This article first appeared on GuruFocus .
-
Net Loans Growth:3.2% increase in net loans.
-
Originations Growth:53% growth in originations from higher-yielding segments.
-
Net Interest Income:GBP679.4 million, down 2% from the previous year.
-
Profit Before Tax:GBP382.5 million.
-
Return on Tangible Equity (RoTE):13.7%.
-
Tangible Net Asset Value (TNAV) per Share:579p, up from 544p last year.
-
Dividend Increase:5% increase in full year dividend.
-
Share Buyback Program:GBP100 million announced for 2026.
-
Net Interest Margin (NIM):228 basis points, down from 230 basis points in 2024.
-
Administrative Expenses:GBP270.1 million, up 5% from the previous year.
-
Impairment Charge:GBP13 million for 2025.
-
Retail Deposit Balances:GBP24.3 billion, a 2% increase from the prior year.
-
Cost-to-Income Ratio:40.4%, up from 38.7% in the prior year.
-
Capital Generation:150 basis points increase in CET1 ratio, ending at 15.8%.
Release Date: March 05, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
-
OSB Group PLC ( OSBGF ) achieved all targets set for 2025, aligning with their medium-term plan.
-
Net loans grew by 3.2%, with significant growth in commercial lending and higher-yielding segments.
-
The company maintained cost discipline, with core cost growth contained to only 0.8%.
-
Profit before tax was GBP383 million, translating to a RoTE of 13.7%, and a 5% increase in full-year dividend was announced.
-
A GBP100 million share buyback program for 2026 was announced, following the successful completion of the 2025 buyback program.
Negative Points
-
Net interest income decreased by 2% compared to 2024, with a reduction in NIM by 2 basis points.
-
The fair value loss on hedging activities increased significantly to GBP22 million.
-
Administrative expenses rose by 5%, driven by investment in the transformation program.
-
There was an impairment charge of GBP13 million for 2025, compared to an impairment credit in 2024.
-
Funding costs increased, with elevated levels persisting into 2026, impacting NIM guidance.
Q & A Highlights
Q: Ben Toms from RBC asked about the RoTE guidance for 2028, considering recent positive developments like the MREL story and a lower capital base. He also inquired about the 225 basis points NIM guidance and the potential impact if funding costs do not decrease as expected. A: Andy Golding, CEO, stated that the company is optimistic about reaching the high end of mid-teens RoTE by 2029 due to MREL instruments maturing. Victoria Hyde, CFO, explained that the NIM guidance is based on sustainable front book margins and expected normalization of funding costs. If funding costs remain high, they have levers like optimizing front book returns and transformation initiatives to manage the impact.
Q: Grace Dargan from Barclays asked about the trajectory of NIM in 2026 and beyond, and the timeline for reaching the 13% to 13.5% CET1 capital target. A: Victoria Hyde noted that while they expect funding costs to normalize, it's challenging to predict exact NIM trends for 2027. Andy Golding mentioned that the Board is committed to reaching the CET1 target, but the timeline will depend on macroeconomic conditions and regulatory changes like Basel 3.1.
Q: Jonathan Pierce from Jefferies inquired about the current margin on deposit stock compared to new business and the potential for increasing ILTR usage. He also asked about the timeline for Foundation IRB on the mortgage book. A: Victoria Hyde stated they are not disclosing the exact deposit stock margin but confirmed ILTR is used to manage funding peaks and troughs. Andy Golding explained that the decision on Foundation IRB will depend on regulatory clarity and the cost-benefit analysis, with no current assumptions based on IRB approvals.
Q: Edward Firth from KBW asked about the current average funding cost relative to SONIA plus 30 and the current front book margins. A: Andy Golding confirmed that front book margins remain between 240 and 280 basis points. Victoria Hyde noted that current funding costs are about 10 to 15 basis points above the SONIA plus 30 target, with a focus on balancing fixed versus easy access deposits.
Q: Edward Firth also asked about the sustainability of front book margins given the funding assumptions. A: Victoria Hyde assured that they are comfortable with the sustainable front book margins, and the impact on NIM will depend on how funding costs evolve throughout the year.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
