Secure Trust Bank Plc · LSE:STB
Secure Trust Bank — FY2020 Earnings Presentation
28 slides from Secure Trust Bank's earnings presentation, Mar 25, 2021
Slide 1: 2020 Year End Results
2020 Year End Results 25 March 2021
Slide 2: 2020 Overview
1 Section 2020 Overview DAVID McCREADIE | CHIEF EXECUTIVE OFFICER 2
Slide 3: A strong performance. Growth opportunities ahead
Secure Trust Bank PLC 2020 Year End Results A strong performance. CET 1 Ratio 2020 Overview Growth opportunities ahead 14.2% 2019: 12.7% Net Interest Margin • The Group delivered a strong and resilient operational and financial performance in 2020 6.3% 2019: 6.5% • We focused on minimising risk, con
Slide 4: New Business Volumes
Secure Trust Bank PLC 2020 Year End Results New Business Volumes 2020 Overview Last year’s trend provides confidence in our growth trajectory as we emerge from lockdown and recovery takes hold New Business 350.0 Trends 300.0 297.5 311.0 • New business volumes started strongly in Q1 prior to the firs
Slide 5: Diversified Portfolio
Secure Trust Bank PLC 2020 Year End Results Diversified Portfolio 2020 Overview The Group consists of five core divisions across Business and Consumer Finance. The business is diversified across market, yield, security and cost of risk. Business Finance Consumer Finance Non Core STBG 54.4% of loan b
Slide 6: Supporting our Customers and Colleagues
Secure Trust Bank PLC 2020 Year End Results Supporting our Customers and Colleagues 2020 Overview Our team’s commitment has enabled us to provide a seamless service through the pandemic. Customers Colleagues • Flexible support for existing customers • 85% of colleagues working from home • Payment Ho
Slide 7: Financial Review
2 Section Financial Review Rachel Lawrence Chief Financial Officer 7
Slide 8: Summary income statement
Secure Trust Bank PLC 2020 Year End Results Summary income statement Financial Review Despite the pandemic STBG has delivered a Statutory PBT of £20.1m. On a pre-impairment basis operating profit of £74.5m is up 4.5% on FY19. £m FY 2020 FY 2019 % Change Net Interest income 150.9 145.4 3.8% Net Fee,
Slide 9: Net Interest Income
Secure Trust Bank PLC 2020 Year End Results Net Interest Income Net Interest Income (£m) Financial Review Increased net interest income 165.0 but lower NIM 160.0 2.5 5.1 4.6 3.8% increase in 155.0 8.4 2.1 1.4 net interest income 150.0 2.4 150.9 • As a result of funding mix changes (54% Term in FY20
Slide 10: Net Fee, Commission and Other Income
Secure Trust Bank PLC 2020 Year End Results Net Fee, Commission Financial Review and Other Income Impacted by lower new business volumes Net Fee and Commission Income (£m) and activity due to the pandemic 25.0 20.1 24.4% decrease in net fee, (24.4%) commission and other income 20.0 15.2 5.3 • Busine
Slide 11: Operating Expenses
Secure Trust Bank PLC 2020 Year End Results Operating Expenses Financial Review Reduction of £2.6m in operating expenses and 180bps drop in Cost Income Ratio. Reduction in Cost Income Ratio Driven by: £2.6m reduction in CiR (1.8%) operating expenses 56.9% 55.1% Driven by: • Lower new business reduce
Slide 12: Macroeconomic Scenarios (MES)
Secure Trust Bank PLC 2020 Year End Results Macroeconomic Scenarios (MES) Financial Review Conservative set of forward looking macroeconomic scenarios. No change to scenario weightings. Sensitivities Economic scenarios and weightings Change to 100% weighting to the Scenario Weightings UK Unemploymen
Slide 13: Impairment charge
Secure Trust Bank PLC 2020 Year End Results Impairment charge Financial Review Stable credit experience but impairment charge increase of £18.7m reflecting the application of forward looking macroeconomic factors. Impairment charge Impairment charge by Division (£m) increased by £18.7m Business Fina
Slide 14: Payment Holidays
Secure Trust Bank PLC 2020 Year End Results Payment Holidays Financial Review Total Consumer customers on Payment Holidays peaked at 3.0%, now down to 0.5%. • A significant number of our Motor and Retail Finance Payment Holidays # Retail Finance customers took advantage of payment holidays 25,000 2.
Slide 15: Summary Balance Sheet
Secure Trust Bank PLC 2020 Year End Results Summary Balance Sheet Financial Review Assets remained steady with a small reduction in Loans to customers. Deposits from customers reduced by 1.4% in line with the reduction in Loans to customers. £m FY 2020 FY 2019 % Change Balance sheet remains steady Y
Slide 16: Loans and Advances and New Business Volumes
Secure Trust Bank PLC 2020 Year End Results Loans and Advances and New Business Volumes Financial Review Loans and advances reduced by 3.7% with contraction in Consumer Finance and Non Core. New business volumes started strong in Q1 and returned to pre-pandemic levels in Q4. Loans and Advances reduc
Slide 17: Funding
Secure Trust Bank PLC 2020 Year End Results Funding Financial Review Total funding decreased by 2.7% in the year, reflecting lower lending balances. Mix of deposits shifting away from term £m FY 2020 FY 2019 % Change reflected in lower cost of funds. Customer Deposits 1,992.5 2,020.3 (1.4)% Product
Slide 18: Capital
Secure Trust Bank PLC 2020 Year End Results Capital Total Capital Financial Review £318.0m £328.8m £15.7m increase in CET 1 capital, reflecting profits and changes to IFRS 9 £45.1m transitional relief. Strong and improved £50.0m capital ratios. CET1 & TCR ratio improved by £283.7m £268.0m 1.5% and 1
Slide 19: Looking ahead: Strategy & Outlook
3 Section Looking ahead: Strategy & Outlook David McCreadie Chief Executive Officer 19
Slide 20: CEO Initial Assessment
Secure Trust Bank PLC 2020 Year End Results CEO Initial Assessment Strategy & Outlook • Colleagues – customer-centric, supportive, committed • Excellent customer service • Experienced, divisional management teams • Technology led solutions in Consumer Finance • Specialist lending in attractive segme
Slide 21: Future Opportunities
Secure Trust Bank PLC 2020 Year End Results Future Opportunities Strategy & Outlook Build on strong foundations Scale our Develop businesses our product organically offerings Tidy-up Leverage sub-scale our product portfolios platforms Further develop our digital and data capabilities 21
Slide 22: Strategic Priorities
Secure Trust Bank PLC 2020 Year End Results Strategic Priorities Strategy & Outlook We will evolve and We will continue to:- rearticulate our strategy:- • Serve businesses and consumers • Define our Core Purpose • Operate in attractive segments offering • Simplify our business higher yields • Become
Slide 23: Medium Term Performance Targets
Secure Trust Bank PLC 2020 Year End Results Medium Term Performance Targets Strategy & Outlook 2020 Medium Term Actual Net Interest Margin 6.3% >6.0% Cost Income Ratio 55.1% 50% – 55% Return on Average Equity 6.1% 14% – 16% CET 1 14.2% >12.0% 23
Slide 24: Outlook
Secure Trust Bank PLC 2020 Year End Results Outlook Strategy & Outlook • Strong financial performance has continued into early 2021 • Business volumes continue to be impacted by lockdowns • Focus on managing risk and supporting customers • Our diversified business model remains a key strength • Stro
Slide 25: Appendix
4 Section Appendix 25
Slide 26: KPI summary
Secure Trust Bank PLC 2020 Year End Results KPI summary Appendix Key Performance Indicator FY 2020 FY 2019 Key Performance Indicator FY 2020 FY 2019 EPS (Basic) 87.0 168.3 Cost of risk 2.1% 1.4% Return on Average Assets 0.6% 1.2% Cost of funding* 1.8% 2.0% Return on Average Equity 6.1% 12.8% Total c
Slide 27: Important notice
Secure Trust Bank PLC 2020 Year End Results Important notice Appendix This presentation and the information, statements This document contains forward looking statements with respect to the business, strategy and plans of the Group and its current goals and expectations relating to and opinions in i
Slide 28: Q&A
Secure Trust Bank PLC 2020 Year End Results Q&A 28