Osb Group Plc · LSE:OSB
Osb — OneSavings Bank — FY2016 Earnings Presentation
17 slides from Osb's earnings presentation, Mar 16, 2017
Slide 1: 2016 Results
Achieving consistent and sustainable growth and returns with high quality assets 2016 Results 16 March 2017 Specialist Personal Flexible
Slide 2: Performance highlights
Performance highlights Gross organic lending Loans and advances £5.9bn £5.1bn 28% 26% Improved by £1.8bn £2.3bn +16% +28% 2% points 2015 2016 2014 2016 2015 2015 Cost:income ratio Underlying PBT £137.0m 26% 27% £105.9m +1% point +29% 2015 2016 2015 2016 Underlying basic EPS Return on equity 32% 29%
Slide 3: Delivering on our financial objectives 2014 - 2016
Delivering on our financial objectives 2014 - 20161 2016 result Funding / Liquidity strength Maintain loan to deposit ratio of <100% 90%2 Cost discipline Cost:income ratio of <35% 27% Capital strength CRD IV CET1 ratio >10% 13.3% 3 Shareholder returns Return on equity of >25% 29% Dividend policy Pay
Slide 4: Key Financial Indicators
Key Financial Indicators 1 Improved underlying profitability… 2 …driven by profitable new lending… 180 220 3.09% 3.14% 3.5% Underlying profit before tax (£m) 160 200 2.91% 3.0% 140 180 160 2.5% 120 2.11% 100 140 2.0% 80 120 1.5% 60 137 100 207 2 106 80 170 1.0% 40 70 0.6% 20 60 125 0.5% 30 40 0 71 0
Slide 5: Income growth drives underlying profit up 29%
Income growth drives underlying profit up 29% Change £m 2016 2015 • Underlying PBT up 29% £m % reflecting strong balance sheet Net interest income 206.6 169.8 36.8 22 growth and continued focus on cost efficiency and discipline Other income / (expense) (5.2) (7.3) 2.1 (29) Total income 201.4 162.5 3
Slide 6: Underlying loan book growth 20%
Underlying loan book growth 20% excluding impact of Rochester 1 disposal Change £m 2016 2015 £m % • Underlying loan book Lending growth of 16% supported by Net customer loans 5,939 5,135 804 16 28% growth in organic origination and portfolio Gross customer loans 5,964 5,162 802 16 purchases for £181
Slide 7: Segmental results – BTL/SME
Segmental results – BTL/SME • LTVs remain low at 69% (2015: 66%) with only 0.4% of loans exceeding 90% LTV (2015: 1%) 1 Gross loan book 2 Net interest income 4,000 140 3,500 120 Gross loan book (£m) Net interest income (£m) 3,000 100 2,500 80 2,000 4,095 132.0 60 1,500 3,106 95.2 1,000 2,065 40 500
Slide 8: Segmental results – BTL/SME sub-segments
Segmental results – BTL/SME sub-segments 1 Buy-to-Let (£m) 2 Semi-commercial/Commercial (£m) 4,000 300 3,500 250 3,000 Gross loan book (£m) Gross loan book (£m) 2,500 200 2,000 150 3,613 268 1,500 2,711 100 230 1,000 50 500 0 0 2015 2016 2015 2016 • Average interest rate coverage (ICR) was 171% for
Slide 9: Segmental results – Residential
Segmental results – Residential • LTVs remain low at 58% (2015: 56%) with only 3% of loans by value with LTVs exceeding 90% (2015: 2%) • Average loan to incomes (LTIs) for residential mortgage lending reduced with 2.6% of new loans having LTIs over 4.5 in 2016 compared to 3.3% in 2015, significantly
Slide 10: Segmental Results – Residential sub-segments
Segmental Results – Residential sub-segments 1 First charge mortgages 2 Second charge mortgages 600 1,500 500 1,250 Gross loan book (£m) Gross loan book (£m) 400 1,000 300 750 1,433 518 1,322 487 500 200 250 100 0 0 2015 2016 2015 2016 3 Residential funding lines 4 Summary 100 90 • First charge new
Slide 11: Strong balance sheet
Strong balance sheet • Pillar 2a requirement of 1.2% of risk weighted 15.1% 15% assets 1.8% • The weighted average LTV of the mortgage 12% book remained low at 63% as at 31 9% December 2016, with an average LTV of 69% on new origination in the year. 6% 13.3% • Portfolio arrears rate, excluding legac
Slide 12: Lending customer franchise
Lending customer franchise 1 Organic lending growth 2 Strong performance Only 91 loans in 3m+ arrears (£8.6m), out of >29,000 loans 2,500 £2.3bn (£5.9bn) originated since the Bank’s creation in 2011 (2015: 382 Gross loan book (£m) 2,000 £1.5bn 48 loans, £5.1m) 334 1,500 £1.2bn Limited company Buy-to
Slide 13: Sustainable funding model
Sustainable funding model 1 Growth 2 Recommendation and retention Our stable retail funding franchise continues to grow, Retention rates on maturing Bonds and ISAs remain ensuring long term, stable funding exceptionally strong at 87% We continue to lead on customer satisfaction with our excellent Ne
Slide 14: Summary
Summary 2016 was another year of strong growth: 28% increase in organic origination to £2.3bn Strong financials: we have yet again achieved or exceeded all of the financial objectives set at IPO Strong credit profile: low arrears and LTVs Excellent customer results: customer NPS at 59%, retention at
Slide 15: Confident outlook
Confident outlook Confidence in our core BTL market remains strong 2017: we expect to deliver net loan growth in the mid teens through organic lending…… ……and keep NIM and cost to income ratio broadly flat to 2016 We anticipate maintaining a CET1 level at a minimum of 12% going forward Dividend poli
Slide 16: Appendix: Balance Sheet
Appendix: Balance Sheet Group 2016 2015 Group 2016 2015 £m £m £m £m Assets Liabilities Cash in hand 0.4 0.4 Amounts owed to retail depositors 5,952.4 5,363.8 Loans and advances to credit Amounts owed to credit institutions 417.8 354.7 101.7 1.5 institutions Investment securities 141.7 393.4 Amounts
Slide 17: Disclaimer
Disclaimer Important Message No undertaking, representation, warranty or other assurance, express or implied, is given or made by or on behalf of any member of OneSavings Bank plc ("OSB") and its subsidiaries (together, the "OSB Group") or any shareholders, directors, officers, partners, employees,