OSB Group PLC (OSBGF) (Q2 2024) Earnings Call Highlights: Strong Financial Performance Amid ...

GuruFocus News
4 min read

In This Article:

  • Return on Equity (ROE): 18% for the first half of 2024.

  • Underlying Pre-Tax Profit: GBP 250 million, up from GBP 117 million in the prior period.

  • Net Interest Margin (NIM): 243 basis points, up 40 basis points from the prior period.

  • Underlying Net Interest Income: GBP 362 million, a 29% increase.

  • Cost to Income Ratio: 34% in the first half.

  • Retail Deposits Growth: 10% increase to over GBP 24 billion.

  • Underlying Loan Book Growth: 1.5% increase to GBP 26.1 billion.

  • Underlying Earnings Per Share: GBP 0.46.

  • Impairment Release: GBP 24.7 million due to favorable macroeconomic scenarios.

  • Net Loan Book Originations: GBP 1.9 billion, an 18% decrease from the prior period.

  • Share Buyback: GBP 50 million announced to commence on September 06.

  • Common Equity Tier 1 (CET1) Ratio: 16.2% at the end of June.

Release Date: August 15, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • OSB Group PLC (OSBGF) maintained a strong return on equity (ROE) of 18%, supported by a robust CET1 ratio, enabling capital returns to shareholders through dividends and a GBP50 million share buyback.

  • The company demonstrated disciplined pricing in a competitive market, maintaining high-quality underwriting standards, which resulted in an impairment release in the first half.

  • Retail deposits grew by 10% in the first half, with a high retention rate of maturing fixed-rate savings customers, indicating strong customer loyalty and satisfaction.

  • The Group successfully completed two securitizations, raising GBP839 million, which contributed to the repayment of TFSME borrowings without widening spreads.

  • OSB Group PLC (OSBGF) is investing in technology, launching a mobile app for intermediaries and planning a new savings platform to enhance customer engagement and operational efficiency.

Negative Points

  • Net loan book growth was slightly lower than originally guided due to pricing discipline amidst high competition, impacting overall growth.

  • The net interest margin (NIM) faced pressure from lower prevailing spreads on mortgages and deposits, with guidance for 2024 set between 230 and 240 basis points.

  • The cost-to-income ratio is expected to rise to around 36% due to income dynamics, despite maintaining cost discipline.

  • There was a small increase in arrears to 1.6%, reflecting the impact of higher borrowing costs on some borrowers.

  • The buy-to-let market remains subdued, with competitive pressures affecting the Precise brand, leading to higher and earlier redemptions.

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