OneSavings Bank reports loan growth as Charter Court merger progresses

OneSavings Bank has unveiled strong loan growth as it prepares to integrate Charter Court into its business after a £1.6 billion merger.

The lender said pre-tax profits were flat at £91 million in the six months to June 30, but rose 6% on an underlying basis to £96.9 million.

The net loan book grew 10% during the period, driven by 13% growth in organic originations with high demand across core markets.

The group said the professional buy-to-let segment and some more specialist businesses had been particularly successful.

Return on equity was 23%, down from 26% this time last year.

Net interest margin was down more than analysts had expected, coming in at 278 basis points compared to 301 last year, due to refinancing of the higher-yielding back book.

The group announced a 14% increase in the dividend to 4.9p.

It comes as OneSavings prepares to integrate Charter Court Financial Services Group, after the takeover was approved by shareholders in June and gained competition authority approval at the end of July.

Due to the impending combination, OneSavings said it was not able to give detailed guidance for the financial year ahead.

But the lender said it has a strong pipeline for the current quarter, with net loan book growth in the high teens expected for 2019.

Chief executive Andy Golding said performance would be strong despite ongoing uncertainty surrounding Brexit.

“OneSavings Bank is exceptionally well-placed to continue to generate attractive returns for our shareholders, regardless of potential political scenarios that may take place and we look to the future with confidence,” he said.

OneSavings shares were down 1.6% in early trading on Wednesday.

Analysts at Goodbody Financial said it was a “reassuring update” and pointed to further loan growth, especially in the buy-to-let market.

“The strong net lending and deposits growth will, once again, reassure that OneSavings Bank can continue to deliver as professional buy-to-let remains a growth segment of the buy-to-let market (with the large banks and building societies mostly absent from this space).”