OneSavings Bank reports modest improvements in third quarter

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OneSavings Bank PLC (LON:OSB) reported slight upturn in loan originations, net loan growth and net interest margin in the third quarter.

The challenger bank, which specialises in buy-to-Let, commercial and semi-commercial mortgages, said there had been a small improvement in arrears over three months during the quarter and as of September 30, active payment holidays had decreased to only around 3% of the loan book by value.

READ: OneSavings Bank surges as loan book expands in first half despite pandemic impact

Originations in the quarter of £0.7bn were up from the £0.6bn in the second quarter.

Net loan growth excluding asset sales was 8% for the nine months so far, implying 1% growth in the past quarter and the full-year target of 10% was unchanged.

Underlying NIM improved towards the end of the third quarter, but was not quantified, as the full impact of the base rate cuts was passed on to retail savers

The lender’s board said it “aspires” to return to dividend payment and promised to “assess at the end of the year whether circumstances support the payment of a dividend for 2020, taking into account the macroeconomic and capital outlook”.

The shares rose 1% to 391p in early trading on Thursday.

Broker Peel Hunt noted that they have increased by 43% over the past three months and now trade at around 1.2 times tangible net asset value, which is high by bank sector standards but low relative to the high-teens return on equity currently being generated by the group.

While the statement had “little incrementally new” the momentum was positive “and there is still significant upside if the outlook doesn’t deteriorate”. 

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