Slide 1: OSB Group 2021 interim results
OSB Group 2021 interim results 19 August 2021 OSB GROUP PLC – Private and Confidential
Slide 2: Record half-yearly results
Record half-yearly results • Underlying profit before tax up 62% to a record £253m (H1 2020: £156m) • Net interest margin improved to 268bps (H1 2020: 250bps) • Underlying return on equity of 24% (H1 2020: 18%) Record results • Underlying net loan book increased 6% in the period to £20.3bn supported
Slide 3: Financial highlights - underlying
Financial highlights - underlying Gross new lending Net loan book Net interest margin Cost to income ratio The Board has declared a 16% 6% 18bps (1)pts dividend of 4.9 pence per share £2.5bn £20.3bn for the period, 268bps 26% £2.1bn 25% representing 1/3 of £19.0bn 250bps the total 2020 dividend, in
Slide 4: Who we are and what we do
Who we are and what we do Our purpose is to help our customers, colleagues and communities prosper. We care about our stakeholders. Statutory net Statutory retail Statutory cost to loans to deposits income ratio Specialist customers Sophisticated Unique lending funding H1 2021: £17.1bn operating H1
Slide 5: Leading complementary brand propositions
Leading complementary brand propositions To support achieving our vision we offer a unique breadth of complementary yet differentiated lending propositions to our customers. ‘Off the peg’ ‘Tailored’ ‘Bespoke’ If the case fits the policy then it will We can make adjustments to our Unique to each case
Slide 6: Attractive underlying return on equity
Attractive underlying return on equity 1. Record half-yearly underlying profit before tax 2. Loan book growth at stronger margins 2.68% Underlying PBT (£m) 300 400 3 2.50% Underlying NII (£m) Underlying NIM (%) 300 200 2 253 200 299 100 267 1 156 H1 2021 100 0 underlying 0 0 H1 2020 H1 2021 RoE of 2
Slide 7: Excellent results for the period
Excellent results for the period 1 Underlying P&L Underlying net interest income grew by 12% to £299m, primarily reflecting growth in the loan H1 2021 H1 2020 Change book and a lower cost of retail funds £m £m £m % Underlying gain on sale of £2.3m related to the Net interest income 299.0 266.8 32.2
Slide 8: Strong, secure balance sheet
Strong, secure balance sheet H1 2021 FY 2020 Change Underlying net loan book grew by 6% £m £m £m % supported by £2.5bn of organic Lending originations in the period Underlying loans and advances to customers 20,254 19,021 1,233 6 Impairment provisions (94) (111) 17 15 Customer deposits reached £17.1
Slide 9: Improvement in underlying NIM
Improvement in underlying NIM Components of change in NIM 268 bps 250 bps H1 2020 Base rate H2 2020 Lower cost of Lower liquidity Other H1 2021 lag/liability retail funds management Underlying NIM improved to 268bps in the first half of 2021 from 250bps in the prior period, primarily due to a lower
Slide 10: Release of impairment provisions
Release of impairment provisions Expected credit losses £m Statutory impairment credit of £14.6m included: • £24.4m of provision release due to: (14.0) o improved outlook led to less severe 111.0 1.2 3.2 3.4 94.4 (10.4) forward-looking macroeconomic scenarios being used in the Group’s IFRS 9 models
Slide 11: Strong capital base
Strong capital base Exceptionally strong CET1 and total capital ratios of 18.7% as at 1.6% the end of June 2021, benefiting (0.7)% from capital generation from (0.3)% (0.2)% profitability in the period 18.7% 18.3% FY 2020 Profit for the period Loan book growth Amortisation of FV ECL relief H1 2021 u
Slide 12: Components of Group capital
Components of Group capital Capital resources and requirements as a percentage of RWAs 18.7% Capital requirements shown are as at 30 June. They include standard regulatory buffers (CCB, CCyB) for illustrative 1.2% 2 purposes The Pillar 2a requirement of 1.4% of RWAs includes a static 13.9 % 13.9 % i
Slide 13: Capital management framework
Capital management framework Focused on shareholder value creation • Primary objective is to hold sufficient, but not excessive levels of regulatory capital to support the Group’s stated strategy Regulatory capital • BOE preferred resolution strategy is single point of entry bail-in at the group par
Slide 14: Our award-winning lending franchises
Our award-winning lending franchises Recovery in originations in the first half of 2021 Encouraged by volumes and quality of new applications we are seeing in Buy- OSB CCFS to-Let and Residential sub-segments 4 Originations £m 28 68 Recently reintroduced products in our 299 core sub-segments with ri
Slide 15: Sophisticated funding model
Sophisticated funding model The combined Group remains predominantly retail funded with £17.1bn of Retail savings complemented by diversified funding retail deposits, up 3% in the first six months of 2021. sources: Attract Retain Satisfy We continue to attract We retain a very high High quality of c
Slide 16: Summary and outlook
Summary and outlook Returning to our key messages from today: • Strong financial performance due to lower cost of retail funds and a release of provisions • Reintroduction of products in our core sub-segments in Q3 with risk appetite closer to pre- pandemic level, building the Group’s pipeline, prin
Slide 17: OSB Group 2021 interim results - Appendices
OSB Group 2021 interim results - Appendices 19 August 2021 OSB GROUP PLC – Private and Confidential 17
Slide 18: Financial highlights - statutory
Financial highlights - statutory Gross new lending Net loan book Net interest margin Cost to income ratio 16% 6% 19bps 3pts £2.5bn £20.4bn £2.1bn £19.2bn 236bps 31% 28% 217bps H1 2020 H1 2021 H1 2020 H1 2021 H1 2020 H1 2021 FY 2020 H1 2021 Profit before tax Return on equity Basic EPS (pence per shar
Slide 19: Strong statutory results
Strong statutory results Statutory P&L Change Net interest income grew 13% to H1 2021 H1 2020 £m £m £m % £265.3m due to reduction in the cost of retail funds Net interest income 265.3 233.8 31.5 13 Fair value gain/(loss) on financial instruments 16.1 (12.1) 28.2 233 Fair value gain of £16.1m on Grou
Slide 20: OSB segment results – BTL/SME
OSB segment results – BTL/SME Average book LTV remains low at 67% (FY 2020: 67%) with 3.4% of loans by value with LTVs exceeding 90% (FY 2020: 2.9%) and average new origination LTV of 73% (H1 2020: 71%). 1. Gross loan book 2. Net interest income 10000 150 Gross loan book income (£m) Net interest 100
Slide 21: OSB segment results – Residential
OSB segment results – Residential Average book LTV remains low at 51% (FY 2020: 54%) with only 0.9% of loans by value with LTVs exceeding 90% (FY 2020: 1.6%) and average origination LTV reduced to 48% (H1 2020: 69%). 1. Gross loan book 2. Net interest income 2000 50 Gross loan book income (£m) Net i
Slide 22: CCFS segment results – BTL sub-segment
CCFS segment results – BTL sub-segment Average book LTV remains low at 69% (FY 2020: 69%), average origination LTV was 74% (H1 2020: 73%). 1. Gross loan book 2. Net interest income 6000 80 Gross loan book income (£m) Net interest 60 5,878 (£m) 3000 5,292 40 56 67 20 0 0 FY 2020 H1 2021 H1 2020 H1 20
Slide 23: CCFS segment results – Residential sub-segment
CCFS segment results – Residential sub-segment Average book LTV remains low at 61% (FY 2020: 62%), average origination LTV was 65% (H1 2020: 71%). 1. Gross loan book 2. Net interest income 3000 40 Gross loan book income (£m) Net interest 2000 (£m) 20 38 1000 2,386 2,472 34 0 0 FY 2020 H1 2021 H1 202
Slide 24: OSB segment results – BTL/SME sub-segments
OSB segment results – BTL/SME sub-segments 1. Buy-to-Let 2. Semi-commercial/Commercial 9000 • 900 Gross loan book Gross loan book 6000 • 600 (£m) 8,045 8,583 (£m) 3000 • 300 822 802 0 • 0 FY 2020 H1 2021 FY 2020 H1 2021 • The weighted average interest coverage ratio (ICR) was 197% during • Weighted
Slide 25: OSB segment results – Residential sub-segments
OSB segment results – Residential sub-segments 1. First charge mortgages 2. Second charge mortgages 2000 300 Gross loan book Gross loan book 1500 200 295 (£m) 1000 1,661 1,807 (£m) 100 261 500 0 0 FY 2020 H1 2021 FY 2020 H1 2021 3. Funding lines • First charge gross loan book increased by 9% largely
Slide 26: CCFS segment results – Bridging
CCFS segment results – Bridging The Group continued to control volumes with limited products at restricted lending criteria and higher pricing than pre-pandemic. 1. Gross loan book 2. Net interest income Gross loan book 100 income (£m) Net interest 5 (£m) 50 106 7 76 3 0 0 FY 2020 H1 2021 H1 2020 H1
Slide 27: CCFS segment results – Second charge
CCFS segment results – Second charge Significant lending policy restrictions remained in place as a result of the pandemic. 1. Gross loan book 2. Net interest income 200 4 Gross loan book income (£m) 150 Net interest 198 (£m) 100 171 2 4 3 2 50 0 0 FY 2020 H1 2021 H1 2020 H1 2021 RWA as % Gross asse
Slide 28: Updated forward-looking macroeconomic scenarios
Updated forward-looking macroeconomic scenarios Scenario % Probability Year end Year end Year end Scenario Economic measure weighting % 2021 2022 2023 GDP 6.8 5.6 2.0 Base case 40 Unemployment rate 5.8 4.9 4.5 House price growth 0.2 (4.9) 0.2 GDP 8.4 7.3 2.4 Upside 30 Unemployment rate 4.8 4.3 4.0 H
Slide 29: This document should be read in conjunction with RNS documents
This document should be read in conjunction with the documents distributed by OSB GROUP PLC (OSBG) through the Regulatory News Service (RNS). This document is not audited and contains certain forward-looking statements with respect to the business, strategy and plans of OSBG, its current goals, beli