Slide 1: OSB Group 2022 interim results
OSB Group 2022 interim results 11 August 2022 OSB GROUP PLC – Private and Confidential
Slide 2: Excellent results for the first half of 2022
Excellent results for the first half of 2022 • The Group delivered a record underlying profit before tax of £294m • The net loan book grew by 3% in line with management expectations, supported by £2.3bn of new lending Financial performance • Underlying return on equity remained strong at 24% • Under
Slide 3: 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. Underlying net Underlying retail Underlying cost loans to deposits to income ratio customers H1 2022: £17.9bn Unique H1 2022: 23% Specialist Sophisticated (FY 2021: £17
Slide 4: 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 5: Financial highlights - statutory
Financial highlights - statutory Gross new lending Net loan book Net interest margin Cost to income ratio (7)% 3% 44bps (3)pps £2.5bn £21.8bn £2.3bn £21.1bn 280bps 28% 25% 236bps H1 2021 H1 2022 FY 2021 H1 2022 H1 2021 H1 2022 H1 2021 H1 2022 Profit before tax Return on equity Basic EPS (pence per s
Slide 6: Financial highlights – underlying
Financial highlights – underlying Net loan book Net interest margin Cost to income ratio The Board has declared a 3% 34bps (2)pps dividend of 8.7 pence per share for the period, representing 1/3 of the £20.9bn £21.6bn 302bps 25% total 2021 dividend, in line 23% with the Group’s stated 268bps policy
Slide 7: Attractive underlying return on equity
Attractive underlying return on equity 1. Record half-yearly underlying profit before tax 2. NII growth and improvement in margins 2.68% 3.02% Underlying PBT (£m) 300 2.50% Net interest margin (%) 400 3 Underlying NII (£m) 294 253 300 369 2 200 299 200 267 1 156 Underlying 100 RoE of 24% 100 0 H1 20
Slide 8: Record underlying profit
Record underlying profit 1 Underlying P&L Underlying NII grew by 23% to £369m, largely reflecting growth in the loan book and a higher net H1 2022 H1 2021 Change interest margin £m £m £m % Fair value gains on financial instruments of Net interest income 369.2 299.0 70.2 23 £11.1m on the Group’s hedg
Slide 9: Strong, secure balance sheet
Strong, secure balance sheet H1 2022 FY 2021 Change Statutory and underlying net loan book £m £m £m % growth of 3% supported by £2.3bn of Lending organic originations in the period Statutory net loans and advances to customers 21,759 21,080 679 3 Expected credit losses (102) (102) - - Customer depos
Slide 10: Improvement in underlying NIM
Improvement in underlying NIM 302 bps 268 bps H1 2021 Cost of Other EIR reset H2 2021 EIR reset Lending Cost of Other H1 2022 retail funds gains gains yield retail funds non-repeat Underlying NIM improved to 302bps in the first half of 2022 from 268bps in the prior period, due primarily to a lower c
Slide 11: Impairment provisions
Impairment provisions Expected credit losses £m Statutory impairment charge of £1.6m Macro scenarios net £0.9m representing 1bp of average gross loans and 7.8 advances: 6.8 101.5 (4.9) 102.1 • £14.0m of provision release due to: (3.2) (5.9) o house price appreciation in the first half o release of p
Slide 12: Strong capital base
Strong capital base CET1 ratio remained strong at 18.9% and included the full impact of the £100m share repurchase programme The capital ratios include transitional (1.1)% benefits of c.0.8% points from acquisition 1.7% related adjustments (primarily the remaining (1.1)% 19.6% (0.2)% fair value upli
Slide 13: Capital management framework in action
Capital management framework in action The Board is confident that the Group’s business strategy and proven capital generation capability can support both strong net loan book growth and further capital returns to shareholders, including a progressive dividend per share. • Primary objective is to ho
Slide 14: Our award-winning lending franchises
Our award-winning lending franchises Strong originations in the first half of 2022 Applications grew strongly throughout OSB the period, delivering a record pipeline CCFS 4 3 Increased originations in Commercial Originations £m 68 77 299 and semi-Commercial as the Group 245 313 257 Underlying launch
Slide 15: Sophisticated funding model
Sophisticated funding model The Group remains predominantly retail funded with £17.9bn of retail Retail savings complemented by diversified funding deposits, up 2% in the first six months of 2022. sources: Attract Retain Satisfy We continue to attract We retain a very high High quality of customer 2
Slide 16: Summary and outlook
Summary and outlook Returning to our key messages from today: • The Group saw strong financial and operational performance with record profit in the first half, £2.3bn of new lending, increased NIM and a class-leading underlying return on equity of 24% • The credit performance of the Group’s loan bo
Slide 17: OSB Group 2022 interim results - Appendices
OSB Group 2022 interim results - Appendices 11 August 2022 OSB GROUP PLC – Private and Confidential 17
Slide 18: Components of Group capital
Components of Group capital Capital resources and requirements as a percentage of RWAs Capital requirements shown are as at 30 June 2022. They include standard regulatory buffers (CCB, CCyB) for illustrative purposes 20.4% The Pillar 2a requirement of 1.27% of RWAs excludes a static 1.5% integration
Slide 19: Strong statutory results
Strong statutory results Statutory P&L Change Net interest income grew 29% to H1 2022 H1 2021 £m £m £m % £343.4m largely reflecting growth in the loan book and a higher net interest Net interest income 343.4 265.3 78.1 29 margin Fair value gains on financial instruments 16.4 16.1 0.3 2 Gain on sale
Slide 20: OSB segment results – BTL/SME
OSB segment results – BTL/SME Average book LTV reduced to 63% (FY 2021: 65%) with only 2.5% of loans by value with LTVs exceeding 90% (FY 2021: 2.5%) and average new origination LTV was 74% (H1 2021: 73%). 1. Gross loan book 2. Net interest income 10000 200 Gross loan book income (£m) Net interest 1
Slide 21: OSB segment results – Residential
OSB segment results – Residential Average book LTV reduced to 46% (FY 2021: 48%) with only 0.6% of loans by value with LTVs exceeding 90% (FY 2021: 0.8%) and average origination LTV was to 61% (H1 2021: 48%). 1. Gross loan book 2. Net interest income 50 2000 Gross loan book income (£m) Net interest
Slide 22: CCFS segment results – BTL sub-segment
CCFS segment results – BTL sub-segment Average book LTV remains low at 67% (FY 2021: 68%), average origination LTV was 74% (H1 2021: 74%). 1. Gross loan book 2. Net interest income 120 6000 Gross loan book 100 income (£m) Net interest 80 6,748 (£m) 3000 6,302 60 67 40 102 20 0 0 FY 2021 H1 2022 H1 2
Slide 23: CCFS segment results – Residential sub-segment
CCFS segment results – Residential sub-segment Average book LTV remains low at 58% (FY 2021: 59%), average origination LTV was 66% (H1 2021: 65%). 1. Gross loan book 2. Net interest income 3000 Gross loan book 40 income (£m) Net interest 2000 (£m) 46 1000 2,452 2,444 20 38 0 0 FY 2021 H1 2022 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 9,000 900 Gross loan book Gross loan book 6,000 600 (£m) 8,868 9,099 (£m) 3,000 300 794 790 0 0 FY 2021 H1 2022 FY 2021 H1 2022 • The weighted average interest coverage ratio (ICR) was 211% during H1 • Weighted av
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 200 225 (£m) 1000 1,896 1,971 (£m) 100 196 500 0 0 FY 2021 H1 2022 FY 2021 H1 2022 3. Funding lines • First charge gross loan book increased by 4% as the
Slide 26: CCFS segment results – Bridging
CCFS segment results – Bridging Continued improvement in bridging products offering, including a relaunched and rebranded refurbishment product in April 2022 1. Gross loan book 2. Net interest income Gross loan book 100 income (£m) Net interest 5 (£m) 50 56 84 3 2 0 0 FY 2021 H1 2022 H1 2021 H1 2022
Slide 27: CCFS segment results – Second charge
CCFS segment results – Second charge Second charge products have recently been withdrawn 1. Gross loan book 2. Net interest income 200 4 Gross loan book income (£m) 150 Net interest 154 (£m) 100 133 2 3 3 2 50 0 0 FY 2021 H1 2022 H1 2021 H1 2022 RWA as % Gross asset of net loans 41% 41% 4.5% 5.2% yi
Slide 28: Updated forward-looking macroeconomic scenarios
Updated forward-looking macroeconomic scenarios Downside weighting increased by 10% in forward-looking macroeconomic scenarios to address growing cost of living concerns. 1 Scenario % Probability Year end Year end Year end Scenario Economic measure weighting % 2022 2023 2024 GDP 3.7 1.8 2.1 Base cas
Slide 29: Pre-pandemic impairment coverage
Pre-pandemic impairment coverage Stage 1 Stage 2 Stage 3 + POCI Total 1.07% 11.37% 0.47% 0.75% 7.35% 0.05% 0.23% 0.03% FY 2019 H1 2022 FY 2019 H1 2022 FY 2019 H1 2022 FY 2019 H1 2022 Gross carrying Expected credit Coverage amount losses ratio As at 30 June 2022 £m £m % Stage 1 18,702.0 8.8 0.05% Sta
Slide 30: This document should be read in conjunction with documents distributed by OSB GROUP
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