Andy Golding

OSB Group new business originations fell to £3.8bn in 2020



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OSB Group’s net loan book has grown by 4% to £19.2bn on a statutory basis and 5% to £19bn on an underlying basis, as revealed in the company’s preliminary results for the year ended 31st December 2020.

However, statutory gross originations fell by 9% to £3.8bn (from £4.1bn in 2019) and by 42% on an underlying basis (from £6.5bn in 2019), reflecting the impact of Covid-19.

While application levels in its core businesses were strong prior to the pandemic, the initial lockdown inevitably impacted application and completion volumes in Q2 and Q3.

As restrictions eased in the middle of the year, the group increased its lending in its core BTL and residential businesses at higher pricing, reduced maximum LTVs and loan sizes.   

Statutory profit before tax increased by 25% to £260.4m, but underlying profit before tax decreased by 9% to £346.2m.

On a statutory basis, the cost-to-income ratio improved to 31% from 32% in 2019 and, on an underlying basis, it improved to 27%, benefitting from delivery of synergies, lower discretionary spend during lockdowns and continued focus on cost discipline and efficiency.

Statutory and underlying loan loss ratios increased to 38 basis points, due primarily to the impact of adopting Covid-19 forward-looking assumptions in the group’s IFRS 9 models.

This is also a result of a £20m impairment provision in relation to potential fraudulent activity by a third party on a secured funding line provided by the group.

Andy Golding, CEO at OSB Group (pictured above), said he was extremely proud of the company’s performance in what he called a “very challenging year”.

“Our business model proved its resilience in 2020 and we produced another year of strong returns, despite the impact of the pandemic. 

“Lockdowns inevitably impacted our business and we reacted by tightening our risk appetite to protect margin and credit quality overgrowth. 

“I am pleased that applications have now recovered to near pre-Covid levels in our core BTL and residential sub-segments on tighter criteria and we have a strong pipeline of new business.”

He added that the group continued to control volumes in its more cyclical product lines, reflecting the economic outlook and its prudent approach to risk management. 

In October 2020, OSB Group celebrated the milestone of being a combined group for a year.

“We have delivered synergies earlier than anticipated and, by the end of the first year, we had achieved more than 65% of our end-of-year three synergy target and expect to marginally exceed our run-rate pledge for the third anniversary of the combination.”

The group expects to deliver underlying net loan book growth for 2021 of circa 10%, based on its pipeline and current application levels and risk appetite.

It also expects underlying NIM for 2021 to return to 2019 levels.

In terms of its underlying cost-to-income ratio, OSB Group anticipates it to be marginally higher in 2021, as the ratio in 2020 benefitted from higher income from gains on structured asset sales and lower discretionary spending in lockdowns.   

“After a year of unprecedented uncertainty, it seems there is finally reason for some cautious optimism, and we hope the country will begin to return to some sense of normality,” added Andy. 

“However, many businesses, families and individuals are currently receiving support from government initiatives and there is ongoing uncertainty over the true impact of the pandemic on the economy, our customers and the group’s business when that support ends.”

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