Osb Group Plc · LSE:OSB
Osb — OneSavings Bank — H1 2016 Earnings Presentation
17 slides from Osb's earnings presentation, Aug 24, 2016
Slide 1: High quality assets achieving sustainable growth and returns
High quality assets achieving sustainable growth and returns H1 2016 Results 24 August 2016 Specialist Personal Flexible
Slide 2: Performance highlights
Performance highlights Gross organic Lending £973m Loans and Advances £5.4bn £778m £5.1bn 28% 26% Improved by + 10% + 25% 2% points 1 H1 15 H1 2014 16 2015 FY 15 H1 16 Cost : Income ratio Underlying PBT £64.6m 26% 27% £47.6m + 1% point +36% H1 15 H1 16 H1 15 H1 16 Underlying Basic EPS Underlying RoE
Slide 3: Delivering on our financial objectives 2014 - 2016
Delivering on our financial objectives 2014 - 20161 H1 2016 result Funding / Liquidity strength Maintain loan to deposit ratio of <100%2 85% Cost discipline Cost:Income ratio of <35% 27% Capital strength CRD IV CET1 ratio >10% 13.3% Shareholder returns RoE of >25% 29%3 Dividend policy Pay-out ratio
Slide 4: Key Financial Indicators
Key Financial Indicators 1 Improved underlying profitability… 2 …driven by profitable new lending… 80 120 3.5% 3.07% 3.05% 3.11% 3.07% 70 2.82% 3.0% Profit Before Tax (£m) 100 60 2.5% 50 80 2.0% 40 60 1.5% 30 58 65 99 2 90 1.0% 48 40 80 20 40 69 0.5% 30 56 10 20 0.0% 0 0 -0.5% H1 14 H2 14 H1 15 H2 1
Slide 5: Income growth drives underlying profit up 36%
Income growth drives underlying profit up 36% Change £m H1 2016 H1 2015 £m % Net interest income 99.1 79.5 19.6 43 • Underlying PBT up 36% Other income / (expense) (2.6) (3.3) (0.7) (22) reflecting strong balance sheet growth and continued focus on Total income 96.5 76.2 2.3 27 cost efficiency and d
Slide 6: Significant loan growth
Significant loan growth Change £m H1 2016 FY 2015 £m % • Underlying loan book Lending growth of 10% supported by Net customer loans 5,413 5,135 278 5% 25% growth in organic origination and portfolio o/w gross customer loans 5,441 5,162 279 5% purchases of £131m; 5% o/w provisions (31) (27) (4) (15)%
Slide 7: Segmental Results – BTL / SME
Segmental Results – BTL / SME • LTVs remain low at 68% (2015: 66%) with only 1% of loans by value with LTVs exceeding 90% (2015: 1%) 1 Gross loan book 2 Net interest income 4,000 3,500 60 Gross Loan Book (£m) Net interest income (£m) 3,000 2,500 40 2,000 3,540 60.8 1,500 2,549 3,105 54.0 1,000 20 41
Slide 8: Segmental Results – BTL / SME
Segmental Results – BTL / SME 1 Buy-to-Let (£m) 2 Semi-commercial/Commercial (£m) 3,000 300 2,500 250 Gross Loan Book (£m) Gross Loan Book (£m) 2,000 200 1,500 3,120 150 2,711 m) 230 249 1,000 100 500 50 0 0 FY 15 H1 16 FY 15 H1 16 • Average Interest rate coverage (ICR) was 161% during H1 • Weighted
Slide 9: Segmental Results – Residential
Segmental Results – Residential • LTVs remain low at 57% (2015: 56%) with only 2% of loans by value with LTVs exceeding 90% (2015: 2%) • Average loan to incomes (LTIs) for residential mortgage lending reduced with 1.5% of new loans having LTIs over 4.5 in the first half of 2016 compared to 3.3% in 2
Slide 10: Segmental Results – Residential breakdown
Segmental Results – Residential breakdown 1 First charge mortgages 2 Second charge mortgages 600 1,500 500 1,250 Gross Loan Book (£m) Gross loan book (£m) 400 1,000 300 750 1,433 518 1,299 514 500 200 250 100 0 0 FY 15 H1 16 FY 15 H1 16 3 Residential funding lines 4 Summary 80 • First charge new org
Slide 11: Strong balance sheet
Strong balance sheet 15.6% 15% • The weighted average LTV of the mortgage 2.3% book remained low at 62% as at 30 June 12% 2016, with an average LTV of 72% on new origination in the first half. 9% • Portfolio arrears rate remained stable at 2.1% 6% 13.3% in June 2016 (2.1% Dec 2015) excluding legacy
Slide 12: Current trading – 2016 full year outlook
Current trading – 2016 full year outlook H2 to date application volumes significantly up on H1 run rate Full year loan book growth of marginally higher than 20% (excluding the impact of Rochester disposal) Potential upside from portfolio acquisitions NIM in line with H1 Full year cost:income ratio i
Slide 13: Lending customer franchise
Lending customer franchise 1 Growth 2 Strong performance Gross new organic lending £m 1,200 Only 71 loans in 3m+ arrears (£10.5m), out of >25,000 1,049 973 loans (£5.0bn) originated since the Bank’s creation in 2011 1,000 837 199 779 Gross Loan Book (£m) 173 (2015: 48 loans, £5.1m) 800 649 156 135 6
Slide 14: Sustainable funding model
Sustainable funding model 1 Growth 2 Recommendation and retention Our stable retail funding franchise continues to grow, Retention rates on maturing Bonds and ISAs remain ensuring long term, stable funding exceptionally strong at 86% We continue to lead on customer satisfaction with our excellent Ne
Slide 15: Summary
Summary The first half of 2016 was another period of strong performance: achieved all financial objectives since IPO and produced an underlying RoE of 29% 25% growth in organic origination with application run rate higher now than in the first half Increased capital ratio following the Rochester Dis
Slide 16: Confident outlook
Confident outlook Confidence in our core BTL market remains strong 2017: we will continue to deliver double digit net loan growth through organic lending… ……and we see further opportunities for accretive acquisitions Therefore our business model means we remain well positioned for growth in 2017 15
Slide 17: Disclaimer
Disclaimer Important Message No undertaking, representation, warranty or other assurance, express or implied, is given or made by or on behalf of any member of OneSavings Bank plc ("OSB") and its subsidiaries (together, the "OSB Group") or any shareholders, directors, officers, partners, employees,