REG - Secure Trust BankPLC - Capital Markets Event

Secure Trust BankAnnouncement

13/11/2024 07:00

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RNS Number : 9761L  Secure Trust Bank PLC  13 November 2024

13 November 2024

 

Secure Trust Bank PLC

 

Capital Markets Event - Deep dive on Commercial Finance

 

Secure Trust Bank PLC ("STB" or the "Group"), a leading specialist lender,
will host an investor event today to provide an update on its Commercial
Finance business and how the business supports the Group in achieving its
financial targets as set out in the capital markets day on 8 November 2023.

 

Commercial Finance: A trusted funding partner

 

Over the last decade, Commercial Finance, an Asset Based Lending (ABL)
specialist, has achieved:

·    Significant growth, increasing its loan book by 65% in the three
years to the end of 2023;

·    A low cost of risk, an average of 0.49% since 2014;

·    Delivered significant operational leverage by taking advantage of its
scalable cost base;

·    Taken advantage of deep sector expertise and strong relationships,
delivering a 4% market share in its chosen market;

·    Provided nearly £20 billion of funding to over 250 businesses.

 

John Bevan (Managing Director, Commercial Finance), Sean Powell (National
Sales Director), James Hodkinson (Chief Operating Officer) and Will Airey
(Head of Risk) will provide details of Commercial Finance's impressive track
record and the deep relationships it has built.

 

Growth track record

 

Commercial Finance is celebrating its 10(th) year and has a strong track
record of net lending balance growth.  Lending balances grew from £231
million in 2020 to £381 million at the end of 2023, representing 65% total
growth. The management team will describe the drivers of this success and the
opportunities for further growth, including deepening relationships with
private equity groups, offering funding solutions across multiple event-led
situations and how their market expertise and the bespoke relationship driven
approach is particularly valued by clients.

 

In a market with over £20 billion of lending outstanding, the long-term
growth opportunity remains significant. Commercial Finance has written 4% of
the ABL deals transacted in the £5 million to £50 million space since the
start of 2022.

 

Specialist, relationship-led lending

 

Commercial Finance has adopted an integrated approach to origination and
portfolio management that clients appreciate. Origination is through a
relationship network of private equity firms, accountants, insolvency
practices, and legal and corporate finance firms.  Cost of origination is
low, and the power of the relationship-led model has seen significant repeat
business from over 65% of our active private equity network.

 

Private equity backed companies represent half of the portfolio. A benefit of
supporting private equity backed companies is their access to additional
capital, which helps deliver a lower cost of risk.

 

Multiple fee streams building endowment-style income model

 

Since 2020, total income has grown by 102% compared to lending balance growth
of 65%. The Commercial Finance business has different income streams compared
to STB's other businesses. Fee income typically accounts for half of total
income for Commercial Finance, and the business has a strong track record of
building income per client over time, delivering an endowment style business
model.

 

Improved lending quality and low cost of risk

 

Commercial Finance has maintained its credit underwriting discipline, while
delivering strong growth and has not increased its risk profile as the average
facility size has increased over time. The portfolio's utilisation level was
55% at the end of 2023.  Cost of risk has averaged 0.49% since 2014, despite
the volatile macro-economic backdrop and the rapid increase in the Bank of
England base rate more recently.

 

Cost efficiency - Operational leverage

 

Costs have been tightly controlled while the business has seen robust growth
in the loan book. Average staff numbers (full-time equivalents) increased from
29 in 2019 to 32 in 2023, supporting the operational leverage in the business.

 

John Bevan, Managing Director, Commercial Finance, said:

 

"STB's Commercial Finance business has a long-term track record of delivering
growth in the Asset Based Lending market.  The business has increased its
loan book by 65% in the 3 years to the end of 2023 and we have an ambition to
drive further loan book growth without compromising our attractive returns.
With our specialist, relationship-led lending approach and a 4% share of our
target market, there is plenty of opportunity to go after."

 

David McCreadie, Chief Executive Officer, said:

 

"Our Capital Markets event will provide insight into our Commercial Finance
business and highlight the capability of this team as they continue its growth
trajectory.

 

"Secure Trust Bank continues to deliver on its strategic priorities across all
our specialist lending businesses. I remain confident in our ability to
deliver the £4 billion loan book ambition that will unlock our 14-16% return
on average equity target."

 

 

Capital Markets Event details

 

A live webcast of the presentation including Q&A will be held today at
14:00 pm for investors and analysts and will be available via our website
at https://www.securetrustbank.com/ (https://www.securetrustbank.com/) or
on https://brrmedia.news/STB_CMD (https://brrmedia.news/STB_CMD) . This will
be available for playback after the event.  The Group will not provide an
update on Vehicle Finance business at the event.

 

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)

Chris Baird

David Anderson

Maria Gomez de Olea

Tel: +44 (0)20 7597 5970

 

Shore Capital Stockbrokers (Joint Broker)

Mark Percy / Sophie Collins (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 (mailto:securetrustbank@camarco.co.uk)

Tel: +44 (0)7591 760844

 

About STB:

Secure Trust Bank is an established, well‐funded and capitalised UK retail
bank with over 70‐years of trading history. Secure Trust Bank operates
principally from its head office in Solihull, West Midlands, and had 897
employees (full‐time equivalent) as at 30 September 2024. 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, Arleston Way, Solihull, B90 4LH.

 

 

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