Banks have been in the spotlight for all the wrong reasons lately – shutting down accounts, penalising savers, losing customer trust. Solihull-based Secure Trust Bank strives to be different. Under ambitious chief executive David Creadie, the bank defines its mission as helping consumers and businesses to fulfil their ambitions.
In a world awash with flowery but meaningless corporate gobbledegook, Secure Trust’s ethos is reassuringly simple. And it is backed by hard graft and consistent service across four main areas of lending – goods and services, cars, professional property and business.
The first arm is all about helping shops to offer credit, largely interest-free, to their customers. Secure Trust works with more than 1,500 retailers, including Watches of Switzerland and furniture giant DFS. Creadie also supplies all the Premier League clubs with finance so they can offer season ticket deals to fans. And with some London clubs charging well over £1,000 for a single season of games, supporters need all the help they can muster.
Not so long ago, Secure Trust focused on costly loans for hard-pressed shoppers. Now, the bank tends towards interest-free credit, generally offered to more affluent consumers, who are less susceptible to economic pressures. Bad debts are lower, credit facilities are higher and Secure Trust is expanding at a fair clip, increasing lending by more than £1 billion last year alone, while remaining prudent about the customers it takes on.
Secure Trust also supplies finance to nearly 500 car dealers and brokers so they can offer deals to motorists in search of second-hand vehicles.
Again, business is brisk. The bank offers cutting-edge technology that allows loans to be made swiftly and efficiently and new business more than doubled last year. On the property front, Creadie is keen to distinguish his business from other buy-to-let mortgage lenders. His bank specialises in lending to individuals and small firms that own four or five properties, each with several flats. These are experienced property hands, borrowing around £10 million on average.
But Secure Trust takes a conservative approach to lending so bad debts are minimal. The bank supplies credit to small businesses too, generally backed by assets such as invoices. Typical customers include food processors and manufacturers which supply supermarkets and may have to wait weeks or months before invoices are settled.
The bank advances up to 90 per cent of the funds up-front, so firms have access to the working capital they need. Across the group, net lending rose 17 per cent to more than £3 billion in the first quarter of 2023, with further growth expected throughout the year.
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Loans are largely funded by deposits and here too Secure Trust is expanding, attracting more than £2.5 billion of savings in the first quarter of 2023 and on track to deliver more of the same through the year. Savings rates are generous and customers are responding with their wallets. Secure Trust shares have been hit hard by macro-economic worries, more than halving in value to £5.56 since last August. The price is a poor reflection of current trading and future prospects.
Interim figures, out this week, should prove encouraging. Secure Trust is a minnow compared to other banks, valued on the stock market at just £107 million. But it has more than 1.2 million customers and Creadie is confident of delivering growth. He took the helm in 2021, has made some canny moves to date and won support among City analysts. Brokers forecast a 13 per cent increase in profits to £44 million this year, rising to £53 million in 2024. Dividends are pretty decent too, with 43p pencilled in for 2023, rising to more than 50p next year.
Midas verdict: Secure Trust shares were more than £12 last summer. Now they are just £5.56, even though the business has grown, costs have been streamlined and the outlook is bright. Banks may be unloved right now but Secure Trust is a rather different animal and David Creadie is determined to make his mark. The shares are a buy and the 7.5 per cent dividend yield is an added attraction.
Traded on: Main market Ticker: STB Contact: securetrustbank.com or 0121 693 9100
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