Osb Group Plc · LSE:OSB
Osb — FY2022 Earnings Presentation
30 slides from Osb's earnings presentation, Mar 16, 2023
Slide 1: OSB Group 2022 preliminary results
A trusted partner OSB Group 2022 preliminary results 16 March 2023
Slide 2: Outstanding performance in 2022
Outstanding performance in 2022 Strong credit Strong capital Financial Our lending Outlook for and risk and liquidity performance franchise 2023 management position • The Group achieved a • Strong demand across the • Strong credit performance • CET1 strong at 18.3%, with • Overall mortgage market re
Slide 3: Financial highlights - statutory
Financial highlights - statutory Gross new lending Net loan book Net interest margin Cost to income ratio 29% 12% 25bps 1pt £5.8bn £23.6bn 278bps 253bps 27% £21.1bn 26% £4.5bn 2021 2022 2021 2022 2021 2022 2021 2022 Return on equity Profit before tax Basic EPS (pence per share) CET1 ratio 1pt 14% 19
Slide 4: Financial highlights - underlying
Financial highlights - underlying Net loan book Net interest margin Cost to income ratio The ordinary dividend for 12% 21bps 1pt 2022 of 30.5 pence per share representing a 30% £23.5bn 303bps 25% payout ratio. 24% £20.9bn 282bps Special dividend of £50m, equivalent to 11.7 pence per share. 2021 2022
Slide 5: Attractive underlying return on equity
Attractive underlying return on equity 1. Record underlying profit before tax 2. NII growth with strengthening NIM 2.82% 3.03% Underlying NIM (%) 600 2.47% 3 Underlying NII (£m) 800 Underlying PBT (£m) 400 600 2 346 522 591 400 200 534 651 769 1 200 0 0 0 2020 2021 2022 2020 2021 2022 2022 underlyin
Slide 6: Excellent results for 2022
Excellent results for 2022 1 Underlying P&L Change • Underlying NII up 18% reflecting the growth in the loan 2022 2021 £m £m book and the improved net interest margin £m % Net interest income 769.1 650.5 118.6 18 • Fair value gains on financial instruments of £48.5m Net fair value gains on financial
Slide 7: Strong, secure balance sheet
Strong, secure balance sheet 2022 2021 Change Lending £m £m £m % Statutory net loans and advances to customers 23,613 21,080 2,533 12 Expected credit losses (130) (102) (28) 27 • Statutory and underlying net loan book growth of 12% supported by organic originations of Funding and liquidity £5.8bn, u
Slide 8: Improvement in underlying NIM
Improvement in underlying NIM 303 282 bps bps 2021 Retail funding Lending Other 2022 spread spread • Underlying NIM improved by 21bps to 303bps, due primarily to the benefit of base rate rises • There were delays in the market passing base rate rises on to savers in full resulting in a lower cost of
Slide 9: Impairment provisions
Impairment provisions • The expected credit loss provision increased by £28.5m. The main components of this change Expected credit losses £m were: 7.0 o £10.3m decrease due to house price 15.2 appreciation 130.0 13.3 o £8.3m decrease primarily due to pandemic- 11.6 related modelling and staging enha
Slide 10: Strong capital base
Strong capital base CET1 ratio The Group’s strategy and proven capital generation capability can support both strong net loan book growth and further capital returns 4.8% to shareholders, including a progressive ordinary dividend per share. • 12% net loan book growth in 2022 (2.8)% • Ordinary divide
Slide 11: Our award-winning lending franchises
Our award-winning lending franchises Recovery in originations in 2022 218 701 Other • Strong demand across the Group’s core Buy-to-Let and Residential sub-segments 447 1,325 Residential • Increased originations in commercial and semi-commercial Originations £m 1,116 as the Group launched a new set o
Slide 12: Sophisticated funding platform
Sophisticated funding platform The Group remains predominantly retail funded with £19.8bn of retail deposits, up 13% compared to 2021 Retail savings complemented by increasingly Attract Retain Satisfy diversified funding sources: More than doubled the Retained a very high High quality 301 number of
Slide 13: Delivering the now and delivering the future
Delivering the now and delivering the future Investing in Delivering for customers today Keeping the bank future ready • Honoured our offered and pre-offered pipeline of new • Process enhancements to ensure we remain well- business through the disruption caused by September’s Supporting placed to me
Slide 14: Summary and outlook
Summary and outlook Our key messages from today Outstanding performance in 2022 Outlook • The Group saw strong financial and operational • Overall mortgage market expected to be subdued in 2023 performance with record profit for the year, £5.8bn of new • We are building a healthy pipeline of new bus
Slide 15: 2022 preliminary results appendices
2022 preliminary results appendices 16 March 2023 15
Slide 16: Components of Group capital
Components of Group capital Capital resources and requirements as a percentage of RWAs • Capital resources and requirements1 are as at 31 December 2022. The requirements include standard regulatory buffers (CCB, CCyB1) for illustrative purposes 19.7% • The Pillar 2a requirement of 1.5% of RWAs inclu
Slide 17: Strong statutory results
Strong statutory results Reconciliation of underlying to statutory PBT £m Statutory P&L 2022 2021 Change 591 (59) £m £m £m % 10 (4) (8) 1 Net interest income 709.9 587.6 122.3 21 532 Fair value gain on financial Underlying PBT Amortisation of FV loss on fin Admin expenses Integration costs Other Sta
Slide 18: Who we are and what we do
Who we are and what we do Specialist lending Sophisticated funding Unique operating business platform model Underlying retail deposits Underlying cost to income ratio Underlying net loans to customers 2022: £19.8bn (2021: £17.5bn) 2022: 25% (2021: 24%) 2022: £23.5bn (2021: £20.9bn) 22 securitisation
Slide 19: Leading complementary brand propositions
Leading complementary brand propositions ‘Off the peg’ ‘Tailored’ ‘Bespoke’ Gross underlying loan book Gross loan book Gross loan book 2022: £10.4bn 2022: £12.1bn 2022: £1.2bn 2021: £9.0bn 2021: £11.0bn 2021: £1.1bn If the case fits the policy then it will work well We can make adjustments to our Un
Slide 20: Our ESG framework
Our ESG framework In 2022, the Group continued to formalise its approach to ESG matters through the development of the Group’s ESG Strategy and ESG Operating Framework. These are now embedded across the business and will support us along the path to achieving our target of net zero greenhouse gas em
Slide 21: OSB segment results: BTL/SME
OSB segment results Average book LTV1 reduced to 63% (2021: 65%) with only BTL/SME 3.2% of loans by value with LTVs exceeding 90% (2021: 2.5%) and average new origination LTV of 73% (2021: 73%). 1. Gross loan book 2. Net interest income 400 10000 income (£m) Gross loan Net interest book (£m) 300 500
Slide 22: OSB segment results: Residential
OSB segment results Average book LTV1 reduced to 45% (2021: 48%) with only Residential 0.8% of loans by value with LTVs exceeding 90% (2021: 0.8%) and average origination LTV increased to 64% (2021: 50%). 1. Gross loan book 2. Net interest income 3,000 80 income (£m) Gross loan Net interest book (£m
Slide 23: CCFS segment results: BTL
CCFS segment results Average book LTV remains low at 66% (2021: 68%), BTL sub-segment average origination LTV was 73% (2021: 74%). 1. Gross loan book 2. Net interest income 8000 200 income (£m) Gross loan Net interest book (£m) 4000 6,302 7,469 100 151 206 0 0 2021 2022 2021 2022 RWA as % of net loa
Slide 24: CCFS segment results: Residential
CCFS segment results Average book LTV reduced to 57% (2021: 59%), Residential sub-segment average origination LTV was unchanged at 66%. 1. Gross loan book 2. Net interest income 3,000 100 income (£m) Gross loan Net interest book (£m) 2,000 2,452 2,671 50 81 96 1,000 0 0 2021 2022 2021 2022 RWA as %
Slide 25: OSB segment results: BTL/SME sub segments
OSB segment results BTL/SME sub segments 1. Buy to let 2. Semi-commercial/commercial The weighted • Weighted average 10,000 average interest 900 book LTV remained coverage ratio (ICR) at 69% Gross loan book Gross loan book was 207% during 2022 (2021: 199%) 600 • Average loan size 8,868 9,755 794 881
Slide 26: OSB segment results: Residential sub-segments
OSB segment results Residential sub-segments 1. First charge mortgages 2. Second charge mortgages 2,000 250 Gross loan book Gross loan book 200 1,500 150 1,896 2,153 225 172 (£m) (£m) 1,000 100 500 50 0 0 2021 2022 2021 2022 3. Funding lines Gross Loans Undrawn commitments • First charge gross loan
Slide 27: CCFS segment results: Bridging
CCFS segment results Continued improvement in bridging products Bridging offering, including a relaunched and rebranded refurbishment product in April 2022 1. Gross loan book 2. Net interest income 150 10 income (£m) Gross loan Net interest book (£m) 100 150 5 50 5 5 56 0 0 2021 2022 2021 2022 RWA a
Slide 28: CCFS segment results: Second charge
CCFS segment results Second charge products were withdrawn in Second charge August 2022 1. Gross loan book 2. Net interest income 200 10 income (£m) Gross loan Net interest book (£m) 150 100 5 154 7 6 50 112 0 0 2021 2022 2021 2022 RWA as % of net loans 41% 41% Gross asset yield 4.5% 5.8% 3. Contrib
Slide 29: Updated forward-looking macroeconomic scenarios
Updated forward-looking macroeconomic scenarios Forecast macroeconomic variables over a five-year period Scenario % Probability Scenario Economic measure Year end 2022 Year end 2023 Year end 2024 Year end 2025 Year end 2026 weighting % GDP 4.3 (0.7) 1.8 2.7 2.1 Unemployment 3.7 4.7 4.2 3.9 3.8 Base
Slide 30: OSB GROUP PLC, Registered in England and Wales
This document should be read in conjunction with any 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, beliefs or opinions, including statements with respect to the b