Secure Trust Bank Plc · LSE:STB
Secure Trust Bank — Investor Day (November 2021)
75 slides from Secure Trust Bank's investor day presentation, Nov 3, 2021
Slide 1: Capital Markets Day
CAPITAL MARKETS DAY 3 November 2021
Slide 2: Important notice
Important notice The basis of this presentation: This presentation has been prepared and performance. Statements that are not historical facts, including by Secure Trust Bank PLC (STB) solely for information. It is not an offer statements about STB’s or management’s beliefs and expectations, are or
Slide 3: Chairman's Introduction
1 chairman’s INtroduction lord forsYTh Chairman
Slide 4: Group Overview and Strategy
2 Group Overview and Strategy David McCreadie Chief Executive Officer
Slide 5: Today's presentation
Today’s presentation Timing Session Presenter 10.00am Chairman’s Introduction Lord Forsyth 10.05am Group Overview and Strategy David McCreadie 10.15am Retail Finance Nick Davies 10.40am Vehicle Finance David Nield & Ciara Raison 11.05am Real Estate Finance Jon Bowers SECURE TRUST BANK PLC 11.20am Co
Slide 6: Experienced Management Team
Experienced Management Team DAVID McCREADIE RACHEL LAWRENCE CHRIS HARPER KATIE DOCHERTY ANNE McKENNING CHIEF EXECUTIVE OFFICER CHIEF FINANCIAL OFFICER CHIEF RISK OFFICER CHIEF OPERATING OFFICER HR DIRECTOR Joined 2021 Joined 2020 Joined 2021 Joined 2021 Joined 2007 SECURE TRUST BANK PLC NICK DAVIES
Slide 7: New Core Purpose
New Core Purpose Vision To be the most trusted specialist lender in the UK Purpose To help more consumers and businesses fulfil their ambitions SECURE TRUST BANK PLC Strengths Specialist Expert Diverse Ambitious 7 Secure Trust Bank PLC | Capital Markets Day
Slide 8: Refreshed strategy
Refreshed strategy Strategy grow sustain care Generate growth and Create sustainable value Help customers with simple, attractive returns in through market expertise and clear and compelling products specialist segments deep customer knowledge SECURE TRUST BANK PLC Exploit digital capabilities Utili
Slide 9: Diverse business segments
Diverse business segments Consumer Business Savings Finance Finance Business Retail Vehicle Debt Real Estate Commercial Unit Personal SECURE TRUST BANK PLC Finance Finance Management Finance Finance Branding (H1 2021) Balances £694M £244m £90m £1,057m £239m £1,940m 9 Secure Trust Bank PLC | Capital
Slide 10: How we help
How we help Business Unit By providing... Retail Finance ...instant credit for the purchase of goods online and in store Vehicle Finance ...finance solutions for used vehicles Debt Management ...support for customers repaying their existing debts SECURE TRUST BANK PLC Real Estate Finance ...financia
Slide 11: Clear plan to deliver lending growth and attractive returns
Clear plan to deliver lending growth and attractive returns Focus on attractive and specialist markets Diverse portfolio in consumer and business finance Agility enhances our ability to pursue opportunities Strong market expertise, relationships and digital capabilities SECURE TRUST BANK PLC Underpi
Slide 12: Medium term targets
Medium term targets 14% -16% Return on Average Equity >12%CET1 Ratio Lending book CAGR >6% 15%+ SECURE TRUST BANK PLC 50% -55% Cost:Income Ratio Net Interest Margin New growth target 12 Secure Trust Bank PLC | Capital Markets Day
Slide 13: Retail Finance
3 RETAIL Finance NICK DAVIES CEO, Retail Finance
Slide 14: Substantial specialist retail finance expertise
Substantial specialist retail finance expertise Consumer Business Savings Finance Finance Retail Vehicle Debt Real Estate Commercial Personal Finance Finance Management Finance Finance Interest Free Credit 76 % Interest 30% Free Credit RETAIL Finance Interest Bearing of STB 24 % Interest Bearing Cre
Slide 15: What we do
What we do Watch the video on YouTube RETAIL Finance 15 Secure Trust Bank PLC | Capital Markets Day
Slide 16: A leading player in the retail finance market
A leading player in the retail finance market Interest Free Credit Interest Bearing Credit Generally higher end prime credit quality, Generally lower end prime credit quality, Summary lower yield but lower impairment higher yield and higher impairments 69% FY 2020 31% FY 2020 New Business 80% H1 202
Slide 17: Focus on attractive segments provides market beating growth
Focus on attractive segments provides market beating growth Lending balances Market CAGR FY15 – FY20 Top 10 Sectors £687m £694m £656m Furniture £596m 5.3% Jewellery Bicycles £451m STB CAGR FY15 – FY20 Gym Equipment Dental Procedures 16.2% Musical Instruments Art RETAIL Finance Market share Home Impr
Slide 18: Web based retailing and Digital Buy Now Pay Later
Web based retailing and Digital Buy Now Pay Later products to shape future of retail finance Digital BNPL Shift to becomes a web based disrupter retailing across all retail sectors Retailer Impact of system Covid on integrations retailing still unfolding Last increasingly important Forward 5 years l
Slide 19: Partner testimonial
Partner testimonial V12 have been a valued partner of Sofology for over 3 years, and have always provided tremendous levels of support, helping us to improve our customer journey both online and in-store. Their adaptable approach has meant that they have been able to quickly tailor their offering to
Slide 20: Meeting retailer needs with flexible in-house software
Meeting retailer needs with our flexible in-house software is the bedrock of our success grow sustain care Market leading Experienced Highly experienced in-house software senior team workforce Extensive Low cost Strong embedded API network digital customer servicing retailer partnerships Agile syste
Slide 21: Continuous evolution of our successful strategy
Continuous evolution of our successful strategy will deliver further growth in market share grow sustain care Continue growth Further embed Retailer centric in market share retailer system systems proposition integrations Develop new product Increase customer Customer focused offers to 840,000+ self
Slide 22: Time is right to launch into Digital BNPL
As a leading interest free provider, the time is right to launch into Digital BNPL, leverage our capabilities and grow our market share Consumer We are one We are already We have a demand for of the leading well placed track record of Digital BNPL interest free to deal with taking market is now firm
Slide 23: We will continue to leverage our successful model
We will continue to leverage our successful model and scale up Proven track record of growth with opportunity to continue with successful formula into the future Established retailer relationships combined with embedded system integration protects our position as preferred supplier Low cost operatin
Slide 24: Vehicle Finance
4 VEHICLE FINANCE DAVID NIELD CiaRA RAISON MD, Vehicle Finance Commercial Director, Vehicle Finance
Slide 25: Breadth of credit appetite and digital capabilities differentiate us
Our breadth of credit appetite and digital capabilities differentiate us Consumer Business Savings Finance Finance Retail Vehicle Debt Real Estate Commercial Personal Finance Finance Management Finance Finance Consumer 96 % Consumer VEHICLE FINANCE Finance 10 % Finance Stock of STB lending book 4 %
Slide 26: Nearing years of vehicle finance experience
We have nearing 14 years of vehicle finance experience The Group’s vehicle finance business Launched stock funding under Moneyway brand aligned with V12 launched in 2008 under the Moneyway the V12 Vehicle Finance brand, Vehicle Finance, combining all customers brand, transforming the underserved sup
Slide 27: Transformation Programme broadens our market opportunity
Transformation Programme broadens our market opportunity Investment in new product offerings and infrastructure extends our addressable market to £18.4bn of annual used car finance with a holistic, technology led proposition Point of sale consumer used car finance £’bn Prior to Transformation Progra
Slide 28: Wide breadth of capability to help customers finance used cars
With a wide breadth of capability to help customers finance their used cars Prime Near Prime Sub Prime Franchised dealer groups – New Franchised dealer groups – Used Distributors Independents and large used car supermarkets Internet sellers Small and medium independent dealers Internet brokers Manuf
Slide 29: Looking forward, lender technology will be key
Looking forward, lender technology will be key Dealers Covid-19 seeking lockdown simplicity Significant Increasing Continuous Technology regulatory online regulatory and change Last purchases change Forward integration 5 years looking VEHICLE FINANCE Fossil Disruptor Rise in used Ease of fuel models
Slide 30: We have invested ahead of time to maximise the opportunity
We have invested ahead of time to maximise on the opportunity Significant investment has been made to build capability to underpin future growth – we are nearing the end of the programme and now expect to leverage for scale grow sustain care Launch of stock funding, Scorecards derived using Open API
Slide 31: Our dealer proposition is holistic and technology led
Our dealer proposition is holistic and technology led Transformation programme extends proposition Dealer High levels of digitisation enables scaling characteristics Open API architecture and system agnostic Business Integrated Seamless integration into sellers’ processes and platforms model technol
Slide 32: First transformation delivery is a proven success
Our first transformation delivery is a proven success V12 Vehicle Finance Stock Funding Supports increased and improved dealer stock for sale Opportunity to stock and sell more cars, more often Instant funding including VAT and fees 100% of hammer price on vehicles purchased at auction Integrated wi
Slide 33: Leading digital proposition in stock funding
With a leading digital proposition in stock funding Watch the video on YouTube VEHICLE FINANCE 33 Secure Trust Bank PLC | Capital Markets Day
Slide 34: Our proposition meets the needs of diverse dealers
Our proposition meets the needs of diverse dealers There are around 11,000 dealers in the UK – Here are some examples of the broad range of dealers we support Cheshir Phantom Motor Co e Moto rts & Classics Bob Davies Car Sales r Co V12 Spo VEHICLE FINANCE Able to integrate quickly and simply with al
Slide 35: Our technology already enables disruptor models
And our technology already enables disruptor models Zuto is a customer first, technology focused company – therefore we hold a high bar for lenders to join our platform with both the product and technical capability of the lender being paramount. STB is at the front end of this, with an intuitive cu
Slide 36: Our opportunity is ambitious growth
Our opportunity is ambitious growth grow sustain care Scale into an £18bn+ All originations on Leverage our holistic addressable market a single platform customer proposition Deliver new Introduction of Widen our network products into new collections of embedded API 2022 platform VEHICLE FINANCE Int
Slide 37: In a changing world, we are well positioned to win
In a changing world, we are well positioned to win The world of used car buying is becoming increasingly digital We have invested ahead of time and are ready to capitalise The addressable market opportunity now stands at £18bn+ We have a holistic and technology led customer and dealer offer VEHICLE
Slide 38: Real Estate Finance
5 REAL ESTATE FINANCE JON BOWERs MD, Real Estate Finance
Slide 39: Substantial organic growth and scale in this specialist sector
Substantial organic growth and scale in this specialist sector Consumer Business Savings Finance Finance Retail Vehicle Debt Real Estate Commercial Personal Finance Finance Management Finance Finance Residential Commercial REAL ESTATE FINANCE 60 % Residential Investment Development Development 45% 1
Slide 40: We have built a specialist business
We have built a specialist business Real Estate Finance Residential Commercial Residential Commercial PBSA Investment Investment Development Development (Student Accommodation) Through the cycle Serviceability 70% LTV investment Secured on UK collateral methodology Customer 60% LTGDV development Fir
Slide 41: Demand for residential property is resilient
Demand for residential property is resilient High St Banks favour Exit of low yield, smaller low leverage landlords Increasing focus on Growth of Specialists and Last unregulated Entry of corporate Forward Overseas investors Peer to Peer 5 years residential investment landlords looking return to UK
Slide 42: There are significant growth opportunities
There are significant growth opportunities £224.8bn of UK buy to let – 2020 (source - BoE / FCA) Growing (Yield comprising fees & margins) Shrinking Growing Non-Bank No change Peer-to- Specialist Peer Price No change Mid-Tier Banks REAL ESTATE FINANCE High Street Banks Bubble size denotes estimated
Slide 43: Our core strength is our people
Our core strength is our people grow sustain care Structuring Effective capital Agility and proactivity capabilities and liquidity management Execution Commercial viability Quality capability from risk reward aspects of relationships through to workout ability Nimble and responsive Operationally Rel
Slide 44: Customer testimonial
Customer testimonial Family operated, international, market leading property operator and developer Founded in 1980, with a strategy of UK and international growth within the Hotel sector Substantial Development of a 5-Star Westin (Marriott Group branded) hotel in St Pauls, REAL ESTATE FINANCE inclu
Slide 45: Customer testimonial
Customer testimonial US-based fund which has recently opened a UK office Founded in 2010, with a team of over 70 professionals worldwide REAL ESTATE FINANCE Purchase of three residential portfolios in As Warwick entered the UK real estate market, Mayfair & Belgravia Secure Trust Bank worked to under
Slide 46: We are nimble and seize opportunities
We are nimble and seize opportunities GREEN HOMES SCHEME Residential Investment Loans £2-45m Responsible 1- Green Investment Loan £400m • Portfolios which meet CGST 2035 target level Balance Sheet ˜ • Five-year fixed market-leading interest rate • All existing credit policies remain applicable Growt
Slide 47: Opportunity is controlled and sustainable growth
The opportunity is controlled and sustainable growth grow sustain care Significant market Expand UK Explore niche opportunity – Britain footprint markets needs more houses Controlled and Optimise capital Make it easy for REAL ESTATE FINANCE sustainable growth utilisation people to do business with u
Slide 48: Growth in Real Estate Finance will continue
Growth in Real Estate Finance will continue Dynamics of supply and demand means opportunity remains to grow The scale of market opportunity for specialists is significant We are nimble and seize opportunities REAL ESTATE FINANCE Our core strength is our people. Their expertise adds value and differe
Slide 49: Commercial Finance
6 Commercial Finance John Bevan MD, Commercial Finance Alcohol brand in high spirits after securing a multi-
Slide 50: Significant growth in market share in Commercial Finance
Significant growth in market share in Commercial Finance Consumer Business Savings Finance Finance Retail Vehicle Debt Real Estate Commercial Personal Finance Finance Management Finance Finance Asset Based Lending Commercial Finance 67% Receivables 10 % 20% Government schemes Receivables Government
Slide 51: Working capital solutions across the UK market
We provide working capital solutions across the UK market Asset Based Lending Receivables Government Schemes Inventory Other Stock Finance £1m to £50m exposure Existing Clients Only Retail Sector, Floating Property and Cash Flow Average Facility £7.5m CBILs, CLBILs and RLS Charge Collaborative Core
Slide 52: We have a proven record of growth
We have a proven record of growth Top 15 lenders excluding high street banks – 2020 Active in the market for over 15 years 600 500 Lending balances 400 Commercial Finance 300 In 2016 Secure Trust Bank 200 was ranked 13th 100 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 52 Source: Internal Research Secure T
Slide 53: There are significant growth opportunities
There are significant growth opportunities Consistent Opportunities growth for specialists New New products entrants Seamless Last Cross border Forward working 5 years looking capital Commercial Finance Product High street flexibility domination Technology 53 Secure Trust Bank PLC | Capital Markets
Slide 54: Our core strength is our people
Our core strength is our people grow sustain care Bespoke Commercial Recurring lending facilities but responsible private equity business Swift Robust Experienced lending decisions exit planning and engaging team In-life Timely action Four hub decision making to preserve value regional model Commerc
Slide 55: Customer testimonial
Customer testimonial UK leading fruit supplier Introduction by Private Equity firm Elaghmore Prepared fruit is an attractive proposition to Acquisition of firm with £130m revenue the end consumers and retailers alike, but its Commercial Finance perishable nature requires specific knowledge and equip
Slide 56: Opportunities to grow alongside our clients
There are significant opportunities to grow alongside our clients as they scale grow sustain care Significant market Repeat business Maintain customer opportunity – model satisfaction rates new product lines / syndications Commercial Finance Continue growth of Endowment impact Retain and attract ave
Slide 57: Market knowledge and expertise will support our growth
Our market knowledge and expertise will continue to support our growth Strong reputation across Asset Based Lending market Highly engaged and experienced specialist team Sustainable growth allied to strong risk management Commercial Finance Flexible solutions delivered to client timescales Income en
Slide 58: A short break
a short BREAK
Slide 59: Funding and Capital
7 Funding and Capital rachel lawrence Chief Financial Officer
Slide 60: Balance Sheet highly matched and behaviourally funded long
Structurally, the Balance Sheet remains highly matched and behaviourally funded long Liabilities* Assets* Contractual weighted average residual duration: 1.1 Years 1.2 Years Behavioural weighted average residual duration: 1.8 Years 1.3 Years Focused on retail funding Sight Cash & Other Assets ≤90 Da
Slide 61: Funding mix transformation is embedded
Funding mix transformation is embedded, delivering lower funding costs through a diversified set of products Past Funding Mix* Current Funding Mix 10% Equity 1% <90 Day Notice 11% Equity 4% Sight Deposit 2% Tier 2 Debt 2% Tier 2 Debt 7% <90 Day Notice 21% >90 Day Notice 12% BoE CoF: CoF: 19% >90 Day
Slide 62: Investment in Savings digital capability
Investment in Savings digital capability underpins our growth ambitions H1 Increasing our market access to liquidity Ambition 2021 and leveraging the cost base to scale % Product Coverage* Device agnostic, mobile first, cloud first (£1.4tn+ household £442bn +300% £1.3tn onboarding and servicing savi
Slide 63: Strong capital base to deliver on our growth strategy
Strong capital base to deliver on our growth strategy Headroom in capital ratios provides solid foundation to deliver on our strong growth strategy* Capital held in CET1 and Tier2, opportunity to improve the capital stack with AT1 in the future 16.5% 5.0% 15.8% headroom 14.2% 6.6% headroom 13.6% 2.5
Slide 64: Conclusion
8 Conclusion David McCreadie Chief Executive Officer
Slide 65: Clear plan to deliver lending growth and attractive returns
Clear plan to deliver lending growth and attractive returns Focus on attractive and specialist markets Diverse portfolio in consumer and business finance Agility enhances our ability to pursue opportunities Strong market expertise, relationships and digital capabilities SECURE TRUST BANK PLC Underpi
Slide 66: Medium term targets
Medium term targets 14% -16% Return on Average Equity >12%CET1 Ratio Lending book CAGR >6% 15%+ SECURE TRUST BANK PLC 50% -55% Cost:Income Ratio Net Interest Margin New growth target 66 Secure Trust Bank PLC | Capital Markets Day
Slide 67: Lending growth ambition
Lending growth ambition Lending book CAGR 15%+ Consumer Finance Business Finance Retail Finance Vehicle Finance Real Estate Finance Commercial Finance Expand product Expand distribution Expand geographical Further develop capability to include and scale Prime HP footprint our relationships Digital B
Slide 68: Conclusions
Conclusions Our DIVERSIFICATION is a key DIFFERENTIATOR Agility to adapt to evolving market conditions 14% -16% Return on Average Equity Range of margin, capital and return considerations Leverage our SPECIALIST capabilities and heritage 50% -55% Cost:Income Ratio Specialist knowledge of our markets
Slide 69: Questions & Answers
8 Questions & Answers David McCreadie Chief Executive Officer
Slide 70: Management biographies
9 management biographies
Slide 71: Management Team Biographies
Management Team Biographies DAVID McCREADIE RACHEL LAWRENCE CHIEF EXECUTIVE OFFICER CHIEF FINANCIAL OFFICER Joined 2021 Joined 2020 David is a career banker and a Fellow of the Rachel has considerable experience in financial Chartered Banking Institute. He spent 22 years services gained from a caree
Slide 72: Management Team Biographies
Management Team Biographies NICK DAVIES DAVID NIELD CIARA RAISON CEO, RETAIL FINANCE MD, VEHICLE FINANCE COMMERCIAL DIRECTOR, VEHICLE FINANCE Joined 2013 Joined 2009 Joined 2018 Nick is a qualified banker with over 25 years’ David has over 25 years’ financial services Ciara is a 20 year career banke
Slide 73: Management Team Biographies
Management Team Biographies JON BOWERS JOHN BEVAN MD, REAL ESTATE FINANCE MD, COMMERCIAL FINANCE Joined 2011 Joined 2014 Jon has over 28 years’ financial services John has over 38 years’ banking experience, experience undertaking director level including 21 years in the receivables sector. roles wit
Slide 74: Management Team Biographies
Management Team Biographies CHRIS HARPER KATIE DOCHERTY ANNE McKENNING CHARLES MAYO CHIEF RISK OFFICER CHIEF OPERATING OFFICER HR DIRECTOR GENERAL COUNSEL Joined 2021 Joined 2021 Joined 2007 Joined 2021 Chris has extensive experience Katie has a wealth of experience in Anne has worked in the financi
Slide 75: Thank you
Thank you