Edison Investment Research Limited : Secure Trust Bank (STB): Solid FY20, ready for growth

Edison Investment Research Limited 
Edison Investment Research Limited: Secure Trust Bank (STB): Solid FY20, ready for growth 
12-Apr-2021 / 10:50 GMT/BST 
=---------------------------------------------------------------------------------------------------------------------- 
 
London, UK, 12 April 2021 
 
Secure Trust Bank (STB): Solid FY20, ready for growth 
Secure Trust Bank (STB) reported FY20 PBT of GBP20.1m versus our estimate of GBP13m. The beat was mostly driven by lower 
than expected impairments (2.3% vs 2.7%). PBT was about 50% down on FY19, but the ROE of 6.2% shows resilience given 
the pandemic. STB's Q3 update and pre-close statement had already indicated that asset quality was better than expected 
and business volumes were holding up relatively well. The latest lockdown is affecting H121, but we estimate loan 
growth of 5% and 15% for FY21 and FY22. We see impairment dropping to 1.5% by 2022, which should help drive ROE to 
11.1%. The share price has rebounded but STB still trades on an FY21 P/BV of 0.79x, despite a strong track record of 
value creating returns (ROE above COE). Its solid good capital base (CET1 14.2) supports management's strategy of 
seeking growth opportunities both organically and through possible M&A. We have increased our fair value to 2,163p/ 
share (from 1,756p) mainly due to rolling forward one year. 
We obtain a fair value (FV) of 2,163 per share using a net asset value (NAV) approach. We continue to assume a 
sustainable ROE of 13.5%, 10% in COE and 2% annual growth. FV is the present value (PV) of the (ROE-g)/(COE-g) formula 
at end 2022 discounted to FY21. The 2,163p value implies an FY21e P/BV of 1.4x; STB is currently trading on a 0.79x P/ 
BV ratio. 
Click here to view the full report. 
 
All reports published by Edison are available to download free of charge from its website 
www.edisongroup.com 
About Edison: Edison is a leading research and investor relations consultancy, connecting listed companies to the 
widest pool of global investors. By focusing on the volume and quality of investors reached - across institutions, 
family offices, wealth managers and retail investors - Edison can create and gauge intent to purchase, even in the 
darkest pools of capital, and then make introductions via non-deal roadshows, events or virtual meetings. 
Having been the first in-market 17 years ago, Edison now has more than 100 analysts covering every economic sector. 
Headquartered in London, Edison also has offices in New York, Frankfurt, Amsterdam and Tel Aviv and a presence in 
Athens, Johannesburg and Sydney. 
Edison is authorised and regulated by the Financial Conduct Authority. 
Edison is not an adviser or broker-dealer and does not provide investment advice. Edison's reports are not 
solicitations to buy or sell any securities. 
For more information, please contact Edison: 
Pedro Fonseca [phone] [e-mail] 
Andrew Mitchell [phone] [e-mail] 
Learn more at www.edisongroup.com and connect with Edison on: 
LinkedIn        https://www.linkedin.com/company/edison-group-/ 
Twitter           www.twitter.com/Edison_Inv_Res 
YouTube       www.youtube.com/edisonitv 
=---------------------------------------------------------------------------------------------------------------------- 
Dissemination of a CORPORATE NEWS, transmitted by EQS Group. 
The issuer is solely responsible for the content of this announcement. 
=---------------------------------------------------------------------------------------------------------------------- 

1183544 12-Apr-2021

(END) Dow Jones Newswires

April 12, 2021 05:51 ET (09:51 GMT)