OneSavings Bank shrugs off Brexit fears with 36% pre-tax profit hike

The lender, which operates in the buy to let (BTL), first and second charge markets, increased gross mortgage lending by 25% in the six months to June compared with the same period last year, reaching a total of £973m (excluding acquisitions).

The firm lends predominantly to clients based in London and the South East and has little exposure to the high end property market, which, early indications have shown, was most affected by Brexit.

OneSavings said it felt well-positioned in the “current uncertain economic climate” but that it was too soon to predict the medium to long-term impact of Brexit on the UK economy.

“We will continue to concentrate on what we have proven we do best; using our broker relationships, manual underwriting expertise and secured lending strategy to lend responsibly to customers in under served markets. We remain well placed to take advantage of opportunities that arise using these well proven capabilities,” group CEO Andy Golding said.

OneSavings BTL lending was up 24% in the period, to £800m, predominantly from business written by its Kent Reliance and InterBay brands.

Its average loan to value (LTV) in the segment remained low at 68%, with 1% of loans exceeding 90%, the firm said.

The combined BTL/SME segment increased its contribution to group profit by 64% to £59.9m in the first half of 2016, reflecting lower impairment losses in the period.

The group’s residential lending business, which includes first and second charge mortgages predominantly sold by the Kent Reliance and Prestige Finance brands, was also up 28% in the six months, to £173m.

However, while the value of the group’s first charge mortgage book increased 9%, the second charge equivalent remained flat at a gross value of about £514m, after suffering redemptions and acquired books in run-off.

The bank’s average LTV in residential lending remained low at 57% with about 2% of loans exceeding 90%, while the average LTV of new residential mortgages was 65%, it said.

Residential mortgages made a contribution to group profit of £30.2m in the period, down 0.3% on the £30.3m earned in the first half 2015. It said profits had been offset by higher impairment losses from the acquired mortgage portfolios and the impact of its disposal of Rochester Financing, which it sold to Morgan Stanley in May.

Golding said: “I am delighted that OneSavings Bank has delivered another strong set of results for the first half of 2016. We have achieved all of our financial objectives since IPO and the strength of our balance sheet, together with the high quality of our secured asset portfolio, positions us well in the current uncertain economic climate.”