Slide 1: Preliminary results 2023
Preliminary results 2023 14 March 2024
Slide 2: 2023 Results
2023 Results Strong credit Strong liquidity Financial Our lending and capital Outlook for and risk performance franchise position 2024 management • The Group achieved an • Gross organic lending • Credit performance remained • CET1 strong at 16.1%, with a • Based on current application underlying pro
Slide 3: Financial highlights - statutory
Financial highlights - statutory Gross new lending Net loan book Net interest margin Cost to income ratio £5.8bn £25.8bn 36% 278bps £4.7bn £23.6bn 231bps 27% 2022 2023 2022 2023 2022 2023 2022 2023 Return on equity Profit before tax Basic EPS (pence per share) CET1 ratio 21% £532m 18.3% 90.8p 16.1%
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 £25.8bn The total ordinary £25.7bn 303bps 314bps 33% dividend for 2023 of 32.0 26% £23.5bn 251bps pence per share 25% represents a 29% payout ratio, excluding the adverse
Slide 5: Attractive underlying fundamentals
Attractive underlying fundamentals 1. Profit before tax 2. NII and NIM 3.03% 3.14% Underlying NIM (%) 600 1200 2.82% Underlying NII (£m) 608 3 2.51% Underlying PBT 1000 400 2 591 800 896 1 (£m) 522 600 426 200 400 769 715 0 651 200 -1 0 0 -2 2021 2022 2023 2021 2022 2023 2023 Underlying NII Underlyi
Slide 6: Underlying results for 2023
Underlying results for 2023 1 Underlying P&L Change • Underlying NII reduced by 7% as the benefit of net loan 2023 2022 book growth was more than offset by the adverse EIR £m £m £m % adjustment Net interest income 714.7 769.1 (54.4) (7) • Fair value loss on financial instruments of £10.8m Net fair v
Slide 7: Strong, secure balance sheet
Strong, secure balance sheet 2023 2022 Change Lending £m £m £m % • Statutory and underlying net loan book growth Statutory net loans and advances to of 9% supported by strong organic originations of 25,765 23,613 2,152 9 customers £4.7bn and improved retention Expected credit losses (146) (130) (16)
Slide 8: 2023 NIM Waterfall
2023 NIM Waterfall 314 63 303 bps bps bps 251 302 bps bps 2022 Cost of retail Lending T2 & MREL Other 2023 pre Total net 2023 funds margin issuance funding EIR adjustment EIR adjustment • Underlying NIM excluding the EIR adjustment increased by 11bps to 314bps • Cost of retail funds - there were del
Slide 9: NIM Outlook
NIM Outlook Dynamics affecting the December 2023 exit rate Bridge to 2024 guidance 314 bps 273 Broadly bps flat to 302 2023 bps under- lying NIM of 251bps 2023 Cost of retail Lending Tier 2 & MREL Other Dec 2023 Cost of retail Lending Tier 2 & MREL Other 2024 Pre EIR funds margin issuance funding Ex
Slide 10: Impairment provisions
Impairment provisions Expected credit losses £m 8.0 (33.6) • The statutory expected credit loss provision 7.8 14.1 increased by £15.8m. The main components of this 14.1 change were: 6.4 (1.0) 145.8 o £6.4m charge for the updated forward-looking 130.0 macroeconomic scenarios used in the Group’s IFRS
Slide 11: Strong capital base
Strong capital base CET1 ratio 4.2% The Group’s strategy and proven capital generation capability can support both strong net loan book growth and further capital returns (2.1)% to shareholders, supported by planned MREL issuance 18.3% (1.2)% (0.4) 17.6% (1.2%) 17.1% (1.5)% 16.1% • 9% net loan book
Slide 12: Components of Group capital
Components of Group capital • The Pillar 2a requirement of 1.4% of RWAs includes a static integration 1 Capital resources and requirements as a percentage of RWAs add-on of £19.5m • Current minimum capital requirement of 9.4% (Pillar 1 and Pillar 2a) • Optimal mix of instrument type to meet minimum
Slide 13: Our award-winning lending franchises
Our award-winning lending franchises Leading mortgage distribution • The Group’s lending brands distribute mortgages through our deep relationships with more than 30,000 experienced mortgage intermediaries, supported by our award-winning business development team and direct access to our expert unde
Slide 14: Sophisticated funding platform
Sophisticated funding platform The Group remains predominantly retail funded with £22.1bn of retail deposits, up 12% in 2023 Retail savings complemented by increasingly Attract Retain Satisfy diversified funding sources: 582 Continue to attract new Retained a very high High quality 266 819 percentag
Slide 15: Investing in our future
Investing in our future The Group is recognised for its efficiency and excellent customer service and throughout 2023 we continued to invest to remain agile and nimble. We made good progress on our digitalisation journey which will enable us to meet the future needs of our customers, brokers and wid
Slide 16: Summary and outlook
Summary and outlook Our key messages from today 2023 performance Outlook • Strong operational performance, however our financial • Our specialist market sub-segments are performing well and results were significantly impacted by the adverse EIR the Group’s target professional landlords continue to a
Slide 17: Appendices
Appendices 14 March 2024
Slide 18: Strong statutory results
Strong statutory results Reconciliation of underlying to statutory PBT £m Statutory P&L (56) 6 Change 426 2023 2022 £m £m (2) 374 £m % Net interest income 658.6 709.9 (51.3) (7) Underlying PBT Amortisation of FV FV loss on fin Admin expenses Statutory PBT Net fair value (loss)/gain on uplift to CCFS
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 2023: £22.1bn (2022: £19.8bn) 2023: 33% (2022: 25%) 2023: £25.7bn (2022: £23.5bn) 23 securitisation
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 2023: £11.4bn 2023: £13.1bn 2023: £1.4bn 2022: £10.4bn 2022: £12.1bn 2022: £1.2bn If the case fits the policy then we will Experience-based manual underwriting Uniqu
Slide 21: 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 end of the initial fixed rate term for Precise Mortgages and • Precise Mortgages (Precise) fixed rate products were designed to revert to a rate which wa
Slide 22: Sustainability
Sustainability 2023 was a year of progress as we embedded the ESG principles and embraced our commitment to building a sustainable future for our customers, colleagues and communities Our approach to Sustainability is built on three strategic pillars that enable us to advance on our Purpose and our
Slide 23: OSB segment results: BTL/SME
OSB segment results Average book LTV1 increased to 67% with 4.0% of loans by value BTL/SME with LTVs exceeding 90% (2022: 63% and 3.2%, respectively). Average new origination LTV was 70% (2022: 73%). 1. Gross loan book 2. Net interest income 400 10000 income (£m) Gross loan Net interest book (£m) 10
Slide 24: OSB segment results: Residential
OSB segment results Average book LTV1 increased to 48% with 2.2% of loans by Residential value with LTVs exceeding 90% (2022: 45% and 0.8%, respectively). Average origination LTV decreased to 62% (2022: 64%). 1. Gross loan book 2. Net interest income 3,000 100 income (£m) Gross loan Net interest boo
Slide 25: 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 book LTV 73% (2022: 10,000 ratio (ICR) was 176% 900 69%) Gross loan book Gross loan book during 2023 (2022: 207%) 600 • Average loan size 9,755 10,764 881 1,
Slide 26: CCFS segment results: BTL sub-segment
CCFS segment results Average book LTV remained low at 68% (2022: 66%), BTL sub-segment average origination LTV was 71% (2022: 73%). The weighted average interest coverage ratio (ICR) was 154% during 2023 (2022: 191%). 1. Gross loan book 2. Net interest income 8000 200 income (£m) Gross loan Net inte
Slide 27: CCFS segment results: Residential sub-segment
CCFS segment results Average book LTV remained low at 59% (2022: 57%), Residential sub-segment average origination LTV reduced to 63% (2022: 66%). 1. Gross loan book 2. Net interest income 3,000 100 income (£m) Gross loan Net interest book (£m) 2,000 2,671 3,026 50 96 75 1,000 0 0 2022 2023 2022 202
Slide 28: CCFS segment results: Bridging
CCFS segment results Short-term bridging originations increased to Bridging £437.2m (2022: £217.5m) as the Group continued to enhance and promote its bridging product offering throughout 2023. 1. Gross loan book 2. Net interest income 400 10 income (£m) Gross loan Net interest book (£m) 200 333 5 9
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 % GDP 0.4 0.4 1.5 2.3 1.5 Unemployment 4.4 4.6 4.2 3.9 3.8 Base
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