UPDATE 1-UK’s OneSavings Bank profit jumps on cost controls

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(Adds segment details, 2018 expectations)

March 15 (Reuters) – OneSavings Bank Plc said on Thursday full-year underlying pretax profit rose 21 percent as it controlled costs and focused on bigger, professional landlords, while the broader market lost its sheen for amateur landlords due to tax and regulatory changes.

OneSavings, one of the banks aiming to challenge Britain’s “Big 5” lenders, said underlying pretax profit rose to 167.7 million pounds ($234.5 million) in 2017, from 138.2 million pounds a year earlier.

OneSavings’ loan book grew 23 percent to 7.3 billion pounds, while net interest margin remained stable at 316 basis points.

The bank said its core buy-to-let lending segment grew by 39 percent to 5 billion pounds, with its target audience of professional landlords delivering strong application and completion volumes.

“In line with UK Finance forecasts, the overall buy-to-let market is expected to contract further in 2018. However, we expect to continue to grow market share through the relevance of our proposition to professional landlords,” OneSavings said.

OneSavings said in 2016 that it had increased its focus on professional landlords and tightened lending criteria for financing smaller developments after the Britain voted to leave the European Union.

Returns on equity fell to 28 percent, against 29 percent in 2016. Common equity tier-one capital ratio – a key measure of financial strength – grew to 13.7 percent from 13.3 percent a year earlier.

OneSavings expects to deliver net loan book growth in the mid-teens in 2018 and NIM of about 3 percent. It also looks to maintain its CET1 ratio at a minimum 12 percent going forward. ($1 = 0.7153 pounds)

Reporting by Noor Zainab Hussain in Bengaluru; Editing by
Gopakumar Warrier

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