements as a