Slide 1: OSB Group 2021 preliminary results
OSB Group 2021 preliminary results 17 March 2022 OSB GROUP PLC – Private and Confidential
Slide 2: Excellent results for 2021
Excellent results for 2021 • The Group achieved a record underlying profit before tax of £522m Excellent results for • The statutory net loan book grew by 10% supported by £4.5bn of new lending • Underlying return on equity improved to 24% 2021 • Underlying net interest margin increased to 282bps •
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 2021: £17.5bn Unique 2021: 24% Specialist Sophisticated (2020: £16.6bn) (20
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 20% 10% 37bps (5)pts £21.1bn 253bps £4.5bn 31% 26% £3.8bn £19.2bn 216bps 2020 2021 2020 2021 2020 2021 2020 2021 Return on equity Profit before tax Basic EPS (pence per share) Fully loaded CET1
Slide 6: Financial highlights - underlying
Financial highlights - underlying Gross new lending Net loan book Net interest margin Loan loss ratio The total dividend for 2021 of 26 20% 10% 35bps (40)bps pence per share representing a 30% £20.9bn 282bps 38bps payout ratio £4.5bn £3.8bn £19.0bn 247bps -2bps 2020 2021 2020 2021 2020 2021 2020 202
Slide 7: Attractive underlying return on equity
Attractive underlying return on equity 1. Record underlying profit before tax 2. NII growth with strengthening NIM 2.66%1 2.82% 500 2.47% 3 Underlying PBT (£m) Net interest margin (%) Underlying NII (£m) 600 400 2 300 522 400 651 534 200 381 1 346 5181 1 200 100 2021 0 underlying 0 0 2019 2020 2021
Slide 8: Excellent results for 2021
Excellent results for 2021 1 Underlying P&L Underlying NII up 22% due to growth in the loan book and a lower cost of retail funds. It also included Change net effective interest rate reset gains of £18.6m to 2021 2020 reflect updated prepayment assumptions based on £m £m £m % customer behaviour Net
Slide 9: Strong, secure balance sheet
Strong, secure balance sheet 2021 2020 Change £m £m £m % Lending Statutory and underlying net loan book Statutory net loans and advances to customers 21,080 19,231 1,849 10 growth of 10% supported by organic Expected credit losses (102) (111) (9) (8) originations of £4.5bn, up 20% compared with £3.8
Slide 10: Improvement in underlying NIM
Improvement in underlying NIM 282 bps 247 bps 2020 Lower cost of retail funds EIR reset gains Other 2021 Underlying NIM improved in the year to 282bps from 247bps due primarily to a lower cost of retail funds The underlying net interest income included £18.6m of underlying net EIR reset gains to ref
Slide 11: Impairment provisions
Impairment provisions £m Statutory impairment credit of £4.4m 4.3 representing -2bps of average gross loans 4.3 6.8 and advances (24.9) • £24.9m provision release due to less 111.0 101.5 severe forward-looking macroeconomic scenarios (£22.2m release) and strong house price performance (£12.3m releas
Slide 12: Strong capital base
Strong capital base CET1 % Exceptionally strong CET1 of 19.6% as at 31 December 2021 as a result of strong capital 4.6% generation through profitability (1.4)% (1.2)% Total capital ratio of 21.2% also benefitted (0.5)% (0.2)% the issue of £150m of AT1 from the Group’s 18.3% 19.6% holding company The
Slide 13: Capital management framework in action
Capital management framework in action Focused on shareholder value creation • Primary objective is to hold sufficient, but not excessive levels of regulatory capital to support the Group’s stated strategy Regulatory capital • BOE preferred resolution strategy is single point of entry bail-in at the
Slide 14: Our ESG Framework
Our ESG Framework In 2021, we formalised our approach to environmental, social and governance (ESG) matters setting ambitious goals. • 10.2% reduction in operational carbon footprint for 2021 against 2019 baseline • 100% of electricity purchased in the UK was from renewable tariffs • We are offsetti
Slide 15: Our award-winning lending franchises
Our award-winning lending franchises Demand was strong and the Group Recovery in originations in 2021 remained a lender of choice in our OSB CCFS Buy-to-Let and Residential sub- 11 109 segments 32 559 Originations £m 2000 142 558 Introduced new products at pre- 354 Net loan pandemic criteria in our
Slide 16: Sophisticated funding platform
Sophisticated funding platform The Group remained predominantly retail funded with £17.5bn of retail Retail savings complemented by increasingly diversified deposits as at the end of 2021, up 6% in the year. funding sources: Attract Retain Satisfy We continue to attract We retain a very high High qu
Slide 17: Summary and outlook
Summary and outlook Returning to our key messages from today: • The Group saw strong financial and operational performance in 2021 with record profits, £4.5bn of new lending at attractive margins, increased NIM and a class leading underlying return on equity of 24% • Strong focus on cost discipline
Slide 18: 2021 preliminary results appendices
2021 preliminary results appendices 17 March 2022
Slide 19: Strong statutory results
Strong statutory results Statutory P&L Change NII increased by 24% due to growth in the 2021 2020 £m £m £m % loan book, lower cost of retail funds and an impairment credit for the year Net interest income 587.6 472.2 115.4 24 Fair value gain/(loss) on financial instruments 29.5 7.4 22.1 299 Fair val
Slide 20: OSB segment results – BTL/SME
OSB segment results – BTL/SME Average book LTV reduced to 65% (2020: 67%) with only 2.5% of loans by value with LTVs exceeding 90% (2020: 2.9%) and average new origination LTV of 73% (2020: 71%). 1. Gross loan book 2. Net interest income 10000 Gross loan book 300 income (£m) Net interest 200 (£m) 50
Slide 21: OSB segment results – Residential
OSB segment results – Residential Average book LTV reduced to 48% (2020: 54%) with only 0.8% of loans by value with LTVs exceeding 90% (2020: 1.6%) and average origination LTV reduced to 50% (2020: 61%). 1. Gross loan book 2. Net interest income 80 2000 Gross loan book income (£m) Net interest (£m)
Slide 22: CCFS segment results – BTL sub-segment
CCFS segment results – BTL sub-segment Average book LTV remains low at 68% (2020: 69%), average origination LTV was 74% (2020: 74%). 1. Gross loan book 2. Net interest income 6000 150 Gross loan book income (£m) Net interest 100 151 (£m) 3000 5,292 6,302 50 115 0 0 2020 2021 2020 2021 RWA as % Gross
Slide 23: CCFS segment results – Residential sub-segment
CCFS segment results – Residential sub-segment Average book LTV reduced to 59% (2020: 62%), average origination LTV was 66% (2020: 67%). 1. Gross loan book 2. Net interest income 3000 80 Gross loan book income (£m) Net interest 2000 (£m) 40 81 10002 2,386 2,452 68 0 0 2020 2021 2020 2021 RWA as % Gr
Slide 24: OSB segment results – BTL/SME sub-segments
OSB segment results – BTL/SME sub-segments 1. Buy-to-Let 2. Semi-commercial/Commercial 9000 • 750 Gross loan book Gross loan book 6000 • 500 822 (£m) 8,868 (£m) 8,045 794 30002 • 250 0 • 0 2020 2021 2020 2021 • The weighted average interest coverage ratio (ICR) was 199% during • Weighted average boo
Slide 25: OSB segment results – Residential sub-segments
OSB segment results – Residential sub-segments 1. First charge mortgages 2. Second charge mortgages 2000 400 Gross loan book Gross loan book 1500 300 295 (£m) 1000 1,661 1,896 200 (£m) 225 5002 100 0 0 2020 2021 2020 2021 3. Funding lines • First charge gross loan book increased by 14% largely due 3
Slide 26: CCFS segment results – Bridging
CCFS segment results – Bridging Controlled return to market in the second half of the year with relaxation of lending criteria 1. Gross loan book 2. Net interest income 100 Gross loan book 10 income (£m) Net interest 75 12 (£m) 50 106 5 25 2 56 5 0 0 2020 2021 2020 2021 RWA as % Gross asset of net l
Slide 27: CCFS segment results – Second charge
CCFS segment results – Second charge Lending policy restrictions applied in 2021, with controlled relaxation of LTV 1. Gross loan book 2. Net interest income 200 10 Gross loan book income (£m) 150 Net interest 198 (£m) 100 154 5 7 7 2 50 0 0 2020 2021 2020 2021 RWA as % Gross asset of net loans 42%
Slide 28: Components of Group capital
Components of Group capital Capital resources and requirements as a percentage of RWAs Capital requirements shown are as at 31 December 2021. They include standard regulatory buffers (CCB, CCyB) for illustrative purposes 1.6% The Pillar 2a requirement of 1.27% of RWAs excludes a static integration a
Slide 29: Updated forward-looking macroeconomic scenarios
Updated forward-looking macroeconomic scenarios Forecast macroeconomic scenarios over a five year period Scenario % Cumulative Probability 5 year average growth/(fall) to Scenario Economic measure weighting % (yearly growth %) peak/(trough) (%) GDP 3.3 14.5 House Price Index (HPI) 1.9 (3.5) Base cas
Slide 30: This document should be read in conjunction with the documents distributed by OSB GROUP PLC
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, beliefs or opinions, including statements with respect to the business, strategy