Half Year 2024 OSB Group PLC Earnings Call Transcript
Key Points
- OSB Group PLC (OSBGF) maintained a strong return on equity (ROE) of 18%, supported by a robust CET1 ratio, enabling capital returns to shareholders through dividends and a GBP50 million share buyback.
- The company demonstrated disciplined pricing in a competitive market, maintaining high-quality underwriting standards, which resulted in an impairment release in the first half.
- Retail deposits grew by 10% in the first half, with a high retention rate of maturing fixed-rate savings customers, indicating strong customer loyalty and satisfaction.
- The Group successfully completed two securitizations, raising GBP839 million, which contributed to the repayment of TFSME borrowings without widening spreads.
- OSB Group PLC (OSBGF) is investing in technology, launching a mobile app for intermediaries and planning a new savings platform to enhance customer engagement and operational efficiency.
- Net loan book growth was slightly lower than originally guided due to pricing discipline amidst high competition, impacting overall growth.
- The net interest margin (NIM) faced pressure from lower prevailing spreads on mortgages and deposits, with guidance for 2024 set between 230 and 240 basis points.
- The cost-to-income ratio is expected to rise to around 36% due to income dynamics, despite maintaining cost discipline.
- There was a small increase in arrears to 1.6%, reflecting the impact of higher borrowing costs on some borrowers.
- The buy-to-let market remains subdued, with competitive pressures affecting the Precise brand, leading to higher and earlier redemptions.
Good morning everybody and thank you for joining OSB Group's 2024 interim results presentation. This morning, we'll take you through the key highlights for the year, an update on our lending and savings franchises, then I'll hand over to Victoria for the financials in detail and return for some progress updates, take you through the outlook and add some additional color.
This slide highlights three key themes that help summarize our strategy and results in the first half. Firstly, we've been very disciplined in our approach to new lending. We've been focused on maintaining return on equity on new business during a period of high competition against a backdrop of a subdued market in volume terms.
During Q2, some lenders have elected to drop pricing to a level below those that deliver our target returns and as a result our net loan book growth is now slightly lower than we'd originally guided. This is reflective of our pricing discipline.
Our net interest margin reflects the impact felt across the market
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