LONDON (ShareCast) - (Sharecast News) - Specialist lending and retail savings group OneSavings Bank announced a "strong" set of results for the six months ended 30 June on Thursday, with profit before tax improving 17% to £91.8m.
The FTSE 250 challenger bank said it saw net loan book growth of 11%, driven by 17% growth in gross organic origination to £1.44bn.

It said its "continued focus" on cost discipline and efficiency, alongside strong income growth, delivered a cost-to-income ratio of 27%, compared to 28% in the first half of last year.

Its net interest margin was 301 basis points, down from 324 basis points year-on-year, while its loan loss ratio rose to 11 basis points from four basis points, with the board saying the prior period benefitted from increasing property values.

OneSavings Bank's fully-loaded common equity tier 1 (CET1) capital ratio was "strong" at 13.3%, down from 13.7% at the end of the 2017 financial year.

Basic earnings per share were ahead 13% year-on-year at 27.3p, with the board reporting a return on equity of 26%, down from 28% a year ago.

The company's directors declared an interim dividend of 4.3p per share, up 23%.

"I am delighted that OneSavings Bank has continued to deliver excellent shareholder returns in the first half of 2018," said group chief executive officer Andy Golding.

"Volumes grew strongly with 17% growth in organic originations, driven by high demand for our professional buy-to-let and our commercial and semi-commercial products.

"This supported 17% growth in profit before tax to £91.8m and a strong return on equity of 26%."

Golfing said that, while regulatory and tax changes in the buy-to-let market had "dampened" industry-wide demand for new purchase mortgages, that had been partially offset by an increase in demand for remortgages.

"We focus on the professional Buy-to-Let market where trends remain positive," he quipped.

"Demand for five year fixed rate products has risen noticeably across the market with competition continuing to increase, however we continue to see good opportunities for growth and our InterBay Commercial business continues to flourish."

Given the growth already achieved this year, and considering the current pipeline and application levels for the third quarter to date, Golding said the board now expected to deliver net loan book growth in the high teens in 2018, while maintaining an "appropriate margin" for the risks the company was underwriting.

"Our continued focus on cost efficiency, whilst investing in the future, is reflected in our market-leading cost to income ratio for the first half of 27%.

"There will be further planned expenditure in the second half, as we invest in technology infrastructure and enhancements to our online savings and mortgage origination platforms.

"We continue to expect that our cost to income ratio will be [around] 30% for the full year, as previously guided, with all other guidance for the full year also unchanged."

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