UK challenger OneSavings Bank H1 2019 profit before tax is down by less than 1% year-on-year to £91.0m.
On an underlying basis the bank’s profit before tax rises by 6% y-o-y to £96.9m.
The standout metric is the sharp decline in the OneSavings Bank H1 2019 net interest margin to 2.78%. This compares to 3.01% for the first half of 2018.
Notwithstanding the 23 basis point drop in the net interest margin, the bank’s overall results are generally positive.
But the OneSavings Bank cost-income ratio inches up from 27% a year ago to 28%.
OneSavings Bank H1 2019 highlights
- Net loan book growth of 10%, driven by 13% growth in gross organic origination;
- Deposits increase by 14% to £9.2bn;
- Underlying basic earnings per share of £0.29, up 5%;
- Customer satisfaction rates remain high with a net promoter score of +64 with retail savings bond retention at 93%;
- Interim dividend of 4.9p per share, up 14%, and
- A strong return on equity of 23%, albeit down from 26% in the year ago period
In March OneSavings Bank announced plans to acquire rival specialist lender Charter Court in an all share deal.
In terms of the proposed deal, Charter Court shareholders will own about 45% of the enlarged OneSavings Bank. The deal values Charter Court at around £800m.
The proposed deal received unconditional clearance from the Competition and Markets Authority on 30 July.
Group CEO, Andy Golding says: “I am delighted that OneSavings Bank has delivered strong performance in the first half. Lending volumes were driven by 13% growth in organic originations with high demand across our core market segments. We saw good opportunities in the professional Buy-to-Let segment and our more specialist businesses.”
On margin pressure, Golding adds: “This is primarily due to the changing mix of the loan book. This is despite broadly stable asset pricing. The mix of the loan book continued to change as the higher yielding back book refinanced onto front book pricing. The impact of this mix effect has now largely run its course.”
This assumes that current mortgage pricing, cost of funds and swap spreads continue.
OneSavings Bank’s retail funding franchise acquired 30,000 new customers in the first half of 2019.
The OneSavings Bank share price is down by 3% for the year to date.