OSB Group delivers 'strong' performance in September quarter

Specialist lender and retail savings provider OSB Group said in a trading update on Thursday that it delivered a “strong” financial and operating performance in the three months ended 30 September.

Organic originations totalled £1.1bn for the period, up 46% from £0.7bn in the equivalent period in 2020.

Underlying and statutory net loans increased by 8% in the nine months to 30 September 2021, to £20.6bn and £20.8bn, respectively.

The group said it had updated the forward-looking macroeconomic scenarios used in its IFRS 9 models, leading to further impairment provisions release in the period, while three months-plus arrears balances remained “broadly stable”.

OSB said it was on track to deliver underlying net loan book growth of 10% and an underlying net interest margin of about 270 basis points for 2021.

The full year underlying cost-to-income ratio was now expected to be “broadly flat” to the first half.

“I am delighted with the performance of the group in the period, which further demonstrates the resilience of our business model and strong risk management capabilities,” said chief executive officer Andy Golding.

“Our lending and savings franchises performed well, and whilst we continue to control lending in our more cyclical businesses, we are seeing good demand in our buy-to-let and residential segments, building the pipeline for 2022.

“We updated the forward-looking macroeconomic scenarios used in our IFRS 9 models to reflect the improved economic outlook, which together with the broadly stable credit performance of our loan book led to a further provisions release in the period.”

Golding said the company was continuing to review its capital position as it awaited more clarity on how the UK would adopt the capital rules under Basel 3.1.

“In October, the Group took further steps to optimise its capital stack by retiring its legacy AT1 securities and issuing £150m of AT1 securities from the holding company at a coupon of 6%, further demonstrating the Group’s attractiveness and its excellent capital markets capabilities.

“We remain mindful of uncertainty in the outlook for the UK economy, however, demand in housing and rental markets remains strong and the group is well positioned to continue to deliver attractive and sustainable returns for shareholders across the cycle.”

At 0928 GMT, shares in OSB Group were up 3.5% at 515p.