OneSavings Bank profit rises amid loan book growth

(Sharecast News) - OneSavings Bank reported a rise in interim profit on Wednesday ahead of its merger with rival Charter Court Financial, as the loan book grew amid high demand from its core market segment.
In the six months to the end of June, underlying pre-tax profit increased 6% to £96.9m as the net loan book grew 10% to £9.9bn, driven by 13% growth in gross organic origination to £1.6bn.

OSB said its commercial and residential offerings experienced "exceptionally strong" growth during the period. "However, in light of the current macroeconomic outlook and our disciplined approach to lending, we tightened its underwriting criteria, especially in bridging and residential development finance, to protect the quality of the book," it said.

Including the exceptional costs of the recommended combination with Charter Court, statutory pre-tax profit was broadly flat at £91m.

The net interest margin came in at 278 basis points, down from 301 basis points in the first half of last year, mostly due to the changing mix of the loan book despite broadly stable asset pricing.

Return on equity slipped to 23% from 26% and OSB lifted its interim dividend by 14% to 4.9p a share.

Chief executive officer 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.

"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."