Just over a year on from the implementation of stamp duty increases, there is still solid demand for mortgages from buy-to-let (BTL) landlords. That’s good news for OneSavings Bank (OSB): such mortgages accounted for 65 per cent of its loan book at the end of June 2017, up from 61 per cent a year earlier. Gross BTL lending increased by 37 per cent year on year to £4.3bn. Chief executive Andy Golding says having a customer base of mainly professional landlords has helped maintain growth.
This growth, together with increased commercial lending, pushed sales at the division up 32 per cent to £82m. But residential mortgage balances fell 6 per cent, as management dialled down second-charge mortgage lending. “The market is underpricing the risk in that arena,” says Mr Golding. In line with its conservative approach, the personal loan book continued to run off, reducing to just £3m.
The challenger bank continued to draw on the term funding scheme (TFS), which helped reduce its wholesale funding costs. This boosted the net interest margin to 3.22 per cent, from 3.09 per cent at the same time in 2016. However, management expects the margin at the year-end to be flat, ahead of the closure of the scheme in February.
Analysts at Numis expect net tangible assets of 185p a share at 31 December 2017, up from 150p at the same point in 2016.
| ONESAVINGS BANK (OSB) | ||||
| ORD PRICE: | 399.9p | MARKET VALUE: | £972m | |
| TOUCH: | 399.8-400p | 12-MONTH HIGH: | 478p | LOW: 243p |
| DIVIDEND YIELD: | 2.8% | PE RATIO: | 9 | |
| NET ASSET VALUE: | 214p | LEVERAGE: | 14 | |
| Half-year to 30 Jun | Total operating income (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2016 | 96.5 | 100 | 30.2 | 2.9 |
| 2017 | 111 | 78.4 | 24.1 | 3.5 |
| % change | +15 | -22 | -20 | +21 |
| Ex-div: | 12 Oct | |||
| Payment: | 3 Nov |
