Slide 1: Interim results 2023
Interim results 2023 OSB Group 2023 interim results 10 August 2023
Slide 2: Results for the first half of 2023
Results for the first half of 2023 Strong credit Strong liquidity Financial Our lending and capital Outlook for and risk performance franchise position 2023 management • The Group achieved an • Gross organic lending • Group’s balances over three • Highly liquid with Group LCR • Based on our current
Slide 3: Financial highlights - statutory
Financial highlights - statutory Gross new lending Net loan book Net interest margin Cost to income ratio The Board has declared an interim dividend of 10.2 £24.6bn 280bps 47% pence per share £2.3bn £2.3bn £23.6bn representing 1/3 of the 171bps total 2022 ordinary 25% dividend, in line with the Grou
Slide 4: Financial highlights – underlying and excluding the adverse EIR adjustment
Financial highlights – underlying and excluding the adverse EIR adjustment Net loan book Net interest margin Cost to income ratio The Board has declared an 333bps interim dividend of 10.2 302bps 40% pence per share £24.5bn £23.5bn representing 1/3 of the 203bps 24% 23% total 2022 ordinary dividend,
Slide 5: Attractive underlying fundamentals
Attractive underlying fundamentals 1. Profit before tax 2. NII and NIM 3.02% 3.33% Underlying NIM (%) 400 800 2.68% Underlying NII (£m) 3 2.03% Underlying PBT 600 2 297 294 1 (£m) 200 253 400 461 369 0 200 299 280 117 -1 0 0 -2 H1 2021 H1 2022 H1 2023 H1 2021 H1 2022 H1 2023 H1 2023 Underlying NII U
Slide 6: Results for the first half of 2023
Results for the first half of 2023 1 Underlying P&L • Underlying NII 24% lower with the benefit of loan book Change growth and improving margin more than offset by the H1 2023 H1 2022 adverse EIR adjustment relating to Precise Mortgage £m £m £m % customers spending less time on the higher reversiona
Slide 7: Strong, secure balance sheet
Strong, secure balance sheet H1 2023 FY 2022 Change Lending £m £m £m % Statutory net loans and advances to • Statutory and underlying net loan book growth 24,587 23,613 974 4 customers of 4%, or 5% excluding the EIR adjustment, Expected credit losses (172) (130) (42) 32 supported by strong organic o
Slide 8: Impact of the rapidly changing interest rates on customer behaviour and EIR accounting
Impact of the rapidly changing interest rates on customer behaviour and EIR accounting Average difference between fixed and reversion rates at the • Precise fixed rate products were designed to revert to a rate which was similar to the end of the initial fixed rate term for Precise and Kent Reliance
Slide 9: NIM waterfall
NIM waterfall 333 130 303 bps bps H2 bps Broadly flat to 203 2022 302 bps bps H2 2022 Cost of retail Lending Other H1 2023 Adverse H1 2023 H2 2023 funds spread funding Pre EIR adjustment EIR adjustment • Underlying NIM reduced by 99bps to 203bps versus the first half of 2022, with the benefit of bas
Slide 10: Impairment provisions
Impairment provisions Expected credit losses £m 15.8 0.8 4.5 • The statutory expected credit loss provision 8.4 172.1 increased by £42.1m. The main components of this 12.6 change were: 130.0 o £12.6m increase reflecting £9.7m due to house price moderation as well as the adoption of more severe forwa
Slide 11: Strong capital base
Strong capital base CET1 ratio The Group’s strategy and proven capital generation capability can 2.0% support both strong net loan book growth and further capital returns to shareholders, supported by planned MREL issuance (0.8)% (0.4)% 20.0% • 4% net loan book growth in H1 2023 18.3% (1.4)% (0.8)%
Slide 12: Components of Group capital
Components of Group capital • Capital resources and requirements1 are as at 30 June 2023. The Capital resources and requirements as a percentage of RWAs requirements include standard regulatory buffers (CCB, CCyB1) for illustrative purposes 22.5% 2.0% 1 • The Pillar 2a requirement of 1.5% of RWAs in
Slide 13: Our award-winning lending franchises
Our award-winning lending franchises Resilient originations in H1 2023 218 • Strong demand for the Group’s lending products, 236 520 especially in the first quarter of the year, as Other borrowers took advantage of more attractive 502 Originations £m mortgage rates available at that time 497 Residen
Slide 14: Sophisticated funding platform
Sophisticated funding platform The Group remains predominantly retail funded with £20.7bn of retail deposits, up 5% in the first six months of 2023 Retail savings complemented by increasingly Attract Retain Satisfy diversified funding sources: Continue to attract new Retained a very high High qualit
Slide 15: Summary and outlook
Summary and outlook Our key messages from today H1 2023 performance Outlook • Strong operational performance, however our financial • We remain cognisant of the uncertain macroeconomic results were significantly impacted by the adverse EIR outlook and the potential impact of the higher cost of livin
Slide 16: 2023 interim results appendices
2023 interim results appendices 10 August 2023
Slide 17: Further supporting information in respect of the EIR adjustment
Further supporting information in respect of the EIR adjustment The Bank of England raised the UK’s base rate (BBR) 12 times from the start of The evolution of the Precise EIR asset/liability since the merger and 2022 through to 30 June 2023, as summarised in Table 1 below. The interest the amount r
Slide 18: Strong statutory results
Strong statutory results Reconciliation of underlying to statutory PBT £m Statutory P&L 117 H1 2023 H1 2022 Change (43) 4 £m £m £m % (1) 77 Net interest income 237.5 343.4 (105.9) (31) Underlying PBT Amortisation of FV FV loss on fin Admin expenses Statutory PBT Net fair value (loss)/gain on uplift
Slide 19: 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 H1 2023: £20.7bn (FY 2022: £19.8bn) H1 2023: 40% (H1 2022: 23%) H1 2023: £24.5bn (FY 2022: £23.5bn)
Slide 20: Leading complementary brand propositions
Leading complementary brand propositions ‘Off the peg’ ‘Tailored’ ‘Bespoke’ Gross underlying loan book Gross loan book Gross loan book H1 2023: £10.8bn H1 2023: £12.6bn H1 2023: £1.3bn FY 2022: £10.4bn FY 2022: £12.1bn FY 2022: £1.2bn If the case fits the policy then it will work well We can make ad
Slide 21: OSB segment results: BTL/SME
OSB segment results Average book LTV1 increased to 66% with 4.3% of loans by value BTL/SME with LTVs exceeding 90% (FY 2022: 63% and 3.2%, respectively) and average new origination LTV of 70% (H1 2022: 74%). 1. Gross loan book 2. Net interest income 200 10000 income (£m) Gross loan Net interest book
Slide 22: OSB segment results: Residential
OSB segment results Average book LTV1 increased to 47% with 2.1% of loans by Residential value with LTVs exceeding 90% (FY 2022: 45% and 0.8%, respectively) and average origination LTV increased to 62% (H1 2022: 61%). 1. Gross loan book 2. Net interest income 3,000 60 income (£m) Gross loan Net inte
Slide 23: CCFS segment results: BTL sub-segment
CCFS segment results Average book LTV remained low at 67% (FY 2022: 66%), BTL sub-segment average origination LTV was 71% (H1 2022: 74%). The weighted average interest coverage ratio (ICR) was 154% during H1 2023 (H1 2022: 197%). 1. Gross loan book 2. Net interest income 8000 100 income (£m) Gross l
Slide 24: CCFS segment results: Residential sub-segment
CCFS segment results Average book LTV remained low at 58% (FY 2022: Residential sub-segment 57%), average origination LTV reduced to 62% (H1 2022: 66%). 1. Gross loan book 2. Net interest income 3,000 50 income (£m) Gross loan Net interest book (£m) 2,000 2,671 2,758 25 46 1,000 20 0 0 FY 2022 H1 20
Slide 25: BTL/SME sub segments
OSB segment results BTL/SME sub segments 1. Buy to let 2. Semi-commercial/commercial The weighted average • Weighted average interest coverage book LTV 73% (FY 10,000 ratio (ICR) was 178% 900 2022: 69%) Gross loan book Gross loan book during H1 2023 (H1 2022: 211%) 600 • Average loan size 9,755 10,2
Slide 26: Residential sub-segments
OSB segment results Residential sub-segments 1. First charge mortgages 2. Second charge mortgages 2,500 200 Gross loan book Gross loan book 2,000 150 1,500 172 152 (£m) 2,153 2,190 (£m) 100 1,000 50 500 0 0 FY 2022 H1 2023 FY 2022 H1 2023 • First charge gross loan book increased by 2% • OSB’s second
Slide 27: CCFS segment results: Bridging
CCFS segment results Short-term bridging originations increased to Bridging £226.7m (H1 2022: £77.0m) as the Group continued to enhance and promote its bridging product offering throughout the period. 1. Gross loan book 2. Net interest income 300 4 income (£m) Gross loan Net interest book (£m) 200 2
Slide 28: CCFS segment results: Second charge
CCFS segment results Second charge The Group no longer offers second charge products and the book is in run-off. 1. Gross loan book 2. Net interest income 150 4 income (£m) Gross loan Net interest book (£m) 100 50 112 97 2 3 3 0 0 FY 2022 H1 2023 H1 2022 H1 2023 RWA as % of net loans 41% 42% Gross a
Slide 29: Updated forward-looking macroeconomic scenarios
Updated forward-looking macroeconomic scenarios Forecast macroeconomic variables over a five-year period 1 Scenario % Probability Scenario Economic measure Year end 2023 Year end 2024 Year end 2025 Year end 2026 Year end 2027 weighting % 1.6 GDP 0.4 0.8 1.5 2.3 3.8 Unemployment 4.0 4.2 4.0 3.8 5.3 B
Slide 30: Important disclaimer
Important disclaimer This document should be read in conjunction with any other 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 with respect to the business, strateg