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Equity Bottom-Up

We are adjusting our forecasts for Secure Trust Bank (STB) to better reflect the deteriorating economic outlook in the UK. We have raised our FY22 forecast for PBT from continuing operations by 1%, but reduce it by 15% in FY23. Lower loan growth in 2023 is the key driver; we now estimate growth of 13% in FY22 and 7% in FY23. The impairment charge rate for FY23 has been upped from 1.3% to 1.4%. We have also raised our run-off cost estimates in discontinued operations by £2.6m and £2.0m for FY22 and FY23. Despite our lower FY23 forecasts, the estimated ROE of 9% in both years shows strong business resilience given the cyclical nature of the banking sector. We have maintained a dividend payout ratio of 25% in line with to company policy. STB’s capital position remains comfortable with a CET1 ratio of 14.2% in FY22 and 13.7% in FY23.

We are adjusting our forecasts for Secure Trust Bank (STB) to better reflect the deteriorating economic outlook in the UK. We have raised our FY22 forecast for PBT from continuing operations by 1%, but reduce it by 15% in FY23. Lower loan growth in 2023 is the key driver; we now estimate growth of 13% in FY22 and 7% in FY23. The impairment charge rate for FY23 has been upped from 1.3% to 1.4%. We have also raised our run-off cost estimates in discontinued operations by £2.6m and £2.0m for FY22 and FY23. Despite our lower FY23 forecasts, the estimated ROE of 9% in both years shows strong business resilience given the cyclical nature of the banking sector. We have maintained a dividend payout ratio of 25% in line with to company policy. STB’s capital position remains comfortable with a CET1 ratio of 14.2% in FY22 and 13.7% in FY23.

Secure Trust Bank - Revised forecasts reflect macro concerns

In its Q322 trading update, Secure Trust Bank (STB) said business has been trading in line with management expectations. Loan demand has remained strong in its consumer finance niches. However, the bank says it is slowing growth, tightening lending criteria and increasing its focus on operational efficiency to reflect macroeconomic uncertainty. Total loans in Q322 grew 21.5% y-o-y to £2,813m; we are forecasting 15.8% increase for FY22. Asset quality has remained good while the net interest margin remained stable at 5.7% in the face of rising interest rates.

In its Q322 trading update, Secure Trust Bank (STB) said business has been trading in line with management expectations. Loan demand has remained strong in its consumer finance niches. However, the bank says it is slowing growth, tightening lending criteria and increasing its focus on operational efficiency to reflect macroeconomic uncertainty. Total loans in Q322 grew 21.5% y-o-y to £2,813m; we are forecasting 15.8% increase for FY22. Asset quality has remained good while the net interest margin remained stable at 5.7% in the face of rising interest rates.

Secure Trust Bank - Prudence despite resilience

Secure Trust Bank (STB) reported H122 PBT of £24.7m, including an £8.1m gain on the disposal of its Debt Managers Services (DMS) unit. Reported return on equity (ROE) was 12.5%, and the underlying ROE was 8.3%. Pre-provision operating profit was up 22% y o y driven by a 23% increase in core loans. Underlying earnings were down 52% y-o-y as impairments returned to a normal level (annualised 1.4% of loans in H122) after the unusually large COVID-19 related loan reversals in H121. STB’s capital position remains strong (CET1 14.0%), but we expect the deteriorating UK economic outlook to lead STB to pare down its balance sheet expansion. We are reducing our forecasts to reflect this slowdown: we have cut EPS in FY22e by 6% and FY23e by 12%. Despite the cut, momentum is still good; we forecast a 13% increase in loans in FY23 with a 29% increase in underlying earnings and 11.6% ROE. We have reduced our fair value (FV) from 2,491p to 2,407p, as we have cut our sustainable ROE assumption from 13.5% to 13% due to macro concerns.

Secure Trust Bank (STB) reported H122 PBT of £24.7m, including an £8.1m gain on the disposal of its Debt Managers Services (DMS) unit. Reported return on equity (ROE) was 12.5%, and the underlying ROE was 8.3%. Pre-provision operating profit was up 22% y o y driven by a 23% increase in core loans. Underlying earnings were down 52% y-o-y as impairments returned to a normal level (annualised 1.4% of loans in H122) after the unusually large COVID-19 related loan reversals in H121. STB’s capital position remains strong (CET1 14.0%), but we expect the deteriorating UK economic outlook to lead STB to pare down its balance sheet expansion. We are reducing our forecasts to reflect this slowdown: we have cut EPS in FY22e by 6% and FY23e by 12%. Despite the cut, momentum is still good; we forecast a 13% increase in loans in FY23 with a 29% increase in underlying earnings and 11.6% ROE. We have reduced our fair value (FV) from 2,491p to 2,407p, as we have cut our sustainable ROE assumption from 13.5% to 13% due to macro concerns.

Secure Trust Bank - Solid interim results

Secure Trust Bank disclosed in its Q122 trading update that balance sheet momentum is strong and the business remains on track to deliver on management’s medium-term growth targets. Loan and core loan growth were 4.5% and 4.8%, respectively, in the three months to 31 March. We are forecasting 17% and 18% growth for the full year. Deposit growth was similarly fast paced with a 4.1% increase in the three months and on track for our forecast of 17% for FY21. We note, however, that the economic slowdown may lead us to ease some of our balance sheet growth forecasts later this year.

Secure Trust Bank disclosed in its Q122 trading update that balance sheet momentum is strong and the business remains on track to deliver on management’s medium-term growth targets. Loan and core loan growth were 4.5% and 4.8%, respectively, in the three months to 31 March. We are forecasting 17% and 18% growth for the full year. Deposit growth was similarly fast paced with a 4.1% increase in the three months and on track for our forecast of 17% for FY21. We note, however, that the economic slowdown may lead us to ease some of our balance sheet growth forecasts later this year.

Secure Trust Bank - Strong loan momentum in Q122

Secure Trust Bank (STB) reported FY21 PBT of £56.0m (£57.4m normalised, we forecast £52.7m) and a ROE of 15.9%. The beat was driven by provision reversions: the loan loss ratio was 0.1% versus 0.3%. The numbers otherwise were in line with our expectations. Revenue was flat year-on-year, but pre-provisions profit fell by 18% since costs rose 12% as STB invested for growth. We are forecasting 15–17% annual loan growth for FY22–23 as management sees good risk-adjusted opportunities despite the inflation uncertainty. This is backed by a strong capital base (CET1 14.5%) and good returns (forecast ROE of 10.2% and 12.3% for FY22e and FY23e). We have increased our fair value to 2,491p/share (from 2,234p) mainly due to rolling the model forward one year.

Secure Trust Bank (STB) reported FY21 PBT of £56.0m (£57.4m normalised, we forecast £52.7m) and a ROE of 15.9%. The beat was driven by provision reversions: the loan loss ratio was 0.1% versus 0.3%. The numbers otherwise were in line with our expectations. Revenue was flat year-on-year, but pre-provisions profit fell by 18% since costs rose 12% as STB invested for growth. We are forecasting 15–17% annual loan growth for FY22–23 as management sees good risk-adjusted opportunities despite the inflation uncertainty. This is backed by a strong capital base (CET1 14.5%) and good returns (forecast ROE of 10.2% and 12.3% for FY22e and FY23e). We have increased our fair value to 2,491p/share (from 2,234p) mainly due to rolling the model forward one year.

Secure Trust Bank - FY21 earnings beat with momentum

United Kingdom

Arbuthnot Banking Group PLC, together with its subsidiaries, provides various banking and financial products and services in the United Kingdom. It operates through three segments: Retail Banking, UK Private banking, and Group Centre. The company provides private banking services, such as current accounts, deposit accounts, loans, overdrafts, and foreign exchange services; wealth planning services comprising estate and tax planning, pensions, and wealth preservation and generation; and discretionary investment management services, including asset management and developing tailored investment strategies. It also offers retail banking products and services, such as savings and current accounts; consumer finance products in motor finance, retail finance, and unsecured personal lending areas; and SME?s funding for asset finance, invoice finance, and real estate finance. In addition, the company offers commercial banking services comprising financing and cash transaction requirements of SMEs, as well as household cash management and insurance services. Further, the company offers leasing, debt collection, and property rental and management services. Arbuthnot Banking Group PLC was founded in 1833 and is headquartered in London, the United Kingdom.

Metro Bank PLC provides a full range of commercial banking services for retail and institutional customers. The Bank offers services such as current accounts, mortgages, safe deposit boxes, cash management, private banking, and debit and credit cards. Metro Bank conducts its business in the United Kingdom.

Bank of Georgia Group PLC operates as a bank. The Bank services includes retail banking and payment services, corporate and investment banking, and wealth management operations solutions. Bank of Georgia Group serves customers in the United Kingdom, Belarus, and Georgia.

Mortgage Advice Bureau (Holdings) PLC, through its subsidiaries, operates as mortgage broker. The company offers face to face and telephone advice for customers. It also provides lifestyle and income protection cover. The company was incorporated in 2000 and is based in the Derby, United Kingdom.

Mortgage Advice Bureau (Holdings) (MAB1 LN)

Provident Financial plc is a financial services group specialising in the provision of personal credit products for consumers in the United Kingdom non standard lending market. The Company's Consumer Credit division provides small, unsecured loans, which they collect in weekly installments. The Company's Credit Cards business is operated through Vanquis Bank.

India Capital Growth Fund Limited is a close-ended equity mutual fund launched and managed by Ocean Dial Asset Management Limited. The fund invests in the public equity markets of India. It seeks to invest in stocks of companies operating across diversified sectors. The fund primarily invests in stocks of mid and small cap companies. It employs fundamental analysis with a bottom-up stock selection approach and top-down thematic overlay, focusing on such factors as structural liquidity, cyclical liquidity, earnings momentum, strong management, sound financials, and competitive advantage to create its portfolio. The fund benchmarks the performance of its portfolio against the BSE Mid-Cap Index. It conducts in-house research to make its investments. India Capital Growth Fund Limited was formed on November 11, 2005 and is domiciled in Guernsey.

H&T Group plc primarily provides pawnbroking services in the United Kingdom. It operates in six segments: Pawnbroking, Gold Purchasing, Retail, Pawnbroking Scrap, Personal Loans, and Other Services. The company also offers gold purchasing, jewelry retail, cheque cashing, unsecured lending, buyback, foreign exchange, money transfer, and prepaid debit card services. As of June 30, 2016, it operated 186 H&T Pawnbrokers stores and est1897 second hand jewelry retail stores. The company was incorporated in 2004 and is headquartered in Sutton, the United Kingdom.

Mercia Asset Management PLC is a venture capital firm specializing in incubation, seed EIS, and early stage investments. It invests in technology focusing on sectors such as digital entertainment, gaming, software, electronics and hardware, advanced materials, engineering and specialist manufacturing, and life sciences. The firm invests in Midlands and the North of the United Kingdom. It makes equity investments in companies either directly or via its funds under management and can also provides investments in form of debt or convertible securities. The firm seeks board position in its portfolio companies. Mercia Technologies PLC was founded in April, 2014 and is based in Henley-in-Arden, United Kingdom with an additional office in Edinburgh, United Kingdom.

Record PLC is a specialist currency management firm. The Company provides specialist currency management to institutions and corporations, pension plans, and other institutional investors. ... More

Weiss Korea Opportunity Fund Ltd.is a closed-ended equity mutual fund launched and managed by Weiss Asset Management LP. The fund invests in the public equity markets of South Korea. It seeks to invest in stocks of companies operating across diversified sectors. The fund primarily invests in value stocks and preferred shares of companies. It focuses on such factors as dividend yield, liquidity, and common shares weighting to create its portfolio. The fund benchmarks the performance of its portfolio against the MSCI Korea 25/50 Net Total Return Index. Weiss Korea Opportunity Fund Ltd. was formed on April 12, 2013 and is domiciled in Guernsey.

Weiss Korea Opportunity Fund Ltd (WKOF LN)

Penns Woods Bancorp, Inc. is a bank holding company of Jersey Shore State Bank. The Company provides a variety of commercial and consumer banking services to individual, business, public, and institutional customers.  Penns Woods operates a network of offices in north central Pennsylvania.

Public Financial Holdings Ltd, through its subsidiaries, operates in the deposit taking, personal and commercial lending, credit card, mortgage financing, stockbroking, and property investment businesses.  The Company also provides financing to purchasers of taxis and public light buses, leases taxis, and trades taxi cabs and taxi licenses.

Ames National Corporation is a multi-bank holding corporation.  The Banks offer commercial banking, personal banking, agricultural lending and deposit account services along with trust services and Internet banking services.  Ames affiliates have locations throughout the state of Iowa.

PT Bank Capital Indonesia Tbk provides commercial banking services.

PT Bank Neo Commerce Tbk is a full service commercial bank based in Indonesia.

PT Bank China Construction Bank Indonesia Tbk provides banking and related services. The Bank also provides interbank transaction services that includes import/export transactions, funds transfer, foreign currency transactions, and bank guarantees.

Bank China Construction Bank Indonesia (MCOR IJ)

National Bankshares, Inc. is a holding company for the National Bank of Blacksburg.  The Bank attracts deposits from the general public and use these funds to originate commercial, real estate, and consumer loans.  National Bankshares operates in Montgomery, Giles, Carroll,Tazewell, and Grayson counties in Virginia, and Mercer county West Virginia.

THE TOCHIGI BANK, LTD. is a regional bank based in Tochigi.  The Bank provides commercial banking services including deposits, loans, foreign exchange transactions, and securities investments.  The Tochigi Bank also provides financial services such as mutual funds sales, credit cards, leasing, and clerical works for banks' daily operations.

Tsukuba Bank, Ltd. provides commercial and personal banking services. The Bank offers personal and business checking, savings accounts, mortgages, issues credit card, and business loans for customers. Tsukuba Bank serves customers in Japan.

PT. Bank Agris Tbk provide financing services. The Bank offers investment products, working capital loans, consumer credit, product trade finance and remittance services.

Secure Trust Bank PLC accepts deposits and offers retail banking services.  The Company offers automobile and retail point of sale financing, and personal unsecured lending.

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Secure Trust Bank (STB LN)

Secure Trust Bank - Revised forecasts reflect macro concerns

We are adjusting our forecasts for Secure Trust Bank (STB) to better reflect the deteriorating economic outlook in the UK. We have raised our FY22...

Edison Investment Research

Secure Trust Bank - Prudence despite resilience

In its Q322 trading update, Secure Trust Bank (STB) said business has been trading in line with management expectations. Loan demand has remained...

Edison Investment Research

Secure Trust Bank - Solid interim results

Secure Trust Bank (STB) reported H122 PBT of £24.7m, including an £8.1m gain on the disposal of its Debt Managers Services (DMS) unit. Reported...

Edison Investment Research

Secure Trust Bank - Strong loan momentum in Q122

Secure Trust Bank disclosed in its Q122 trading update that balance sheet momentum is strong and the business remains on track to deliver on...

Edison Investment Research

Secure Trust Bank - FY21 earnings beat with momentum

Secure Trust Bank (STB) reported FY21 PBT of £56.0m (£57.4m normalised, we forecast £52.7m) and a ROE of 15.9%. The beat was driven by provision...

Edison Investment Research

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