OSB Group posts 'disappointing' 1H numbers

OSB Group posted a "disappointing" set of first half results.

"I am disappointed by the results which reflect the adverse EIR adjustment announced in early July, against a backdrop of otherwise strong operational and financial performance in the first half," chief executive officer, Andy Golding, said.

"[...] The Group continued to increase share in its core lending sub-segments, having ranked fourth largest BTL lender in the UK in terms of gross new lending in 2022.8 We also saw strong demand from savers and consistently high retention rates, as we continued to offer attractively priced products."

For the half, the lender reported a 73% drop in statutory profit before tax to reach £76.7m, for a 72% decline in basic earnings per share to 12.8p.

On an underlying basis, first half profit before tax reduced from £294.1m to £116.1m, chiefly as a result of an adverse effective interest rate adjustment of £180.7m.

Excluding EIR, statutory net loan book growth came in at 5% and net interest margins at 322 basis points.

If not for EIR, net interest margins would have improved by 31bp from their year earlier level to 333bp.

The EX-EIR return on equity meanwhile was pegged at 21% with the CET1 capital buffer ending the period at 16.9%.

Balances in arrears were broadly stable at 1.2% of the loan book as at June end.

OSB reiterated guidance for full-year underlying net loan book growth of roughly 7% with net interest margins seen broadly flat when compared to 2022 for a full-year outcome of about 2.6%.

Golding nevertheless said that the lender was aware of the "uncertain" macroeconomic environment, as well as the potential impact of the higher cost of living and borrowing on the mortgage market and customer affordability.

The lender declared an interim dividend of 10.2p per share.