Secure Trust Bank PLC up to ‘hold’ for Peel Hunt after stronger-than-expected
Underlying profit before tax came in at £5.8mln while loan balances fell by only 3% thanks to weighting on real estate
PLC () was upgraded to ‘hold’ from ‘reduce’ by Peel Hunt after stronger-than-expected half-year results.
The target price was also raised to 799p from 752p since the bank showed “good resilience” having remained profitable in the face of challenging economic conditions.
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Underlying profit before tax came in at £5.8mln while loan balances fell by only 3% thanks to weighting on real estate, topping forecasts.
The cost of risk of 2.9% was higher than that reported by other UK banks covered by the broker, reflecting the portfolio mix.
Analysts upped earnings per share (EPS) estimates by 30% to 40.6p for 2020, by 67% to 78.0p for 2021 and by 64% to 176.5p for 2022, due in particular to higher forecasts of future loan balances and strong net interest margin expectations.
“Significant risks remain for all UK banks, but for now the share price fall appears to have adequately discounted actual financial performance together with a cautious view of future developments,” Peel Hunt concluded.
Shares slid 6% to 642p on Monday morning.
Read More: Secure Trust Bank PLC up to ‘hold’ for Peel Hunt after stronger-than-expected