Secure Trust Bank Plc · LSE:STB
Secure Trust Bank — Investor Day (November 2024)
39 slides from Secure Trust Bank's investor day presentation, Nov 13, 2024
Slide 1: Capital Markets Event
Capital Markets Event 13 November 2024
Slide 2: Important Notice
Important Notice The basis of this presentation: Forward looking statements: This presentation has been prepared by Secure Trust Bank PLC (STB) solely for This presentation contains forward-looking statements about the business, strategy and information. It is not an offer or solicitation of an offe
Slide 3: Introduction
Introduction David McCreadie Chief Executive Officer
Slide 4: Focused specialist lender
Focused specialist lender Growth and cost levers being pulled to deliver financial targets Excellent growth Continued delivery £4 billion net lending potential in large of operational ambition will support an addressable markets cost efficiencies attractive return on capital 4 Introduction Commercia
Slide 5: 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% Increase Annual cost c.£4bn in consumer
Slide 6: Group Overview
Group Overview Where Commercial Finance fits in the Group Consumer Business Savings Finance Finance Business Retail Vehicle Real Estate Commercial Consumer Unit Finance Finance Finance Finance Deposits Branding Balances (FY 2023) £1,223m £467m £1,244m £381m £2,872m Growth since end 2020 +86% +92% +1
Slide 7: Commercial Finance
Commercial Finance Well positioned for continued profitable growth and attractive returns Specialist team with Significant growth Highly scalable growth track record of delivering potential in large opportunity and efficient profitable growth with addressable market operating model service-led appro
Slide 8: Commercial Finance
Commercial Finance A trusted funding partner
Slide 9: Setting the scene
Setting the scene What we will talk about today 41 Yrs experience 29 Yrs experience 34 Yrs experience 25 Yrs experience John Bevan Sean Powell James Hodkinson Will Airey Managing Director, STB Commercial Finance National Sales Director, STB Commercial Finance Chief Operating Officer, STB Commercial
Slide 10: Proven track record for growth
Proven track record for growth Scalable business with efficient specialist team Significant Loan Book Growth (£m) 500.0 50 400.0 40 Covid 300.0 30 FTE £m 200.0 20 100.0 10 Gross balance sheet Net balance sheet - - FTE 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Source: Internal data 10 Introdu
Slide 11: Highly collaborative model
Highly collaborative model With a platform for growth and strong returns Lending structure Asset Based Lending Receivables Inventory Other £5m to £50m exposure - Average facility c.£20m Stock finance, retail sector and floating charge Property, cash flow and Government Schemes Collaborative operatin
Slide 12: Addressable market of c.£21bn
Addressable market of c.£21bn Established business but with significant growth opportunity Top 15 lenders (excl. High street banks - 2024*) 2,500 c.34,000 businesses 2,000 currently using ABL facilities* £m 1,500 1,000 STB have provided nearly £20bn of funding to over 250 UK businesses over the last
Slide 13: Commercial Finance – Optimised for Growth
Commercial Finance – Optimised for Growth Multiple drivers of attractive returns Minimising Maximising attrition / Extend new business client life People Maximising Minimise recurring income impairment 13 Introduction Commercial Finance Conclusion and Q&A Management Biographies Secure Trust Bank PLC
Slide 14: Commercial Finance
Commercial Finance Well positioned for continued profitable growth and attractive returns Strong and experienced Collaborative led solutions ensure Consistent growth, built on management team strong credit stewardship established business model High touch, bespoke Proven track record supported relat
Slide 15: Maximising new business
Maximising new business Sean Powell National Sales Director
Slide 16: Proposition
Proposition Leading on service Full product offering Tailored solutions Return Taking the time to truly understand High returns reflect our service Receivables the customer’s needs led approach Real Estate Knowledge and expertise 100% RWA Treatment - Pillar 1 Trusted funding partner with a Income mi
Slide 17: Target market
Target market A clear path for growth Market Profile • S olution not cost led UK trading companies Sector Agnostic £5 - £50m Facility Size • C omplex and evolving scenarios • P artnership and advisory role Event Led Private Equity / seen as integral Service led refinance Financial Sponsors • E arly
Slide 18: Case study
Case study “We are thrilled to have Secure Trust Bank’s support in the successful STB recently provided an inventory led facility to support Modella Capital in their acquisition of Hobbycraft and continued acquisition of Hobbycraft, the largest arts and craft retailer in the UK. support for the busi
Slide 19: Track record of income growth
Track record of income growth Capitalising on our expertise and reputation for delivery New business Average Facility Size £10.6m 2020 102 % Growth over 3yrs 2023 £21.5m Average Yr 1 Net £269k 2020 184% 2023 £764k Income Growth over 3yrs 19 Introduction Commercial Finance Conclusion and Q&A Manageme
Slide 20: Route to market
Route to market A trusted funding partner Source of business 30% Advisory Advisory Relationships and Deal team network recommendations approach 65% Private Equity 5% Direct Expertise Robust conversion rates 82% offer to client 20 Introduction Commercial Finance Conclusion and Q&A Management Biograph
Slide 21: Opportunity
Opportunity Significant potential for growth UK ABL Deal Activity (£5-£50m Facility Size) 2022 - H1 24 Competitive Partnerships Private Equity / advantage Financial Sponsors Debt funds STB 4% £5-50m facility size Nurture existing relationships Syndications Tailored Solution xpand network E –1 0% pen
Slide 22: Relationship-led drives recurring revenue
Relationship-led drives recurring revenue James Hodkinson Chief Operating Officer
Slide 23: Benefits of relationship model
Benefits of relationship model Expert at in-life management • Specialist firm in automotive sector • Brand name retailer of scale model products • Leading manufacturer of Ladders and Platforms in the UK • Faced supply chain challenges post COVID • Client since Q1 2022 • Client since 2019 • STB funde
Slide 24: Relationship model enhances client retention
Relationship model enhances client retention Retention drives recurring income Key reasons why clients leave: Facility no longer required Event driven e.g. Private equity exit Average client life is 5 years Insolvency 24 Introduction Commercial Finance Conclusion and Q&A Management Biographies Secur
Slide 25: Consistent high levels of customer satisfaction
Consistent high levels of customer satisfaction Customer survey results 2021-2024 “As a business the facility works very well and 2021 Survey results 2022 Survey results enables us to make better business decisions knowing we have STB in our corner. 93% 97% 86% All in all, you continue to Weighted 7
Slide 26: Client retention drives recurring income growth
Client retention drives recurring income growth The portfolio endowment effect £2.0 £7.5m £1.75 Total £1.50 HY24 £1.25 £m £1.0 £0.75 42 % CAGR in income over 8 years £0.50 £0.25 2016 £0 £137k 2016 2017 2018 2019 2020 2021 2022 2023 2024 Forecast Example of client on-boarded in 2016 26 Introduction C
Slide 27: Case study: BM Steel
Case study STB have supported BM Steel through some challenging times to help their £25m Facility limit owners to achieve a successful exit • Steel Stockholder “S ince securing the initial • Relationship began in 2018 • Company faced significant challenges during COVID and relied on additional suppo
Slide 28: Minimising Impairment
Minimising Impairment Will Airey Head of Risk
Slide 29: Specialist underwriting
Specialist underwriting Expert structuring Sector agnostic Expert credit partnership on each • Approx. 100 years combined transaction Expert professional experience on every deal advisors • Largest debtor exposure Experienced <2% of total portfolio in-house recoveries team • Access to real time clie
Slide 30: Strategies to protect the balance sheet
Strategies to protect the balance sheet Exit strategies agreed upfront Wind back Collect back Refinance exposure the debt Private equity Accelerated Other or shareholder Trade Sale asset sales injection 30 Introduction Commercial Finance Conclusion and Q&A Management Biographies Secure Trust Bank PL
Slide 31: Case study - Successful exit
Case study - Successful exit Client operated within the home improvement sector £29m Asset backed lending facility £17m Receivables Owned by Suppressed market demand, Early issue identification & strategy financial sponsor causing eventual business failure agreement with sponsor £11m Inventory Succe
Slide 32: Cost of risk
Cost of risk Excellent 10 year track record 10.0 8.0 Cost of risk 6.0 average 4.0 0.49% 2.3% 2.0 1.7% 0.4% 0.5% 0.0 0.1% 0.2% 0.0% 0.0% -0.1% 0.0% -2.0 2015 2016 2017 2018 2019 2020 2021 2022 2023 H1 24 Risk Aware Robust Facility Seasoned Deep Relationships culture structures Professionals 32 Introd
Slide 33: Commercial Finance
Commercial Finance Well positioned for continued profitable growth and attractive returns Strong and experienced Collaborative led solutions ensure Consistent growth, built on management team strong credit stewardship established business model High touch, bespoke Proven track record supported relat
Slide 34: Conclusion
Conclusion David McCreadie Chief Executive Officer
Slide 35: Excellent growth potential in our specialist markets
Excellent growth potential in our specialist markets Moving towards our £4bn loan book ambition Commercial Finance Secure Trust Bank Significant growth potential in large addressable market Excellent growth potential in large addressable markets Highly scalable growth opportunity and efficient opera
Slide 36: Questions & Answers
Questions & Answers 0) SecureTrust Bank Group
Slide 37: Management Biographies
0) SecureTrus Bank Group Management Biographies
Slide 38: Management biographies
Management biographies David McCreadie John Bevan Sean Powell James Hodkinson Will Airey Chief Executive Officer, Managing Director, National Sales Director, Chief Operating Officer, Head of Risk, Secure Trust Bank Group STB Commercial Finance STB Commercial Finance STB Commercial Finance STB Commer
Slide 39: Thanks
Thanks = Oscegrst Bank ons ae