Miton UK Microcap Trust plc (LON:MINI) Co-fund manager, Gervais Williams caught up with DirectorsTalk for an exclusive interview and was asked for his views on Secure Trust Bank.
DirectorsTalk asked: Secure Trust Bank (LON:STB) is a well-funded specialist lender in the UK. Their Q3 trading update was positive overall, growing new business lending 15% and the customer deposit book, how do you see their progress and their plans going forward?
Gervais William’s noted:
“It’s interesting, financials tend to be lowly valued as a sector. You can buy big companies, yielding 5%, 6%, 7%, sometimes 8% or 9% percent yields in the FTSE 100 in the financial service sector. So, it’s a sector which is overlooked anyway; it’s a bit complicated and so some people don’t like it.
Secure Trust is a bank, but most particularly, it’s a very well-funded bank. It’s had a Capital Markets Day recently, and at that, it just outlined just how strong its position is: the tangible assets on the balance sheet, the ability to put those to work to generate returns. Yet, its valuation, being a microcap, is standing at about a third of tangible asset value; very, very low valuations versus the prospects. Shore Capital have just issued a note and referred to ‘trebling your money’. Now, it doesn’t guarantee it’s going to be trebled, but that’s their view.
So, coming back to it, these kinds of companies, financials, particularly small microcap financials, are very overlooked, and therefore, they have this disproportionate upside potential. That’s what we’re trying to access, and again, as I say, Secure Trust is well-positioned for the future.
Secure Trust Bank (LON:STB) is a British retail and commercial banking group listed on the London Stock Exchange, where it is a constituent of the Main Market.
