Secure Trust Bank Plc · LSE:STB
Secure Trust Bank — Investor Day (July 2024)
37 slides from Secure Trust Bank's investor day presentation, Jul 3, 2024
Slide 1: Capital Markets Event
CAPITAL MARKETS 3 July 2024 EVENT
Slide 2: Important notice
Important notice The basis of this presentation: This presentation has been prepared Forward looking statements: This presentation contains forward-looking by Secure Trust Bank PLC (STB) solely for information. It is not an offer statements about the business, strategy and plans of STB and its curre
Slide 3: Introduction
1 Introduction David McCreadie Chief Executive Officer
Slide 4: Today's presentation
Today’s presentation Timing Session Presenter 14:00 Introduction David McCreadie Geoff Ray 14:05 Real Estate Finance John Griffin Chris King SECURE TRUST BANK PLC 14:50 Conclusions David McCreadie 14:55 Q&A All 15:15 Close 4 Secure Trust Bank PLC | Capital Markets Event
Slide 5: Focused specialist lender
Focused specialist lender Growth and cost levers being pulled to deliver financial targets Excellent growth Opportunities £4 billion net lending potential in large identified to deliver ambition will support an addressable markets operational efficiencies attractive return on capital SECURE TRUST BA
Slide 6: Progress towards achieving medium term targets
Progress towards achieving medium term targets Continued momentum across the Group Return on average Lending balances Net interest margin Cost income ratio CET1 ratio equity (ROAE) Target: c. £4bn Target: >5.5% Target: 44% – 46% Target: 14% – 16% Target: >12% SECURE TRUST BANK PLC Increase c. £4bn +
Slide 7: Group overview
Group overview Where Real Estate Finance fits in the Group Consumer Business Savings Finance Finance Business Unit Retail Vehicle Real Estate Commercial Consumer Finance Finance Finance Finance Deposits SECURE TRUST BANK PLC Branding £1,223m £467m £1,244m £381m £2,872m Balances (FY 2023) Growth sinc
Slide 8: Real Estate Finance
Real Estate Finance Well positioned for continued profitable growth and attractive returns Track record of growth Low cost and scalable Further profitable in tailored specialist operating model generating loan growth SECURE TRUST BANK PLC property lending attractive returns opportunities 8 Secure Tr
Slide 9: Real Estate Finance
2 REAL Estate Finance TAILORED SPECIALIST LENDER Geoff Ray John Griffin Chris King Managing Director, Regional Head, Head Of Credit, Real Estate Finance Real Estate Finance Real Estate Finance
Slide 10: Setting the scene
Setting the scene What we will talk about today Geoff Ray John Griffin Chris King Regional Head Managing Director REF Head of Credit Risk London & South East • Our business • Market position • Specialist underwriting • What we do • Our customers • Risk management • Market opportunity • The portfolio
Slide 11: Specialist real estate finance expertise
Specialist real estate finance expertise Strong track record of growth in focused real estate segments Strong track record of growth £1,250 +18% £1,244m £1,000 £1,052m £750 £m £500 Real Estate £250 Finance 2020 2023 REAL ESTATE FINANCE Real Estate Finance as % of total group Residential Commercial R
Slide 12: Addressable specialist market - £2,458bn
Addressable specialist market - £2,458bn Significant opportunity for growth Extracting from the £8,678bn of UK housing stock £2,000 £1,500 £1,591bn " Positive sentiment is returning, with the living sectors, residential development and prime logistics most favoured by the London lender and £bn £1,00
Slide 13: We are a specialist, relationship-led business
We are a specialist, relationship-led business Benefiting from a depth of expertise and multiple routes to market Real Estate Finance Real Estate Finance Relationship Model Model Relationship Through the cycle methodology Through S pecialist the cycle methodology Specialist underwriting underwriting
Slide 14: Highly experienced team
Highly experienced team Huge depth of specialist property lending experience 18 45 20 John Griffin YEARS YEARS YEARS Regional Head EXPERIENCE Geoff Ray EXPERIENCE Chris King EXPERIENCE London & South East Managing Director REF Head of Credit Risk Joined STB in 2019 Joined STB in 2016 Joined STB in 2
Slide 15: Real Estate Finance at Secure Trust Bank
Real Estate Finance at Secure Trust Bank Providing non-regulated secured lending in attractive market segments What we don't do Regulated Buy to Let Mortgages Specialist High touch Cash based debt relationships structuring Bridging Loans or short-term refurbishment loans Light touch Legal diligence
Slide 16: Significant loan book growth
Significant loan book growth Scalable business with efficient specialist team £1,400 140 £1,200 120 £1,000 100 £800 80 FTE £m £600 60 REAL ESTATE FINANCE £400 40 £200 20 £0 0 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Net Lending > 2014 £134m 2015 £368m 2016 £450m 2017 £581m 2018 £770m 2019 £
Slide 17: Relationship model attracts repeat business
Relationship model attracts repeat business Customers value our relationship support and service Retention of maturing New lending loans or new money from Broker channels Self generated existing customers 2021 £376m 36% 42% 22% 2022 £384m 48% 31% 21% 2023 £434m 71% 7% 22% REAL ESTATE FINANCE Special
Slide 18: Retention model enhances returns
Retention model enhances returns Multiple financial benefits of our model Limited cost Better understanding Relationship led of acquisition of risk with a known not price led customer REAL ESTATE FINANCE 18 Secure Trust Bank PLC | Capital Markets Event
Slide 19: We serve an attractive niche market segment
We serve an attractive niche market segment Leveraging underwriting skills and retail funding to generate returns PEER-to-PEER Price (Yield Comprising Fees & Margin) Non-Bank lenders Specialist BANKS Retail deposits, bespoke lending solutions. MID-TIER BANKS REAL ESTATE FINANCE High STREET BANKS RIS
Slide 20: Local customers
Local customers 6.4% National reach, with lots of opportunity >70% of the business from London and South East 1.3% All assets funded are visited in person 2.6% All customers are met face to face 3.2% Opportunity for geographical expansion REAL ESTATE FINANCE 6.1% 5.8% 1.9% 56.7% 12.8% 3% 20 Secure T
Slide 21: Portfolio repositioned to residential investment
Portfolio repositioned to residential investment Split by sector Net lending Risk Appetite Category Average Loan Size Loan to Value RWA Treatment Balances Residential Investment £1,043m £5.9m 57% 35% Investment Commercial Investment £68m £6.8m 47% 100% Investment Total £1,111m £5.9m 57% Residential
Slide 22: Case Study One: Residential investment
Case Study One Residential investment Client: Ultra high net worth investor via a limited company. Relationship established in 2018, originally broker introduced. Portfolio of 1,700 rental flats across 21 sites in 1,700 regional towns across the UK. STB relationship broker introduced in 2018. £50m N
Slide 23: Case Study Two: Residential build to rent
Case Study Two Residential build to rent Client: An investment fund. Relationship established in 2019, originally broker introduced. Strong UK based management team. Secure Trust have provided c£40m of lending STB has been a fantastic, solutions driven, c£40m across 4 individual transactions – resid
Slide 24: Case Study Three: Commercial development
Case Study Three Commercial development Client: UK Family Office through a UK limited company. Relationship established in 2021, originally broker introduced. £45m Development lending provided over the past 30 months – all successfully repaid. £20m Currently moving onto the next phase with £20m of d
Slide 25: Customers really appreciate what we do
Customers really appreciate what we do A key reason for retention and repeat business STB has a real understanding of our market, the provision of Student HMO accommodation, which is crucial in order to have an honest and clear relationship, and they have proved to be Competitive pricing and a good
Slide 26: Specialist underwriting
Specialist underwriting Track record of agility and expertise Credit team with Ongoing risk experience through management support Climate the cycle across through the focus all sectors customer lifecycle REAL ESTATE FINANCE Agile, expert credit In-house partnership on experienced each transaction re
Slide 27: Responding to the changing market
Responding to the changing market Proven track record of innovation and agility £1,400 Interest rate volatility BREXIT 2022 £1,200 ANNOUNCED 2020 £1,000 £800 Personal tax changes £m 2017-2020 RWA £600 changes 2016 COVID 19 PANDEMIC 2020-2021 REAL ESTATE FINANCE £400 £200 £0 2014 2015 2016 2017 2018
Slide 28: Strategic prioritisation of residential lending
T 0 Strategic prioritisation of residential lending Minimal exposure to Commercial Development £1,400 £1,200 84% £1,000 2023 £800 £m £600 % Residential £400 Investment REAL ESTATE FINANCE £200 £0 2014 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 25% Residential Investment Residential Developmen
Slide 29: Case Study Four: Exit via Administration
Case Study Four Exit via Administration Client: L isted property developer / Complex land specialist. Relationship established 2016. Up to £55m total facilities. Administration of Borrower. Worked with professional advisors. REAL ESTATE FINANCE Managed / monitored risk at senior level. Complex site
Slide 30: Stable LTV and cost of risk
T 0 Stable LTV and cost of risk Proven track record of robust risk controls £1,400 £1,200 £1,000 £800 £m £600 59% 58% 57% 56% 56% 57% 55% 55% 56% REAL ESTATE FINANCE £400 £200 £0 0.00% 0.02% -0.03% 0.07% 0.01% 0.50% 0.01% 0.11% 0.38% 2015 2016 2017 2018 2019 2020 2021 2022 2023 Net Lending > £368m £
Slide 31: Real Estate Finance
Real Estate Finance Well positioned for continued profitable growth and attractive returns Track record of growth Low cost and scalable Further profitable in tailored specialist operating model generating loan growth property lending attractive returns opportunities REAL ESTATE FINANCE 31 Secure Tru
Slide 32: Conclusion
3 Conclusion David McCreadie Chief Executive Officer
Slide 33: Excellent growth potential in our specialist markets
Excellent growth potential in our specialist markets Moving towards our £4bn loan book ambition Real Estate Finance Secure Trust Bank Significant growth potential in large addressable market Excellent growth potential in large addressable markets SECURE TRUST BANK PLC Highly scalable growth opportun
Slide 34: Questions and Answers
4 Questions AND Answers David McCreadie Chief Executive Officer
Slide 35: Management biographies
5 Management biographies
Slide 36: Management biographies
Management biographies DAVID McCREADIE GEOFF RAY JOHN GRIFFIN CHRIS KING CHIEF EXECUTIVE OFFICER, MANAGING DIRECTOR, REGIONAL HEAD - HEAD OF CREDIT, SECURE TRUST BANK GROUP REAL ESTATE FINANCE LONDON & SOUTH EAST, REAL ESTATE FINANCE REAL ESTATE FINANCE David was appointed CEO in January 2021. Geoff
Slide 37: Thank you
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