OSB GROUP PLC PRELIMINARY RESULTS
OSB GROUP PLC
Released 0700:00 13 March 2025
OSB GROUP PLC
Preliminary results
For the year ended 31 December 2024
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This announcement contains inside information
13 March 2025
Following the Combination with Charter Court Financial Services Group plc (CCFS) on 4 October 2019, this press release includes results on an underlying basis, in addition to the statutory basis, which Management believe provide a more consistent basis for comparing the Group’s results between financial periods. Underlying results exclude acquisition-related items (see the reconciliation in the Financial review). In 2024, the acquisition-related items were fully amortised and therefore, from 2025 the Group’s results will be presented on a statutory basis only.
OSB GROUP PLC (OSBG or the Group), the specialist lending and retail savings group, announces today its results for the year ended 31 December 2024. The Group has also published today its guidance for 2025 and its medium-term aspirations for 2027-29, see below for more details.
Financial and operational highlights
Underlying profit before tax increased by 4% to £442.9m (2023: £426.0m) and statutory profit before tax increased by 12% to £418.1m (2023: £374.3m)
Underlying and statutory net loan book decreased by 2% to £25.1bn (2023: £25.7bn and £25.8bn, respectively) due to the £1.25bn securitisation and deconsolidation transaction in December. The underlying net loan book would have increased by 2.5% since 31 December 2023 excluding this transaction
Underlying and statutory net interest margin (NIM) reduced to 230bps and 221bps (2023: 251bps and 231bps respectively) inclusive of a further adverse EIR adjustment of £15.9m, largely due to lower prevailing spreads to SONIA from mortgages and deposits as products written in prior years reached maturity and the cost of MREL
Underlying and statutory cost to income ratios increased to 37% and 39% (2023: 33% and 36%, respectively) as a result of continued investment in the transformation programme, redundancy costs and the new Bank of England levy. Core costs increased by 3% in the year
Underlying and statutory loan loss ratios were (5)bps and (4)bps, respectively (2023: 20bps) due to improved house price outlook in the updated forward-looking macroeconomic scenarios
Underlying and statutory return on equity of 16% and 15% (2023: 16% and 14%, respectively), broadly stable as higher profit was offset by an increase in the average equity balance
Basic earnings per share (EPS) increased to 82.2 pence and 77.6 pence on an underlying and statutory basis (2023: 75.0 pence and 66.1 pence) due to higher profit and a lower number of shares in issue following the completion of our share repurchase programmes totalling £100m in the year
The Common Equity Tier 1 capital ratio of 16.3% and total capital ratio of 19.7% remained strong (2023: 16.1% and 19.5%, respectively)
A new share repurchase programme of £100m over the next 12 months to commence on 14 March 2025
Total dividend of 33.6 pence per share (2023: 32.0 pence) including a recommended final dividend of 22.9 pence per share, in line with our stated commitment to provide a progressive dividend per share
Andy GoldingGroup CEOsaid
“The results delivered by OSB Group in 2024 demonstrate the strong fundamentals which underpin our business and also the focused and disciplined strategic choices made in the year by the Board and management that will shape the Group’s future.
The Group’s actions are delivering results, with an improved and attractive blended front book margin for new business originated in 2024, and progress with the planned increase in diversification into our well-established higher yielding specialist segments. The Group focused on reducing EIR sensitivity from changes in customer behaviour at product maturity in our Precise Buy-to-Let book. In December we completed a £1.25bn securitisation of Precise Buy-to-Let loans which was derecognised from the Group’s balance sheet and based on observed customer behaviour, we made the decision to reduce the expected time that Precise borrowers spend on the reversion rate from 5 months to 4 months. This led to an adverse EIR adjustment of £15.9m. These actions helped reduce the sensitivity of interest income to a two month reduction in the expected time Precise borrowers spend on the reversion rate to £27m. This is within the business-as-usual levels seen prior to 2023.
2024 marked the second year of our five-year transformation programme, delivery of which will ensure we remain competitive, deliver at scale with cost efficiency and also enhance the experience of dealing with the Group for our customers, our broker partners and our colleagues.
The Group continued to demonstrate strong capital generation and the Board remains committed to returning excess capital to shareholders. The recommended final dividend for 2024 of 22.9 pence per share, together with the interim dividend of 10.7 pence per share, resulted in a progressive total ordinary dividend per share of 33.6 pence, representing a 40% payout ratio. Together with the £100m of share repurchases completed in the year, this represents a total return to shareholders of £226m for the year. In addition, we have announced a further £100m share repurchase programme over the next 12 months commencing on 14 March.
Given our focus on returns we anticipate low single digit loan book growth in 2025 with similar dynamics to those seen in 2024. NIM in 2025 is expected to be c.225bps, as both lending spreads to SONIA and net funding impacts on NIM began to stabilise in the second half of 2024. We anticipate c.£270m of administrative expenses in 2025, as we continue to invest in our transformation programme, with core costs increasing below the rate of inflation. We anticipate a low teens RoTE ratio in 2025 and we will continue to prioritise returns to shareholders with total dividend increasing by 5%. In 2026, we expect broadly similar dynamics.
Today, we also set out our medium-term aspirations building on our actions over the next two years where we will focus on growing across all our segments and in particular increasing origination volumes where yields are strong and sustainable such as commercial lending, asset finance, development finance and bridging.
The Group remains well capitalised, with strong liquidity and a high-quality secured loan book. We remained focused on delivering good outcomes for our stakeholders and strong returns for our shareholders.”
Investor update
Along with the 2024 preliminary results, the Group updates the market with its medium-term aspirations, strengthening its position as the UK’s leading specialist lender.
The Group’s strategy to deliver higher returns is supported by its key strengths
Intermediary strategy – trusted leadership with intermediaries, offering a single point of entry to access the Group’s diversified product range, through its 100+ sales relationship managers with deep product expertise
Deep experience and credit expertise in a range of higher yielding specialist segments - with increasing diversification and ability to grow, delivering strong risk adjusted returns
Structurally increasing operational leverage – focus on delivering cost efficiency and an increasing proportion of colleagues based in our fully integrated subsidiary OSB India
Building our bank for the future – entering the third year of a five-year transformation programme optimising operations for a digital future
Improving the broker and customer experience – combining our successful intermediary lending strategy with our transformation programme to deliver our optimised lending growth plan with a higher yielding, diversified loan book
This will maintain the Group’s position as the number one specialist lender, enabling us to deliver margin expansion, positive cost jaws, improved returns and enhanced distributions to shareholders.
2025 and 2026 will be transition years during which the Group will continue to invest, whilst lower margin mortgages will continue to roll-off. The Group today guides to the following metrics for these years
2025 Guidance 2026 Direction
Net loan book growth Low-single digit Modestly higher than 2025
NIM c.225bps Similar levels to 2025
Administrative expenses c.£270m Modestly higher than 2025
RoTE ratio Low-teens
CET1 ratio 14% target post Basel 3.1
Distributions 5% dividend per share growth per year and commitment to return excess capital
From 2027, with the transformation largely complete, the Group will be set on a trajectory of attractive growth with a higher yielding mix, improved returns and commitment to returning excess capital to shareholders. The Group today provides the following medium-term aspirations
Medium-term aspirations 2027-2029
Net loan book growth Mid-single digit if returns meet our requirements
Loan book diversification Buy-to-Let to comprise ≤ 60% of the loan book whilst all segments to continue to grow
Administrative
expenses Gradually to improve to low 30s% cost to income ratio and positive jaws
RoTE ratio Mid-teens
CET1 ratio 14% target post Basel 3.1
Distributions Progressive dividend per share and commitment to return excess capital
Transformation programme
The Group completed two years of its five-year transformation programme with c.£60m spend to-date, of which 68% was capitalised. The Group expects to spend a further c.£130m until the programme completes in 2027, of which 33% will be capitalised.
Enquiries
OSB GROUP PLC Brunswick Group
Alastair Pate, Investor Relations Robin Wrench/Simone Selzer
t020 7404 5959 t: 020 7404 5959
Results presentation
A Preliminary results webcast presentation for analysts will be held at 8.00am on Thursday 13 March, followed by an Investor update commencing at 10.00am
Both presentations will be webcast and available on the OSB Group website at www.osb.co.uk/investors/results-reports-presentations.
The UK dial in number is 020 3936 2999 and the password is 133425 for the 8.00am Preliminary results webcast. Registration is open immediately.
About OSB GROUP PLC
OneSavings Bank plc (OSB) began trading as a bank on 1 February 2011 and was admitted to the main market of the London Stock Exchange in June 2014 (OSB.L). OSB joined the FTSE 250 index in June 2015. On 4 October 2019, OSB acquired Charter Court Financial Services Group plc (CCFS) and its subsidiary businesses. On 30 November 2020, OSB GROUP PLC became the listed entity and holding company for the OSB Group. The Group provides specialist lending and retail savings and is authorised by the Prudential Regulation Authority, part of the Bank of England, and regulated by the Financial Conduct Authority and Prudential Regulation Authority. The Group reports under two segments, OneSavings Bank and Charter Court Financial Services.
OneSavings Bank (OSB)
OSB primarily targets market sub-sectors that offer high growth potential and attractive risk-adjusted returns in which it can take a leading position and where it has established expertise, platforms and capabilities. These include private rented sector Buy-to-Let, commercial and semi-commercial mortgages, residential development finance, bespoke and specialist residential lending and asset finance.
OSB originates mortgages organically 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, experience-based manual underwriting and efficient operating model.
OSB is predominantly funded by retail savings originated through the long-established Kent Reliance name, which takes deposits online and through a network of branches in the South East 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)
CCFS focuses on providing Buy-to-Let and specialist residential mortgages and retail savings products. It operates through its brands: Precise and Charter Savings Bank.
It is differentiated through risk management expertise and best-of-breed 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.
CCFS is predominantly funded by retail savings originated through its Charter Savings Bank brand. Diversification of funding is currently provided by securitisation programmes and the Bank of England’s Term Funding Scheme with additional incentives for SMEs.
Important disclaimer
This document should be read in conjunction with any other documents or announcements distributed by OSB GROUP PLC (OSBG) through the Regulatory News Service (RNS).
This document is not audited and contains certain forward-looking statements with respect to the business, strategy and plans of OSBG, its current goals, beliefs, intentions, strategies and expectations relating to its future financial condition, performance and results, and ESG ambitions, targets and commitments described herein. Such forward-looking statements include, without limitation, those preceded by, followed by or that include the words ‘targets’, ‘believes’, ‘estimates’, ‘expects’, ‘aims’, ‘intends’, ‘will’, ‘may’, ‘anticipates’, ‘projects’, ‘plans’, ‘forecasts’, ‘outlook’, ‘future’, ‘would’, ‘could’, ‘should’ or similar expressions or negatives thereof but are not the exclusive means of identifying such statements. Statements that are not historical or current facts, including statements about OSBG, its directors’ and/or management’s beliefs and expectations, are forward-looking statements. By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend upon circumstances that may or may not occur in the future that may or may not arise in the future that may or may not affect the future financial condition, performance and results, and ESG ambitions, targets and commitments described herein. Factors that could cause actual business, strategy, plans and/or financial condition, performance and results, and ESG ambitions to differ materially from the business, strategy, plans and/or financial condition, performance and results, and ESG ambitions, targets and commitments described herein.
Accordingly, no reliance may be placed on any forward-looking statement. Neither OSBG, nor any of its directors, officers or employees provides any representation, warranty or assurance that any of these statements or forecasts will come to pass or that any forecast results will be achieved. Any forward-looking statement may be influenced by, among other things: general economic and business conditions in the UK and internationally, including any changes in global trade policies
market related trends and developments
fluctuations in exchange ratesstock marketsinflationdeflationinterest ratesenergy prices and currencies
policies of the Bank of England, the European Central Bank and other G7 central banks
the ability to access sufficient sources of capital, liquidity and funding when required
changes to OSBG’s credit ratings
the ability to derive cost savings
changing demographic developmentsand changing customer behaviourincluding consumer spendingsaving and borrowing habits
changes in customer preferences
changes to borrower or counterparty credit quality
unemployment levels
the ability to attract and retain senior management and other employees
the extent of any future impairment charges or write-downs caused by, but not limited to, depressed asset valuations, market disruptions and illiquid markets
market relating trends and developments
exposure to regulatory scrutiny, legal proceedings, regulatory investigations or complaints
changes in legislation, regulation, taxation, ESG reporting standards, accounting standards or practices, including as a result of the UK’s exit from the EU
regulatory capital or liquidity requirements and similar contingencies outside OSBG’s control
the policies and actions of governmental or regulatory authorities in the UK, the EU or elsewhere including the implementation and interpretation of key legislation and regulation
the ability to identify, assess, manage and monitor the risks faced by the Group
the ability to maintain appropriate levels of provision coverage levels and the ongoing appropriateness of macroeconomic scenarios utilised within IFRS 9 calculations
the impact of outbreaks, epidemics and pandemics or other such events
the ability to executemanage and integrate acquisitionsinvestmentsdivestmentsrestructuringsand strategic transactions
the ability to maintain or obtain regulatory approvals and to satisfy the conditions imposed in respect of regulatory approvals
the ability to attract and retain senior management and other employees
the extent of any future impairment charges or write-downs caused by, but not limited to, depressed asset valuations, market disruptions and illiquid markets
the actions of competitors, including non-bank financial services and lending companies
the success of OSBG in managing the risks of the foregoing
and other risks inherent to the industries and markets in which OSBG operates.
Accordingly, no reliance may be placed on any forward-looking statement. Neither OSBG, nor any of its directors, officers or employees provides any representation, warranty or assurance that any of these statements or forecasts will come to pass or that any forecast results will be achieved. Any forward-looking statement may be influenced by, among other things: general economic and business conditions in the UK and internationally, including any changes in global trade policies
market related trends and developments
fluctuations in exchange ratesstock marketsinflationdeflationinterest ratesenergy prices and currencies
policies of the Bank of England, the European Central Bank and other G7 central banks
the ability to access sufficient sources of capital, liquidity and funding when required
changes to OSBG’s credit ratings
the ability to derive cost savings
changing demographic developmentsand changing customer behaviourincluding consumer spendingsaving and borrowing habits
changes in customer preferences
changes to borrower or counterparty credit quality
unemployment levels
the ability to attract and retain senior management and other employees
the extent of any future impairment charges or write-downs caused by, but