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One Savings Bank

OneSavings Bank PLC Strong set of results for the six months ended 30 June 2019

OneSavings Bank PLC (LON:OSB), the specialist lending and retail savings group, has announced today another strong set of results for the six months ended 30 June 2019.

Financial highlights

  • Underlying profit before tax1 increased 6% to £96.9m (H1 2018: £91.8m) and statutory profit before tax remained broadly flat at £91.0m (H1 2018: £91.8m)
  • Net loan book growth of 10%, driven by 13% growth in gross organic origination to £1,635m (H1 2018: £1,444m)
  • Continued focus on cost discipline and efficiency alongside strong income growth delivered a cost to income ratio2 of 28% (H1 2018: 27%)
  • Net interest margin (‘NIM’)3 of 278bps (H1 2018: 301bps)
  • Loan loss ratio4 of 12bps (H1 2018: 11bps)
  • Fully-loaded Common Equity Tier 1 (‘CET1’) capital ratio strong at 13.0% (FY 2018: 13.3%)
  • Underlying basic earnings per share (‘EPS’) of 29.0p5, up 5% (H1 2018: 27.5p) and statutory basic earnings per share down 7% to 25.5p (H1 2018: 27.5p)
  • Return on equity6 of 23% (H1 2018: 26%)
  • Interim dividend of 4.9p per share, up 14% (H1 2018: 4.3p)7 

Commenting on the results, Group CEO, Andy Golding said:

“I am delighted that OneSavings Bank has delivered strong performance in the first half of 2019. Lending volumes were driven by 13% growth in organic originations with high demand across our core market segments. We saw good opportunities in the professional Buy-to-Let segment and our more specialist businesses, including InterBay Commercial and bespoke residential, flourished in the first six months of the year. This supported 6% growth in underlying profit before tax to £96.9m and a strong return on equity of 23%.

In July we successfully completed the inaugural issuance of our Canterbury Finance RMBS programme, securitising £500m of organically originated mortgages, adding further diversification to our funding and paving the way for future optimisation of our funding model. Our retail funding franchise had an excellent six months with nearly 30,000 new customers joining the Bank.

NIM decreased in the first half, primarily due to the changing mix of the loan book despite broadly stable asset pricing. The mix of the loan book continued to change as the higher yielding back book refinanced onto front book pricing. The impact of this mix effect has now largely run its course, assuming current mortgage pricing, cost of funds and swap spreads continue.

Our core market segments remain attractive and we have confidence in continuing to deliver growth in our net loan book. Despite ongoing uncertainty surrounding Brexit, given the growth already achieved this year and considering the current strong pipeline and application levels in the third quarter to date, we now expect to deliver high-teens net loan book growth in 2019 at attractive margins. We continue to invest in the business and we will maintain a strong focus on cost efficiency and control.

The recommended all-share combination between OneSavings Bank and Charter Court Financial Services Group plc (‘CCFS’) received shareholder approval from OSB and CCFS’s respective shareholders on 6 June 2019 and an unconditional clearance from the Competition and Markets Authority on 30 July 2019. As a consequence of the combination we are unable to provide detailed guidance for the financial year ahead.

OneSavings Bank is exceptionally well-placed to continue to generate attractive returns for our shareholders, regardless of potential political scenarios that may take place and we look to the future with confidence.”

Key metrics

 H1 2019H1 2018
Total assets (£bn)11.69.7
Net loan book (£bn)9.98.1
Loan to deposit ratio8 (%)9190
3 months+ arrears9 (%)1.51.3
Customer net promoter score10+64+60