Osb Group Plc · LSE:OSB
Osb — H1 2024 Earnings Presentation
27 slides from Osb's earnings presentation, Aug 15, 2024
Slide 1: Interim results 2024
Interim results 2024 15 August 2024
Slide 2: H1 2024 highlights
H1 2024 highlights Applying a disciplined Maintaining cost Focused on RoE and approach to lending discipline and efficiency capital returns 1.5% 34% 18% Net loan book growth1 Cost to income ratio1 Return on equity1 243bps 83bps 10.7p Net interest margin1 Management expense ratio Interim dividend (4)
Slide 3: Financial highlights
Financial highlights Originations Net loan book Net interest margin Cost to income ratio Loan loss ratio £26.1bn 37bps £25.7bn 243bps 40% £2.3bn 34% £1.9bn 203bps (4)bps H1 2023 H1 2024 FY 2023 H1 2024 H1 2023 H1 2024 H1 2023 H1 2024 H1 2023 H1 2024 Return on equity Profit before tax Basic EPS (penc
Slide 4: Temporary market pressures, fundamentals remain
Temporary market pressures, fundamentals remain In H1, activity in the market remained subdued and competition in certain sub-segments increased BTL segment total gross lending1 Implied margin – 5-year fixed BTL mortgage2 4% 7 • We exercised 6 discipline in pricing as 3% we chose not to write 5 and
Slide 5: Our award-winning lending franchises
Our award-winning lending franchises Leaders in professional Cautious re-entry into more cyclical, Buy-to-Let higher margin sub-segments 1st Bridge lending largest specialist BTL lender new lending 20231 Commercial Semi-commercial 9% Development finance BTL market share new lending May 2024 YTD2 Ass
Slide 6: Trusted dual banking licence funding platform
Trusted dual banking licence funding platform The Group remains predominantly retail funded with £24.3bn of retail deposits, up 10% in H1 2024 Retail savings complemented by diversified Attract Retain Satisfy funding sources: 997 582 819 1,113 Continue to attract new Retained a very high High qualit
Slide 7: Attractive underlying fundamentals
Attractive underlying fundamentals 1. Profit before tax 2. NII and NIM Underlying NIM (%) 300 2.43% Underlying NII (£m) 2.03% 3 Underlying PBT 400 2 200 250 1 (£m) 362 100 200 280 0 117 -1 0 0 -2 H1 2023 H1 2024 H1 2023 H1 2024 H1 2024 underlying RoE of 18% 3. Cost discipline and efficiency 4. Credi
Slide 8: Underlying results for H1 2024
Underlying results for H1 2024 1 Underlying P&L • Underlying NII 29% higher benefitting from the non- H1 2024 H1 2023 Change recurrence of the adverse EIR adjustment and net loan £m £m book growth, partially offset by maturing fixed term £m % mortgages redeeming or switching onto lower prevailing Ne
Slide 9: Strong, secured balance sheet
Strong, secured balance sheet H1 2024 FY 2023 Change • Underlying net loan book growth of 1.5% Lending £m £m £m % supported by originations of £1.9bn and Underlying net loans and advances to reflecting a disciplined approach to pricing new 26,117 25,740 377 1.5 business customers Expected credit los
Slide 10: H1 2024 NIM waterfall
H1 2024 NIM waterfall 273 bps 243 Underlying bps NIM 230 – 240bps Dec 2023 Cost of retail Lending MREL Other H1 2024 FY 2024 Exit rate funds margin issuance funding Guidance • Underlying H1 2024 NIM was 30bps lower than the December 2023 exit rate: • Cost of retail funds – continued recycling of the
Slide 11: Impairment provisions
Impairment provisions Expected credit losses £m 3.4 3.5 1.3 7.5 • Statutory £4.7m impairment credit representing 145.8 (4)bps loan loss ratio due to updated 1.6 138.4 macroeconomic scenarios, particularly house price (24.7) improvement • 3 month+ arrears increased to 1.6% reflecting continued cost o
Slide 12: Strong capital base
Strong capital base CET1 ratio 120bps of organic capital generation 1.5 Strong returns delivered 120bps of organic capital generation in H1, (0.3) (0.5) supporting: (0.2) 16.6% (0.4) 16.2% • Interim dividend per share of 10.7 pence (H1 2023: 10.2 pence) 16.1% representing 1/3 of the full year 2023 o
Slide 13: Investing in our future
Investing in our future We continue to make good progress on our digitalisation journey which will enable us to meet the future needs of our customers, brokers and wider stakeholders, whilst delivering further operational efficiencies. In early 2024, we delivered an online broker registration proces
Slide 14: Outlook
Outlook • We have seen an improvement in the macroeconomic outlook recently which supports our cautious re-entry into more cyclical, higher margin sub-segments, which will contribute to returns in the medium term. We are now past peak interest rates, which will also provide a much-needed stimulus to
Slide 15: Appendices
Appendices 15 August 2024
Slide 16: Components of Group capital
Components of Group capital 1 Capital resources and requirements as a percentage of RWAs • The Pillar 2a requirement of 1.4% of RWAs includes a static integration add-on of £19.5m 25.3% • Current minimum capital requirement of 9.4% (Pillar 1 and Pillar 2a) management 22.0% buffer 22.5% • Optimal mix
Slide 17: Strong statutory results
Strong statutory results Reconciliation of underlying to statutory PBT £m Statutory P&L (9) 1 Change 250 H1 2024 H1 2023 (1) £m £m £m % 241 Net interest income 353.5 237.5 116.0 49 Underlying PBT Amortisation of FV FV loss on Admin expenses Statutory PBT Net fair value gain/(loss) on uplift to CCFS'
Slide 18: Who we are and what we do
Who we are and what we do Specialist lending Multi channel Unique operating business funding platform model Underlying retail deposits Underlying cost to income ratio Underlying net loans to customers H1 2024: £24.3bn (FY 2023: £22.1bn) H1 2024: 34% (FY 2023: 33%) H1 2024: £26.1bn (FY 2023: £25.7bn)
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 H1 2024: £11.3bn H1 2024: £13.6bn H1 2024: £1.4bn FY 2023: £11.4bn FY 2023: £13.1bn FY 2023: £1.4bn If the case fits the policy then we will Experience-based manual
Slide 20: OSB segment results: BTL/SME
OSB segment results Average book LTV1 increased to 70% (FY 2023: 67%) with 5.2% of BTL/SME loans by value with LTVs exceeding 90% (FY 2023: 4.0%) . Average new origination LTV remained at 70% (H1 2023: 70%). 1. Gross loan book 2. Net interest income 200 10000 income (£m) Gross loan Net interest book
Slide 21: OSB segment results: Residential
OSB segment results Average book LTV1 increased to 49% with 3.8% of loans by Residential value with LTVs exceeding 90% (FY 2023: 48% and 2.2%, respectively). Average origination LTV decreased to 64% (H1 2023: 62%). 1. Gross loan book 2. Net interest income 50 2,000 income (£m) Gross loan Net interes
Slide 22: OSB segment results: 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 1,200 book LTV 74% (FY 10,000 ratio (ICR) was 185% 2023: 73%) Gross loan book Gross loan book during H1 2024 (H1 900 2023: 178%) • Average loan size 10,765 1
Slide 23: CCFS segment results: BTL sub-segment
CCFS segment results Average book LTV increased marginally to 69% (FY 2023: 68%), average origination LTV was 72% (H1 2023: 71%). BTL sub-segment The weighted average interest coverage ratio (ICR) was 161% during H1 2024 (H1 2023: 154%). 1. Gross loan book 2. Net interest income 8,000 100 income (£m
Slide 24: CCFS segment results: Residential sub-segment
CCFS segment results Average book LTV remained broadly stable at 60% Residential sub-segment (FY 2023: 59%), average origination LTV remained unchanged from the prior period at 62%. 1. Gross loan book 2. Net interest income 3,000 100 income (£m) Gross loan Net interest book (£m) 2,000 3,026 2,988 50
Slide 25: CCFS segment results: Bridging
CCFS segment results Short-term bridging originations decreased to £191.9m Bridging (H1 2023: £226.7m) as the Group concentrated on building a pipeline of high quality, high return business 1. Gross loan book 2. Net interest income 400 10 income (£m) Gross loan Net interest book (£m) 200 333 325 5 6
Slide 26: Updated forward-looking macroeconomic scenarios
Updated forward-looking macroeconomic scenarios Forecast macroeconomic variables over a five-year period 1 Scenario % Probability Year end Year end Year end Year end Year end Scenario Economic measure weighting % 2024 2025 2026 2027 2028 GDP 0.5 1.5 1.9 1.5 1.4 Unemployment 4.5 4.2 4.0 3.9 3.8 Base
Slide 27: 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