Slide 1: Secure Trust Bank Plc 2017 Year End Results
SECURE TRUST BANK PLC 2017 YEAR END RESULTS 22 MARCH 2018
Slide 2: Introduction & Business Review
INTRODUCTION & BUSINESS REVIEW SECTION PAUL LYNAM | CHIEF EXECUTIVE OFFICER
Slide 3: Highlights: Well positioned to accelerate future growth
HIGHLIGHTS Well positioned to accelerate future growth The benefits of strategic repositioning will become increasingly apparent through 2018 and beyond Future lending growth expectations are high as STB entered 2018 with the largest ever pipeline of new business opportunities in all continuing oper
Slide 4: 2017 Developments: A year of strategic repositioning
2017 DEVELOPMENTS A year of strategic repositioning Managed migration of balance sheet Investment in business growth and leadership to lower risk lending complete Significant investment in new leadership in the Motor Finance business with a new MD and FD appointed Motor lending migrating towards low
Slide 5: Strategy: Shareholder value created since 2011 IPO
STRATEGY Very significant shareholder value created since 2011 IPO 300 £240.8m capital generated since IPO 280 Consistently strong dividend payment pattern 260 240 Capital remains strong with Common 220 Equity Tier 1 ratio of 16.5% 200 Leverage ratio of 12.3% well above the PRA 180 minimum £m 160 14
Slide 6: Strategy: Growth and diversification
STRATEGY Growth and diversification Continue to grow our business responsibly with new products where appropriate Use M&A to accelerate growth in portfolios that are less mature or repositioning in their market, with potential opportunities in the Asset Finance and Commercial Finance markets Investm
Slide 7: Continued growth in diverse loan book
CONTINUED GROWTH IN DIVERSE LOAN BOOK Consumer Business Finance Consumer Finance Mortgage Lending 51.6% of loan book (FY 2016 50.3%) 45.5% of loan book (FY 2016 44.8%) Initiated H1 2017 1.0% of loan book Real Estate Finance Asset Finance Commercial Finance Retail Finance Motor Finance Consumer Mortg
Slide 8: Financial Review
SECTION 2 FINANCIAL REVIEW NEERAJ KAPUR | CHIEF FINANCIAL OFFICER
Slide 9: Sustainable positive progress
SUSTAINABLE POSITIVE PROGRESS TOTAL SALE OF FY 2017 FY 2016 Continuing Operations (£m) FY 2017 PLD CONTINUING CONTINUING Total Lending Assets £m Gross interest income 149.3 8.0 141.3 118.8 1,600 GROWTH 27 Interest expense (26.7) - (26.7) (26.3) Net interest income 122.6 8.0 114.6 92.5 1,400 ON FY 20
Slide 10: Summary Income Statement
SUMMARY INCOME STATEMENT Balancing growth and risk by repositioning the business 24% increase in net interest income • Maintaining strong growth in both Consumer Finance and Continuing Operations £m FY 2017 FY 2016 % change Business Finance sectors whilst moving to lower risk, lower margin lending.
Slide 11: Sale of PLD: Impact of the sale
SALE OF PLD Impact of the sale Total Less Continuing STB FY 2017 PLD 2017 STB FY 2017 Profit & Loss £m Interest income 149.3 8.0 141.3 Interest expense (26.7) - (26.7) Net fee income/commissions 14.9 - 14.9 Total revenues 137.5 8.0 129.5 Loan impairment charges (36.9) (3.4) (33.5) Operating expenses
Slide 12: IFRS 9: Impact of the new accounting standard
IFRS 9 Impact of the new accounting standard on results Significant changes brought about by IFRS 9 Impact on opening distributable reserves Requires accounting for impairment losses on an Impact of the initial transition is passed through expected rather than incurred loss basis opening distributab
Slide 13: KPI Summary
KPI SUMMARY Repositioned ready for growth Key Performance Indicator FY 2017 FY 2016 Key Performance Indicator FY 2017 FY 2016 Gross revenue margin 11.1% 12.7% Cost of funding 1.9% 2.5% Net interest margin 8.1% 8.7% Total cost to income ratio 55.1% 60.1% Net revenue margin 9.1% 10.0% Loan to deposit
Slide 14: Profit Bridge
PROFIT BRIDGE Statutory continuing PBT of £25.0m an increase on FY 2016 of £5.6m (28.9%) 30 20 £m £m 10 0 STB PLD STB Transformation Main Additional Other STB Underlying STB Fair value Transformation Other Profit on STB Statutory Result continuing costs Market costs in costs Underlying continuing Un
Slide 15: Income Bridge
INCOME BRIDGE Increase on FY 2016 of £22.2m on a continuing basis £22.2m 160 150 140 130 120 £m £m 110 100 90 80 70 60 50 FY 2016 PLD FY 2016 Real Estate Asset Commercial Motor Retail Consumer Other* FY 2017 £146.3m £(11.2)m Continuing Finance Finance Finance Finance Finance Mortgages £(5.7)m Contin
Slide 16: Income Analysis
INCOME ANALYSIS Changing mix with focus on growth of lower risk lending activities FY 2017 FY 2016 KEY £11.4m £0.1m £32.3m £17.1m £28.4m Real Estate Finance £50.7m Asset Finance Commercial Finance £8.5m £157.3m £157.3m £36.7m £135.1m£135.1m £7.8m Motor Finance £7.2m Retail Finance £4.6m Consumer Mor
Slide 17: Net Revenue Margin Summary
NET REVENUE MARGIN SUMMARY Change of mix towards lower risk, lower margin lending on a continuing basis % Improvement / Reduction in net revenue margins is a (Worsening) reflection of the move to lower risk, lower margin lending, cessation of high margin £129.5m £107.0m 21% sub-prime motor lending a
Slide 18: Costs and Income Analysis
COSTS AND INCOME ANALYSIS Increasing operating leverage Cost to income ratio 55.1% Cost to income ratio 60.1% 21% growth in operating income 11% growth in costs £129.5m £71.3m £107.0m £64.3m FY 2017* FY 2016* Net operating income Operating expenses *Reported on a continuing basis excluding ELG and P
Slide 19: Balance Sheet Summary
BALANCE SHEET SUMMARY On a continuing basis: FY 2016 reported FY 2017 FY 2016 asset position: £m Continuing Continuing Customer loans Operations Operations up 27% to £1,598.3m £1,510.0m, made Customer numbers up of £1,444.5m Cash and balances at central banks 226.1 112.0 up 33% to 990k (Continuing)
Slide 20: Lending Bridge
LENDING BRIDGE Increase on FY 2016 of £342.8m (27.3%) on a continuing basis (excl. ELG and PLD) +£342.8m 1700 1600 1500 1400 1300 1200 1100 1000 900 800 £m 700 £m 600 500 400 300 200 100 0 Reported PLD Continuing Real Estate Asset Commercial Motor Retail Consumer DMS and Continuing FY 2016 £(65.5)m
Slide 21: Customer Loan Progression
CUSTOMER LOAN PROGRESSION Growth of 27.3% on FY 2016 on a continuing basis (excl. ELG and PLD) 1600 1500 1400 1300 1200 1100 1000 900 £m 800 700 600 £m 500 400 300 200 100 0 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 Personal Lending ELG Motor Finance Retail Finance Real Estate Finance Asset Finance Co
Slide 22: Customer Deposit Progression
CUSTOMER DEPOSIT PROGRESSION Increase on FY 2016 of £331.4m, weighted towards term deposits 1,500 1,400 1,300 1,200 1,100 1,000 68.3% 900 £m 800 66.2% 57.0% 700 £m 600 500 54.4% 400 300 30.7% 39.2% 32.5% 200 39.4% 100 6.2% 3.8% 1.3% 1.0% 0 FY 2014 FY 2015 FY 2016 FY 2017 Sight Notice Term 22
Slide 23: Summary and Outlook
SUMMARY AND OUTLOOK Well positioned to accelerate future growth The benefits of strategic repositioning will become increasingly apparent through 2018 and beyond Future lending growth expectations are high as STB entered 2018 with the largest ever pipeline of new business opportunities in all contin
Slide 24: 2018 Outlook: Strategic priorities
2018 OUTLOOK Strategic priorities to deliver Managing competitive, economic further growth and regulatory challenges Organic growth Capital and liquidity management and de-risked • Continuing to invest in the quality of our balance sheet, enhanced through the ELG and leadership and platforms to ensu
Slide 25: Appendices
# Secure Trust Bank Straightforward transparent banking APPENDICES SECTION
Slide 26: Customer Feedback and Awards: V12
CUSTOMER FEEDBACK AND AWARDS V12 Customer feedback from 4.8 stars The company were very quick and thorough ery easy to deal with and great customer V in completing my loan. It was nice to do the support. Would recommend this company and questionnaire on my phone instead of waiting for would use agai
Slide 27: Customer Feedback and Awards: Deposits
CUSTOMER FEEDBACK AND AWARDS Deposits Customer feedback from 4.5 stars Excellent and efficient service, I would definitely use them again. Was recommended Secure Trust Bank by my Mum who had had excellent service from them. I then had the same excellent service when I went ahead and invested in one
Slide 28: Customer Feedback and Awards: Motor Finance
CUSTOMER FEEDBACK AND AWARDS Motor Finance Customer feedback from 4.7 stars Brilliant service. A truly problem free process Very polite staff, very helpful in getting things from start to finish. I would have no hesitation moving to an end result. Very happy with the recommending Moneyway to friends
Slide 29: Business to Business Feedback: Motor Finance
BUSINESS TO BUSINESS FEEDBACK ‘‘ ‘‘ Motor Finance Our partnership with Moneyway during 2017 has strengthened Having worked with Moneyway for a number of years, considerably, we have worked closely with the team and are we have developed a mutually beneficial relationship that ‘‘ looking forward to m
Slide 30: Business to Business Feedback: Real Estate and Commercial Finance
BUSINESS TO BUSINESS FEEDBACK ‘‘ ‘‘ Commercial Finance Real Estate Finance Having built our reputation successfully in the theatre and It is essential to us that our funder provides a facility with entertainment industry, working on some of the most the flexibility to quickly adapt our business mode
Slide 31: Business Finance
BUSINESS FINANCE 900 800 700 Business Finance FY 2014 FY 2015 FY 2016 FY 2017 600 Revenue £m 2.6 24.3 40.8 48.0 £m 500 Impairments £m - (0.3) (0.9) (0.9) 400 Loan book £m 143.3 468.0 631.0 824.0 300 200 100 0 FY FY FY FY 2014 2015 2016 2017 Loan book 31
Slide 32: Business Finance: Business overviews
BUSINESS FINANCE Business overview – Business overview – Business overview – Real Estate Finance Commercial Finance Asset Finance Supports SMEs over a financing Provides a full range of asset Supports SMEs to acquire term of up to 5 years with based lending solutions commercial assets, such as prude
Slide 33: Consumer Finance
CONSUMER FINANCE 800 700 600 Consumer Finance FY 2014 FY 2015 FY 2016* FY 2017 500 Revenue £m 90.2 115.4 99.6 97.8 £m 400 Impairments £m (15.0) (24.8) (31.1) (34.6) 300 Net loan book £m (excl. ELG 254.6 386.1 562.1 726.9 200 and PLD) 100 ELG loan book £m 93.9 114.3 - - 0 PLD loan book £m 87.5 74.3 6
Slide 34: Consumer Finance: Retail and Motor overview
CONSUMER FINANCE Business overview – Business overview – Retail Motor Targeting Prime Credit Portfolio Prime lending and near-prime Customers offering greater participation across the risk curve Active across a range of retail markets including cycle retailers, Maximum loans of £25,000 with season t
Slide 35: Strategy continues to deliver
STRATEGY CONTINUES TO DELIVER Maximise shareholder value: To maximise shareholder value To protect the reputation, integrity To ensure that the fair treatment of through strong lending growth by and sustainability of the Bank customers is central to corporate delivering great customer outcomes for a
Slide 36: Important Notice
IMPORTANT NOTICE This presentation and the information, statements and The Group’s actual future results may differ materially from opinions in it do not constitute, and should not be the results expressed or implied in these forward looking construed as, a public offer under any applicable legislat