OSB GROUP PLC – Q3 Trading Update

OSB GROUP PLC: Trading update

Published: 6.11.2024

OSB GROUP PLC

Q3 Trading update

OSB GROUP PLC (OSBG or the Group), the specialist lending and retail savings group, today issues its trading update for the period from 1 July 2024 to date.

Key highlights for the period

The Group maintained its lending discipline with organic originations of £0.9bn in the third quarter of 2024 (Q3 2023: £1.3bn), as demand in our core sub-segments remained in line with previous expectations. Underlying1 and statutory net loans increased by 2% in the nine months to 30 September to £26.3bn (31 December 2023: £25.7bn and £25.8bn, respectively). Our renewed focus on Commercial Mortgages, Bridging Finance and Asset Finance is progressing, with an increase in applications in each of these sub-segments received in the third quarter. We now expect underlying net loan book growth of slightly under 3% for 2024.

Underlying net interest margin guidance is unchanged at 230bps–240bps for 2024 as higher yielding mortgages in the back book roll off to current prevailing spreads and as the market observes slightly elevated fixed term retail deposit pricing. The Group continues to evaluate customer behaviour in the reversion period throughout the fourth quarter and will assess this as part of the usual year-end process. The potential future impact of Precise Buy-to-Let customers spending less time on reversion will reduce significantly over the next two years as these mortgages reach maturity.

The Group continues to focus on cost control with proactive actions to make its business-as-usual cost base more efficient. At the same time, we continue to invest in the digitalisation of our core platform and customer facing propositions. In October the Group launched the first product on its new savings platform to Kent Reliance customers and will expand the range of products available over the coming months. The expected underlying cost to income ratio remains at c.36% for 2024.

Three months plus arrears balances increased by 10bps to 1.7% as at 30 September (30 June 2024: 1.6%) in line with management expectations as long-term fixed rate mortgages mature and transfer to higher prevailing rates. The Group’s secured loan book benefitted from a small impairment release in the third quarter as the Group adopted improved forward-looking macroeconomic scenarios.

Capital and liquidity remain strong and the Group is reviewing the recently published Basel 3.1 capital standards which will be implemented on 1 January 2026. There remain areas of clarification and until these are finalised, our guidance on the impact for the Group at implementation is unchanged at slightly less than two percentage points on the Group’s CET1 ratio which stood at 16.2% at 30 June 2024. The Group has repurchased £32.1m worth of shares under the £50m repurchase programme announced in August.2

Andy Golding, CEO of OSB GROUP PLC, said:

“Looking forward, whilst challenges remain, there are signs of a gradual return of confidence in our core markets and we are seeing increased applications in our more cyclical businesses. The potential impact on the future plans of professional landlords due to the increase in stamp duty on second properties introduced following the recent budget is being monitored. We have a diversified loan book with proven capabilities in multi-property professional Buy-to-Let lending and specialist residential mortgages and continue to invest in our business to ensure it is fit for the future.”

• Underlying refers to results which exclude acquisition-related items arising from the Combination with CCFS
• As at market close on 5 November 2024

Financial calendar for 2025*

* All dates are subject to change

OneSavings Bank (OSB)

OSB originates mortgages via specialist brokers and independent financial advisers through its specialist brands including Kent Reliance for Intermediaries and InterBay Commercial. It is differentiated through its use of highly skilled, bespoke underwriting and efficient operating model.

OSB is predominantly funded by retail savings originated through the long-established Kent Reliance name, which includes online as well as a network of branches in the Southeast of England. Diversification of funding is currently provided by securitisation programmes and the Bank of England’s Term Funding Scheme with additional incentives for SMEs.

Charter Court Financial Services Group (CCFS)

It is differentiated through risk management expertise and automated technology and systems, ensuring efficient processing, strong credit and collateral risk control and speed of product development and innovation. These factors have enabled strong balance sheet growth whilst maintaining high credit quality mortgage assets.

Important disclaimer

Non-IFRS performance measures