Secure Trust Bank Plc · LSE:STB
Secure Trust Bank — FY2016 Earnings Presentation
37 slides from Secure Trust Bank's earnings presentation, Mar 23, 2017
Slide 1: 2016 Year End Results
2016 YEAR END RESULTS 23rd March 2017
Slide 2: Introduction & Business Review
SECTION INTRODUCTION 1 & BUSINESS REVIEW PAUL LYNAM | Chief Executive Officer
Slide 3: FY 2016 Highlights
FY 2016 HIGHLIGHTS A year of tremendous progress delivers record profits Strong returns and shareholder value Well positioned to accelerate future growth Total PBT (inc. gain on disposal of ELG) £144.3m Sale of Everyday Loans Group (ELG) successfully Total continuing underlying PBT up 23.2% complete
Slide 4: Sale of ELG
SALE OF ELG Broadens the range of strategic options available and accelerates organic growth in Motor, Retail and SME lending books Transaction completed as planned in April 2016 Substantial increase in capital resources and opportunity to invest in accelerating growth in Generated a final post tax
Slide 5: Premium Listing on LSE
PREMIUM LISTING ON LSE Successfully completed in October 2016 as planned Realised our planned progression to be admitted Board changes: onto the premium section of the LSE to support • Lord Forsyth takes on the role of Non-Executive further strategic options Chairman from Sir Henry Angest who remain
Slide 6: 2017 Developments
2017 DEVELOPMENTS In addition to the ELG disposal the following changes will impact 2017 results Closure of Current Account – Q3 2016 Cessation of Personal Lending originations Closure in response to fee free accounts being – Q1 2017 offered by high street lenders Economic uptick has driven a signif
Slide 7: 2017 Developments
2017 DEVELOPMENTS Further product and systems investment will deliver a more flexible and efficient customer proposition Launch of Residential Mortgage lending Deposits platform – Summer 2017 – Q1 2017 Provides a wider range of retail funding options Part of long term diversification strategy to bal
Slide 8: Strategic Priorities
STRATEGIC PRIORITIES 1 ORGANIC GROWTH 2 DIVERSIFICATION 3 M&A ACTIVITY 8
Slide 9: Strategy
STRATEGY Very significant shareholder value created 300 280 £214m capital generated since AIM flotation 260 Consistently strong dividend payment pattern 240 220 Capital remains strong with Common 200 Equity Tier 1 ratio of 17.4% 180 Leverage ratio of 14.1% well above the 160 PRA minimum 140 £m 120 E
Slide 10: Continued Growth in Diverse Loan Book
CONTINUED GROWTH IN DIVERSE LOAN BOOK Business Finance Consumer Finance 48% of lending assets (FY 2015 49%) 48% of lending assets (FY 2015 48%) Personal Lending Real Estate Finance Asset Finance Commercial Finance Retail Lending Motor Finance (exc. ELG) Fixed rate, fixed term Prime credit portfolio
Slide 11: Sustainable Positive Progress
SUSTAINABLE POSITIVE PROGRESS Continuing Operations FY 2016 FY 2015 Total Lending Assets £m £m £m Gross interest income 130.0 100.5 1400 Interest expense (26.3) (21.6) Net interest income 103.7 78.9 1200 Impairment losses (27.7) (16.8) Reported PBT 25.0 24.8 1000 Underlying PBT 32.9 26.7 GROWTH 38 8
Slide 12: Customer Feedback and Awards
CUSTOMER FEEDBACK AND AWARDS V12 Deposits Customer feedback from Customer feedback from 4.5 stars (including fixed bond, notice and Deposit accounts) 4.5 stars Very user-friendly site and process. he service provided was secure and efficient T Very quick, very thorough. Easy to use. and enabled a tr
Slide 13: Customer Feedback and Awards
CUSTOMER FEEDBACK AND AWARDS Motor Finance Customer feedback from 4.7 stars They made it all so easy for me – no pressure yet I’ve had no problems at all with this company. very helpful. Everything has been straightforward and I’m very Not only were my enquiries re early settlements happy to be a cu
Slide 14: Business to Business Feedback
BUSINESS TO BUSINESS FEEDBACK ‘‘ ‘‘ Motor Finance Commercial Finance Moneyway offer a good range of products that suit Hippo’s While achieving growth is a key priority for any business, wide demographic of customer, from near prime applicants managing such rapid expansion represents a considerable t
Slide 15: Business to Business Feedback
BUSINESS TO BUSINESS FEEDBACK ‘‘ V12 V12 took over our business at short notice when our current provider exited the market and the transition was extremely smooth. Our two teams worked very well together from a strategic level to IT, training and implementation. The result was that the transfer was
Slide 16: Financial Review
SECTION 2 FINANCIAL REVIEW NEERAJ KAPUR | Chief Financial Officer
Slide 17: Summary Income Statement
SUMMARY INCOME STATEMENT Strong growth in income and underlying profit Continuing Operations £m FY 2016 FY 2015 % change 31% increase in net interest income • Strong growth in Consumer lending and new Net interest income 103.7 78.9 31% SME lending businesses Net fee, commission and other income 14.5
Slide 18: Sale of ELG
SALE OF ELG Impact of the sale CONTINUING TOTAL ELG 2016 STB FY 2016 STB FY 2016 Profit & Loss £m Interest income 130.0 11.1 141.1 Interest expense (26.3) – (26.3) Net fee income 14.5 – 14.5 Total revenues 118.2 11.1 129.3 Loan impairment charges (27.7) (2.6) (30.3) Operating expenses (65.5) (6.0) (
Slide 19: KPI Summary
KPI SUMMARY Key Performance Indicator FY 2016 FY 2015 Key Performance Indicator FY 2016 FY 2015 Gross revenue margin 12.9% 15.8% Underlying return on average assets 1.9% 2.2% Cost of funding 2.3% 2.9% Underlying return on average equity 11.9% 15.8% Net interest margin 9.2% 10.6% Underlying return on
Slide 20: Underlying Profit Bridge
UNDERLYING PROFIT BRIDGE Underlying continuing PBT of £32.9m an increase on FY 2015 of £6.2m (23.2%) 40 30 £m 20 10 0 STB Subsidiary Share option Group STB Underlying STB Fair value Share based Group Transformation Main Market Additional STB Reported consolidated scheme recharges and Underlying cont
Slide 21: Income Bridge
INCOME BRIDGE Increase on FY 2015 of £28.9m on a continuing basis £28.9m 160 150 140 130 120 £m 110 100 90 80 70 60 50 FY 2015 Real Estate Asset Commercial Personal Motor Retail Other FY 2016 £117.4m Finance Finance Finance Lending Finance Finance £(1.3)m £146.3m £8.1m £5.4m £3.0m £(6.0)m £7.2m £12.
Slide 22: Income Analysis
INCOME ANALYSIS Income through continuing lending and transactional channels is analysed as follows: FY 2016 FY 2015 KEY £9.3m £5.7m £7.4m £28.4m Real Estate Finance £2.1m £6.5m £20.3m £4.5m Asset Finance £2.4m Commercial Finance £1.6m Personal Lending £7.8m £146.3m £146.3m £117.4m £117.4m Motor Fin
Slide 23: Net Revenue Margin Summary
NET REVENUE MARGIN SUMMARY Net revenue margin and cost of funding on a continuing basis Reduction in net revenue margins is primarily driven by the change in business mix and closure of Current Account The reduction in cost of funding reflects the current market for funding, maturing term deposits b
Slide 24: Costs and Income Analysis
COSTS AND INCOME ANALYSIS Cost to income ratio 54.8% Cost to income ratio 55.4% Period average FTE 519 Period average FTE 649 Increased operating expenses reflect the investments made in infrastructure and people 28.3% growth in needed to drive and operating income support efficiency and growth targ
Slide 25: Balance Sheet Summary
BALANCE SHEET SUMMARY On a continuing basis: FY 2016 FY 2015 FY 2015 FY 2015 £m Continuing Customer loans Discontinued Total Operations up 38% to £1.3bn Operations Cash and balances at central banks 112.0 131.8 Customer numbers – 131.8 Debt securities held to maturity 20.0 3.8 up 42% to 755k – 3.8 L
Slide 26: Lending Bridge
LENDING BRIDGE Increase on FY 2015 (exc. ELG) of £360m (38%) +£360m 1400 1300 1200 1100 1000 900 800 700 £m 600 500 400 300 200 100 0 Reported ELG Continuing Real Estate Asset Commercial Personal Motor Retail DMS and FY 2016 FY 2015 £(114.3)m FY 2015 Finance Finance Finance Lending Finance Finance O
Slide 27: Customer Loan Progression
CUSTOMER LOAN PROGRESSION Growth of 38% on FY 2015 excluding ELG 1400 1300 1200 1100 1000 900 800 700 600 £m 500 400 300 200 100 0 FY 2013 FY 2014 FY 2015 FY 2016 Personal Lending ELG Motor Finance Retail Finance Real Estate Finance Asset Finance Commercial Finance DMS and Other 27
Slide 28: Deposit Progression
DEPOSIT PROGRESSION Increase on FY 2015 of £118m, weighted towards term deposits* 1200 1100 1000 900 800 66.2% 57.0% 700 £m 600 500 54.4% 400 44.3% 300 39.2% 32.5% 200 39.4% 47.4% 100 0 8.3% 6.2% 3.8% 1.3% FY 2013 FY 2014 FY 2015 FY 2016 *Presented on a total group basis. Sight Notice Term 28
Slide 29: Summary
SUMMARY Proven strategy continues to generate momentum 38% loan book increase over FY 2015 (exc. ELG) 23% increase in underlying PBT Continuing to deliver strong PBT and shareholder value since AIM flotation in 2011, total shareholder return is 247%, including dividends Prudent balance sheet and ris
Slide 30: 2017 Outlook
2017 OUTLOOK Strategic priorities to deliver Managing competitive, economic further growth and regulatory challenges Organic growth Strong capital and liquidity base, enhanced • Continuing to invest in the quality of our people through the ELG sale, will protect the Bank and systems to ensure sustai
Slide 31: Appendices
APPENDICES
Slide 32: Business Finance
BUSINESS FINANCE 700 600 500 £m 400 Business Finance FY 2014 FY 2015 FY 2016 300 Revenue £m 2.6 24.3 40.8 200 Impairments £m – (0.3) (0.9) 100 Loan book £m 143.3 468.0 631.0 0 FY FY FY 2014 2015 2016 Loan book 32
Slide 33: Business Finance
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 prudent based lending solutions including commercial ass
Slide 34: Consumer Finance
CONSUMER FINANCE 800 700 600 Consumer Finance FY 2014 FY 2015 FY 2016* 500 Revenue £m 90.2 115.4 99.6 £m 400 Impairments £m (15.0) (24.8) (31.0) 300 Net loan book 342.1 460.4 627.6 (exc. ELG) £m 200 ELG loan book £m 93.9 114.3 – 100 Net loan book £m 436.0 574.7 627.6 0 FY FY FY 2014 2015 2016 ELG lo
Slide 35: Consumer Finance
CONSUMER FINANCE Business overview – Business overview – Business overview – Personal Lending Retail Motor Closed to new business following Targeting Prime Credit Portfolio Prime lending product offering announcement in January 2017 Customers greater participation across the Advances were from £1,00
Slide 36: Strategy Continues to Deliver
STRATEGY CONTINUES TO DELIVER Maximise shareholder value To maximise shareholder value through To protect the reputation, integrity To ensure that the fair treatment strong lending growth by delivering and sustainability of the Bank for all of customers is central to corporate great customer outcome
Slide 37: Important notice
Important notice This presentation and the information, statements The Group’s actual future results may differ materially from and 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