In its trading update, the group said its net loan book increased in line with expectations, coming to £25.5bn, 1.8% higher than where it stood at the end of last year.
OSB Group said the growth would have been 2.3% excluding the sale of its portfolio of second charge mortgages in September, valued at £130m.
Following the sale of the second charge portfolio, OSB Group’s risk weighted assets rose by 4% as it “carefully optimised” the loan book towards higher-yielding assets.
The group said it would continue with its plan to evolve its loan book mix, noting that originations in higher-yielding sub-segments of the market outpaced buy-to-let (BTL). It added that its origination and retention margins were in line with expectations.
There was a slight fall in arrears of three months or more, from 1.8% to 1.7%, as the credit quality of its loan book “remained strong”.
Aldermore Insights with Jon Cooper: Edition 4 – Budget 2025: Landlords feel the heat, brokers to steer the market
Sponsored by Aldermore
Andy Golding, CEO of OSB Group, said: “I am pleased with the group’s resilient financial performance and strategic progress in the nine months to 30 September. We have delivered in line with our plan, and we are on track for the full year 2025 net interest margin, administrative expenses, loan book growth and return on tangible equity guidance.
“Our lending franchise performed well as we continued to exercise discipline and optimise returns. In our BTL segment, we remained focused on professional landlords refinancing or adding to their portfolios. The new residential products which were launched in the second quarter have been gaining traction, and we have seen good origination volumes in our higher-yielding sub-segments. In September, we sold our second charge mortgage portfolio, as we continue to focus on our strategic aims of optimising our balance sheet and improving our blended risk adjusted returns.”
He added: “In September, the group completed a £578m securitisation of owner-occupied prime mortgages under the Charter Mortgage Funding programme and I am pleased that we have achieved our best-ever pricing for this transaction. We will continue to complement retail savings funding with attractive price and duration options as we actively manage our overall cost of funds in a competitive market.
“The transformation programme progressed in line with our plan in the third quarter. In October, we began successfully migrating the first tranche of existing Easy Access accounts onto the new savings platform and this will continue in the coming weeks. We are also processing more BTL applications on the new lending platform under the Rely brand before a market launch later this month.
“Looking ahead, we are cognisant that the BTL mortgage market remains subdued, however, the fundamentals of the UK private rented sector are strong. We are focused on making progress through the transition period to deliver on our medium-term aspirations, with positive outcomes for our stakeholders and strong returns for our shareholders.”
