TIDMOSB
LEI: 213800WTQKOQI8ELD692
OneSavings Bank plc
Interim report for the six months ended 30 June 2022
OneSavings Bank plc (OSB or the Group), the specialist lending
and retail savings group, announces today its results for the six
months ended 30 June 2022.
OSB is a wholly-owned subsidiary of OSB GROUP PLC (OSBG). OSBG
has prepared its own interim report for the period ended 30 June
2022 which includes the results of OSB and its subsidiaries (the
Group) and was published on 11 August 2022. OSB is also required to
publish an interim report due to its listed debt.
Following the Combination with Charter Court Financial Services
Group plc (CCFS) on 4 October 2019, this press release includes
results on an underlying basis, in addition to the statutory basis,
which Management believe provide a more consistent basis for
comparing the Group's results between financial periods. Underlying
results exclude exceptional items, integration costs and other
acquisition-related items (see the reconciliation in the Financial
review).
Enquiries:
OneSavings Bank plc Brunswick Group
Alastair Pate, Investor Relations Robin Wrench/Simone Selzer
t: 01634 838973 t: 020 7404 5959
About OneSavings Bank plc (OSB)
OSB began trading as a bank on 1 February 2011 and was admitted
to the main market of the London Stock Exchange in June 2014
(OSB.L). OSB joined the FTSE 250 index in June 2015. On 4 October
2019, OSB acquired Charter Court Financial Services Group plc
(CCFS) and its subsidiary businesses. On 30 November 2020, OSB
GROUP PLC became the listed entity and holding company of the OSB
Group. The Group provides specialist lending and retail savings and
is authorised by the Prudential Regulation Authority, part of the
Bank of England, and regulated by the Financial Conduct Authority
and Prudential Regulation Authority. The Group reports under two
segments, OneSavings Bank and Charter Court Financial Services.
OneSavings Bank
OSB primarily targets market sub-sectors that offer high growth
potential and attractive risk-adjusted returns in which it can take
a leading position and where it has established expertise,
platforms and capabilities. These include private rented sector
Buy-to-Let, commercial and semi-commercial mortgages, residential
development finance, bespoke and specialist residential lending,
secured funding lines and asset finance.
OSB originates mortgages organically via specialist brokers and
independent financial advisers through its specialist brands
including Kent Reliance for Intermediaries and InterBay Commercial.
It is differentiated through its use of highly skilled, bespoke
underwriting and efficient operating model.
OSB is predominantly funded by retail savings originated through
the long-established Kent Reliance name, which includes online and
postal channels as well as a network of branches in the South East
of England. Diversification of funding is currently provided by
securitisation programmes and the Bank of England's Term Funding
Scheme with additional incentives for SMEs.
Charter Court Financial Services Group (CCFS)
CCFS focuses on providing Buy-to-Let and specialist residential
mortgages, mortgage servicing, administration and retail savings
products. It operates through its brands: Precise Mortgages and
Charter Savings Bank.
It is differentiated through risk management expertise and
best-of-breed automated technology and systems, ensuring efficient
processing, strong credit and collateral risk control and speed of
product development and innovation. These factors have enabled
strong balance sheet growth whilst maintaining high credit quality
mortgage assets.
CCFS is predominantly funded by retail savings originated
through its Charter Savings Bank brand. Diversification of funding
is currently provided by securitisation programmes and the Bank of
England's Term Funding Scheme with additional incentives for
SMEs.
Important disclaimer
This document should be read in conjunction with the documents
distributed by OneSavings Bank plc (OSB) through the Regulatory
News Service (RNS). This document is not audited and contains
certain forward-looking statements with respect to the business,
strategy and plans of OSB, its current goals, beliefs, intentions,
strategies and expectations relating to its future financial
condition, performance and results. Such forward-looking statements
include, without limitation, those preceded by, followed by or that
include the words 'targets', 'believes', 'estimates', 'expects',
'aims', 'intends', 'will', 'may', 'anticipates', 'projects',
'plans', 'forecasts', 'outlook', 'likely', 'guidance', 'trends',
'future', 'would', 'could', 'should' or similar expressions or
negatives thereof but are not the exclusive means of identifying
such statements. Statements that are not historical facts,
including statements about OSB, its directors' and/or management's
beliefs and expectations, are forward-looking statements. By their
nature, forward-looking statements involve risk and uncertainty
because they relate to events and depend upon circumstances that
may or may not occur in the future that could cause actual results
or events to differ materially from those expressed or implied by
the forward-looking statements. Factors that could cause actual
business, strategy, plans and/or results (including but not limited
to the payment of dividends) to differ materially from the plans,
objectives, expectations, estimates and intentions expressed in
such forward-looking statements made by OSB or on its behalf
include, but are not limited to: general economic and business
conditions in the UK and internationally; market related trends and
developments; fluctuations in exchange rates, stock markets,
inflation, deflation, interest rates and currencies; policies of
the Bank of England, the European Central Bank and other G8 central
banks; the ability to access sufficient sources of capital,
liquidity and funding when required; changes to OSB's credit
ratings; the ability to derive cost savings; changing demographic
developments, and changing customer behaviour, including consumer
spending, saving and borrowing habits; changes in customer
preferences; changes to borrower or counterparty credit quality;
instability in the global financial markets, including Eurozone
instability, the potential for countries to exit the European Union
(the EU) or the Eurozone, and the impact of any sovereign credit
rating downgrade or other sovereign financial issues; technological
changes and risks to cyber security; natural and other disasters,
adverse weather and similar contingencies outside OSB's control;
inadequate or failed internal or external processes, people and
systems; terrorist acts and other acts of war or hostility and
responses to those acts; geopolitical events; the impact of
outbreaks, epidemics and pandemics or other such events; changes in
laws, regulations, taxation, accounting standards or practices,
including as a result of the UK's exit from the EU; regulatory
capital or liquidity requirements and similar contingencies outside
OSB's control; the policies and actions of governmental or
regulatory authorities in the UK, the EU or elsewhere including the
implementation and interpretation of key legislation and
regulation; the ability to attract and retain senior management and
other employees; the extent of any future impairment charges or
write-downs caused by, but not limited to, depressed asset
valuations, market disruptions and illiquid markets; market
relating trends and developments; exposure to regulatory scrutiny,
legal proceedings, regulatory investigations or complaints; changes
in competition and pricing environments; the inability to hedge
certain risks economically; the adequacy of loss reserves; the
actions of competitors, including non-bank financial services and
lending companies; the success of OSB in managing the risks of the
foregoing; and other risks inherent to the industries in which OSB
operates.
Accordingly, no reliance may be placed on any forward-looking
statement. Neither OSB, nor any of its directors, officers or
employees provides any representation, warranty or assurance that
any of these statements or forecasts will come to pass or that any
forecast results will be achieved. Any forward-looking statements
made in this document speak only as of the date they are made and
it should not be assumed that they have been revised or updated in
the light of new information of future events. Except as required
by the Prudential Regulation Authority, the Financial Conduct
Authority, the London Stock Exchange PLC or applicable law, OSB
expressly disclaims any obligation or undertaking to release
publicly any updates or revisions to any forward-looking statements
contained in this document to reflect any change in OSB's
expectations with regard thereto or any change in events,
conditions or circumstances on which any such statement is based.
For additional information on possible risks to OSB's business,
please see the Risk review section in the OSB 2021 Annual Report
and Accounts. Copies of this are available from OSB.
Nothing in this document and any subsequent discussion
constitutes or forms part of a public offer under any applicable
law or an offer or the solicitation of an offer to purchase or sell
any securities or financial instruments. Nor does it constitute
advice or a recommendation with respect to such securities or
financial instruments, or any invitation or inducement to engage in
investment activity under section 21 of the Financial Services and
Markets Act 2000. Past performance cannot be relied on as a guide
to future performance. Statements about historical performance must
not be construed to indicate that future performance, share price
or results in any future period will necessarily match or exceed
those of any prior period. Nothing in this document is intended to
be, or should be construed as, a profit forecast or estimate for
any period.
Regarding information provided by third parties, neither OSB nor
any of its directors, officers or employees explicitly or
implicitly guarantees that such information is exact, accurate,
comprehensive or complete, nor are they obliged to keep them
updated, nor to correct them in the case that any deficiency, error
or omission is detected. Moreover, in reproducing such information
by any means, OSB may introduce any changes it deems suitable, may
omit partially or completely any of the elements of this document,
and in case of any deviation between such a version and this
document, OSB assumes no liability for any discrepancy.
Liability arising from anything in this document shall be
governed by English law, and neither the Company nor any of its
affiliates, advisors or representatives shall have any liability
whatsoever (in negligence or otherwise) for any loss howsoever
arising from any use of this document or its contents or otherwise
arising in connection with this document. Nothing in this document
shall exclude any liability under applicable laws that cannot be
excluded in accordance with such laws.
Certain figures contained in this document, including financial
information, may have been subject to rounding adjustments and
foreign exchange conversions. Accordingly, in certain instances,
the sum or percentage change of the numbers contained in this
document may not conform exactly to the total figure given.
Non-IFRS performance measures
OSB believes that the non-IFRS performance measures included in
this document provide a more consistent basis for comparing the
business' performance between financial periods, and provide more
detail concerning the elements of performance which the Group is
most directly able to influence or are relevant for an assessment
of the Group. They also reflect an important aspect of the way in
which operating targets are defined and performance is monitored by
the Board. However, any non-IFRS performance measures in this
document are not a substitute for IFRS measures and readers should
consider the IFRS measures as well. For further details, refer to
Alternative performance measures section in the OSB 2021 Annual
Report and Accounts. Copies of this are available on request from
OSB.
Key Performance Indicators - statutory
GBP2.3bn GBP21.8bn
Gross new organic lending down Net loan book up 3%
7% FY 2021: GBP21.1bn
H1 2021: GBP2.5bn
--------------------------------- ----------------------------------
GBP268.1m 280bps
Profit before tax up 21% Net interest margin(1) up 44bps
H1 2021: GBP221.9m FY 2021: GBP21.1bn
--------------------------------- ----------------------------------
25% 1bp
Cost to income ratio(2) improved Loan loss ratio(3) up 16bps
3pps H1 2021: -15bps
H1 2021: 28%
--------------------------------- ----------------------------------
73bps 21%
Management expense ratio(4) up Return on equity(5) improved 2pps
3bps H1 2021: 19%
H1 2021: 70bps
--------------------------------- ----------------------------------
18.7% 3 months + in arrears(7) stable
CET1 (6) remained strong OSB 1.3%, CCFS 0.8%
FY 2021: 19.4% FY 2021: OSB 1.4%, CCFS 0.7%
--------------------------------- ----------------------------------
Customer NPS(8) strong
OSB +69, CCFS +70
H1 2021: OSB +68, CCFS +70
--------------------------------- ----------------------------------
1. Net interest income as a percentage of a 7 point average of
interest earning assets, annualised on an actual days basis
2. Administrative expenses as a percentage of total income
3. Impairment losses as a percentage of a 7 point average of
gross loans and advances, annualised
4. Administrative expenses as a percentage of 7 point average of
total assets, annualised
5. Profit attributable to ordinary shareholders, which is profit
after tax and after deducting coupons on AT1 securities, gross of
tax, as a percentage of a 7 point average of shareholders' equity
(excluding GBP150m of AT1 securities for the first half of 2022 and
GBP60m of AT1 securities for the first half of 2021),
annualised
6. Capital metrics disclosed in this report are on an individual
consolidation basis (OSB solo) which includes the Company and
subsidiaries except for the offshore servicing entity OSBI, SPVs
relating to securitisations and the CCFS entities acquired in
October 2019.
7. Portfolio arrears rate of accounts for which there are
missing or overdue payments by more than three months as a
percentage of gross loans
8. OSB customer Net Promoter Score relates to Kent Reliance
savings customers and CCFS customer NPS relates to Charter Savings
Bank customers. It is calculated based on customer responses to the
question of whether they would recommend the Group's products to a
friend. The responses provide a score between -100 and +100
Key Performance Indicators - underlying
Underlying key performance indicators for the six months to 30
June 2022 and 30 June 2021 reflect results for the combined Group,
excluding exceptional items, integration costs and other
acquisition-related items (see Reconciliation of statutory to
underlying results in Financial review).
GBP21.6bn GBP294.1m
Net loan book up 3% Profit before tax up 16%
FY 2021: GBP20.9bn H1 2021: GBP252.8m
---------------------------------- ---------------------------------
302bps 23%
Net interest margin(1) up 34bps Cost to income ratio(2) improved
H1 2021: 268bps 2ppt
H1 2021: 25%
---------------------------------- ---------------------------------
2bps 72bps
Loan loss ratio(3) up 17bps Management expense ratio(4) up
H1 2021: -15bps 3bps
H1 2021: 69bps
---------------------------------- ---------------------------------
24%
Return on equity(5) unchanged
H1 2021: 24%
---------------------------------- ---------------------------------
For definitions of key ratios please see footnotes in statutory
KPIs above.
CEO Report
I am delighted with the excellent results delivered by the Group
in the first six months of 2022, demonstrating the strength of our
strategy and our business model. We grew our lending at attractive
margins and the strong credit performance of our borrowers was
evidence of our underwriting expertise and rigorous application of
our lending criteria.
Excellent results in the first half
The Group delivered a record underlying pre-tax profit of
GBP294.1m for the first six months of 2022, up 16% from GBP252.8m
in the prior period. On a statutory basis, profit before tax
increased to GBP268.1m.
The underlying and statutory net interest margins improved to
302bps and 280bps respectively, benefitting from base rate rises
(H1 2021: 268bps and 236bps, respectively).
The underlying management expense ratio increased to 72bps
reflecting the expected gradual return to pre-pandemic spending
level (H1 2021: 69bps), the statutory management expense ratio was
73bps (30 June 2021: 70bps). However, the particularly strong
income had a favourable impact on the cost to income ratio which
improved to 23% and 25% on an underlying and statutory basis
respectively for the first six months of 2022 (H1 2021: 25% and
28%, respectively).
The credit performance of the Group's loan book remained strong
in the first six months of 2022, reflecting our underwriting
expertise and a robust rental market. We are cognisant of the
impact that rising, cost of living and increasing interest rates
may have on some of our borrowers. However, a large majority of our
customers have chosen fixed rate mortgages and are therefore
entering the uncertain economic environment with clarity over their
mortgage repayments.
Finally, I am particularly proud of the consistent and
class-leading returns we deliver with an underlying return on
equity of 24% for the first half, unchanged from the prior period
which benefitted from a GBP15.1m provision release. Statutory
return on equity was 21% (H1 2021: 19%).
Our lending franchise
Strong demand for the Group's lending products supported
underlying and statutory net loan book growth of 3% in the first
six months of the year to GBP21.6bn and GBP21.8bn, respectively (31
December 2021: GBP20.9bn and GBP21.1bn). Organic originations of
GBP2.3bn were down 7% from GBP2.5bn in the first half of 2021,
however the prior period benefitted from higher purchase activity
due to the stamp duty holiday.
Applications grew strongly during the first half as the Group
concentrated on its core business sub-segments: Buy-to-Let,
Residential, Commercial and semi-Commercial, and we have a record
pipeline of new business. Applications for our Buy-to-Let mortgages
increased throughout the period as landlords reported improving
levels of tenant demand in the private rented sector which
supported rising rents.(1) In addition, we have seen good demand
for our Commercial and semi-Commercial products and we relaunched
our Residential mortgage proposition in the first half of 2022,
building on the popularity of our complex prime and shared
ownership mortgages.
The Group continues its planning to achieve goals consistent
with its membership of the Net Zero Banking Alliance. I am
delighted that we have recently introduced the first of a range of
mortgage products targeting landlords wishing to improve the energy
efficiency and EPC rating of their properties. The new product
includes funding for refurbishment where landlords wish to optimise
the capital value, desirability and rental yields of their
estate.
Credit and risk management
Our loan book continued to demonstrate consistently strong
credit performance with balances over three months in arrears
remaining broadly stable at just 1.3% and 0.8% of the loan book at
the end of June for OSB and CCFS, respectively (31 December 2021:
1.4% and 0.7%). The weighted average LTV of the Group's loan book
reduced to 61% as at 30 June 2022 from 62% at the end of 2021,
supported by house price appreciation. The weighted average LTV of
new business written by the Group increased marginally to 71% from
69% in the prior period.
The Group recorded an impairment charge of GBP2.0m on an
underlying basis which represented an underlying loan loss ratio of
2bps for the first six months of 2022 (H1 2021: credit of GBP15.1m
and -15bps, respectively). The impairment charge reflects an
improved outlook as pandemic related concerns reduced and house
prices outperformed, offset by a 10% increase in the downside
weighting to address growing cost of living concerns. The statutory
impairment was GBP1.6m equivalent to a loan loss ratio of 1bp (H1
2021: -15bps).
Our Internal Ratings-Based (IRB) models continued to be
integrated into key risk and capital management processes and are
already informing our strategic decision making and business
planning activities. The anticipated delay in Basel 3.1
implementation and extension to the Group's MREL(2) deadlines
provided us with the opportunity to enhance our level of end state
compliance prior to submitting our module 1 application. We
continue to engage with the PRA to agree a submission date.
We have entered the final quarter of our three-year integration
programme and we are progressing the closing phase of the remaining
projects. We delivered annualised run rate savings of GBP24.6m by
30 June 2022, marginally in excess of our run-rate pledge of GBP22m
by the end of the third anniversary of the Combination. Integration
costs to date are also lower than originally expected at GBP23.3m.
The next phase of technology investment will focus on improving
efficiency in our business operations, an enhanced user experience
for our customers and further streamlining the interaction with our
broker community.
Multi-channel funding model
Our savings propositions continued to be popular, and in the
first six months of 2022, we opened over 72,000 new savings
accounts and grew the retail deposit book to GBP17.9bn (31 December
2021: GBP17.5bn).
Under our two savings brands, Kent Reliance and Charter Savings
Bank, our focus is on combining excellent customer service with
transparent and fair savings products. This was reflected in the
strong Net Promoter Scores for the first half of the year of +69
for Kent Reliance and +70 for Charter Savings Bank, as well as high
retention rates; 95% for maturing fixed rate bonds and ISAs at Kent
Reliance and 89% for Charter Savings Bank.
We complement the funding that comes from retail deposits with
our expertise in the wholesale funding markets and in August 2022
we completed a fully retained c. GBP1.3bn securitisation of
buy-to-let mortgages under our Canterbury programme.
Securitisations provide optionality of funding and the opportunity
to increase efficiency in our drawings from the Bank of England
funding schemes through the use of retained AAA bonds. As at 30
June 2022, the drawings under the Term Funding Scheme for SMEs
remained at GBP4.2bn (31 December 2021: GBP4.2bn).
Capital management
The OSB solo capital position, which reflects the impact of the
OSBG share repurchase programme, remained strong with a CET1 ratio
of 18.7% as at 30 June 2022 (31 December 2021: 19.4%).
The GBP100m share repurchase programme announced by OSBG has
progressed well. The OSB solo capital position reflects a deduction
of GBP100m in respect of the programme announced in March. This
will reduce over time as dividends are received from CCFS in
relation to the programme. To date, dividends received from CCFS in
connection with the programme are GBP13.8m as at 30 June 2022. A
further GBP26.2m of dividend receipts are expected from CCFS in
connection with the programme, which is expected to reduce the
final impact on completion of the programme to GBP60m at the OSB
solo capital level.
Dividends paid by the Group in the six months to 30 June 2022
were GBP139.3m of which GBP44.5m were additional dividends to fund
OSBG's share repurchase programme.
Looking forward
Our high quality secured lending book continues to perform well
and we have not seen any systemic signs of distress or early
indicators of future concerns amongst our borrowers. However, we
are cognisant that the macroeconomic outlook for the UK economy
remains uncertain. The pandemic related issues and the benefit of
house price appreciation have been replaced by growing cost of
living concerns, rising interest rates and geopolitical
uncertainty. The strong foundations of our business with its
secured balance sheet, strong capital position and proven
operational resilience position us well to respond to opportunities
and challenges as they arise.
We have a record pipeline of new business and we are seeing
robust demand for our mortgages. Tenant demand in the private
rented sector remains positive, especially amongst our target
multi-property portfolio landlords and we continue to see strong
interest in our other core business sub-segments.
We have improved our full year underlying net interest margin
guidance and now expect it to be broadly flat to the first half. We
remain confident in delivering underlying net loan book growth of
c. 10% for 2022 based on current pipeline and applications. We
continue to expect the underlying cost to income ratio for full
year 2022 to increase marginally from 2021.
Andy Golding
Chief Executive Officer
12 August 2022
1. BVA BDRC, Landlords Panel, Q2 2022
2. Minimum requirement for own funds and eligible
liabilities
Mortgage market
The strong performance in the residential property market was
sustained into 2022 and demand for purchase and remortgage finance
remained high. Mortgage lenders continued to develop their product
offerings to meet this demand, progressively expanding underwriting
criteria, including the reintroduction of lending at higher LTVs
and increasing the number of mortgage products available to
borrowers. Data from the mortgage sourcing provider, Twenty7Tec,
demonstrated that the number of mortgage products in the market
peaked in March 2022, with product availability reaching over
ninety percent of the pre-pandemic maximum.(1) New buyer enquiries
grew for eight consecutive months to April 2022(2) , despite the
average UK house price increasing by 12.8% in the year to May,
according to the ONS.(3)
The Bank of England implemented five successive increases in the
base rate, from 0.1% in December 2021 to 1.25% in June 2022 in an
effort to lower inflation towards its 2% target. As a result,
mortgage rates were on an upward trajectory in the first six months
of 2022 reflecting the base rate rises as well as volatile swap
spreads. The Bank of England reported that quoted interest rates on
new mortgage lending were up across all loan to value categories
between January and April 2022(4) with the average two-year fixed
rate on new mortgage lending increasing by 0.73 percentage points
to 2.35% over this period.(5)
Overall, UK gross mortgage lending in the first six months of
2022 reduced by 10% to GBP151.4bn from GBP168.5bn in the same
period of 2021.(6)
In the private rented sector, conditions were particularly
buoyant, and research, conducted by BVA BDRC on behalf of the
Group, reported consistently high levels of tenant demand
throughout the first quarter of the year.(7) This strong demand was
matched by increasing rents, with the annual rental growth at a
14-year high of 11% in the first quarter according to Zoopla.(8)
Buy-to-Let gross advances reached GBP21.9bn to May 2022, an
increase of 15% compared with GBP19.1bn in the same period in 2021
with purchases reducing to 31% of total lending from 40% in the
prior period which benefitted from the stamp duty holiday.(9)
1. Twenty7Tec, Monthly Mortgage Market Report, May 2022
2. RICS, Residential Market Survey, May 2022
3. ONS, UK House Price Index, May 2022
4. Bank of England, Monetary Policy Report, May 2022
5. UK Finance, Quoted new lending interest rates, UK (BOE), May
2022
6. UK Finance, New mortgage lending by purpose of loan, UK
(BOE), July 2022
7. BVA BDRC, Landlords Panel, Q1 2022
8.
https://www.zoopla.co.uk/press/releases/average-uk-rents-reach-995-taking-rental-growth-to-highs-not-seen-since-the-global-financial-crisis/
9. UK Finance, BTL mortgages outstanding and gross lending, June
2022
Segment review
The Group reports its lending business under two segments:
OneSavings Bank and Charter Court Financial Services.
OneSavings Bank (OSB) segment
The following tables present OSB's contribution to profit and
loans and advances to customers on a statutory basis:
Contribution to profit for the period
BTL/SME Residential Total
For the six months ended 30
June 2022 GBPm GBPm GBPm
Net interest income 175.7 42.9 218.6
Other income 3.4 0.7 4.1
Total income 179.1 43.6 222.7
Impairment of financial assets (2.6) 0.7 (1.9)
Contribution to profit 176.5 44.3 220.8
For the six months ended 30
June 2021
Net interest income 148.0 40.6 188.6
Other income 4.0 1.0 5.0
Total income 152.0 41.6 193.6
Impairment of financial assets 2.7 2.4 5.1
Contribution to profit 154.7 44.0 198.7
Loans and advances to customers
BTL/SME Residential Total
As at 30 June 2022 GBPm GBPm GBPm
Gross loans and advances to
customers 10,151.1 2,167.5 12,318.6
Expected credit losses (74.4) (8.7) (83.1)
Net loans and advances to
customers 10,076.7 2,158.8 12,235.5
Risk-weighted assets 4,732.1 958.6 5,690.7
As at 31 December 2021
Gross loans and advances to
customers 9,936.1 2,121.2 12,057.3
Expected credit losses (72.0) (10.2) (82.2)
Net loans and advances to
customers 9,864.1 2,111.0 11,975.1
Risk-weighted assets 4,614.1 957.6 5,571.7
OSB Buy-to-Let/SME sub-segment
Loans and advances to customers
30-Jun-2022 31-Dec-2021
GBPm GBPm
-------------------------------------- ----------- -----------
Buy-to-Let 9,099.3 8,867.7
Commercial 789.5 794.4
Residential development 132.9 120.7
Funding lines 129.4 153.3
Gross loans and advances to customers 10,151.1 9,936.1
Expected credit losses (74.4) (72.0)
Net loans and advances to customers 10,076.7 9,864.1
-------------------------------------- ----------- -----------
This sub-segment comprises Buy-to-Let mortgages secured on
residential property held for investment purposes by experienced
and professional landlords, commercial mortgages secured on
commercial and semi-commercial properties held for investment
purposes or for owner-occupation, residential development finance
to small and medium-sized developers, secured funding lines to
other lenders and asset finance.
The Buy-to-Let/SME net loan book increased by 2% to GBP10,076.7m
in the first six months of 2022 supported by organic originations
of GBP832.3m (H1 2021: GBP963.5m).
Buy-to-Let/SME net interest income increased by 19% to GBP175.7m
from GBP148.0m in the prior period, primarily due to growth in the
loan book and the beneficial impact of base rate rises. The Group
also recognised a GBP3.9m net EIR reset gain in the period (H1
2021: GBPnil) due to updated prepayment assumptions based on
observed customer behaviour. This segment benefitted from GBP3.4m
of other income relating to gains on the Group's hedging activities
(H1 2021: GBP4.0m gain) and recorded an impairment charge of
GBP2.6m (H1 2021: GBP2.7m credit). The impairment charge was
largely due to provisions raised against two specific accounts,
growth in Buy-to-Let lending and the updated forward-looking
macroeconomic scenarios and weightings, partially offset by house
price appreciation in the period. Overall, the Buy-to-Let/SME
segment made a contribution to profit of GBP176.5m, up 14% compared
with GBP154.7m in the first six months of 2021.
The Group remained highly focused on the risk assessment of new
lending, as demonstrated by the average LTV for Buy-to-Let/SME
originations of 74% (H1 2021: 73%). The average book LTV in the
Buy-to-Let/SME segment reduced to 63% (31 December 2021: 65%)
benefitting from house price appreciation with only 2.5% of loans
exceeding 90% LTV (31 December 2021: 2.5%).
Buy-to-Let
The Buy-to-Let gross loan book increased by 3% to GBP9,099.3m at
the end of June 2022 (31 December 2021: GBP8,867.7m) largely
benefitting from strong refinance activity. Originations in this
segment were GBP673.2m in the first half of 2022, down from
GBP799.7m in the prior period.
This year marks the fifth anniversary of the introduction of the
PRA underwriting standards for Buy-to-Let mortgages which triggered
a shift towards five year fixed rate products. The early wave of
mortgages taken post that introduction have been reaching the end
of their initial term resulting in an increase in refinance
activity. The proportion of Kent Reliance Buy-to-Let completions
represented by remortgages increased to 60% from 50% in the first
half of 2021 with purchases reducing as the prior period benefitted
from a spike in purchase activity due to the stamp duty holiday.
Five-year fixed rate mortgages represented 67% of Kent Reliance
completions (H1 2021: 59%).
Professional, multi-property landlords continued to add to their
portfolios and optimise their businesses from a tax perspective and
represented 83% of completions by value for the Kent Reliance brand
(H1 2021: 81%) and 76% of mortgage applications in Kent Reliance
came from landlords borrowing via a limited company (H1 2021:
73%).
Research conducted by BVA BDRC on behalf of the Group showed
that the proportion of landlords planning to purchase new
properties has fallen slightly since last year. However, of those
planning to acquire more properties, the proportion planning to do
so within a limited company ownership structure has increased,
especially amongst landlords with portfolios of six or more
properties. This signals the continued professionalisation of the
Buy-to-Let market sub-segment and the Group is well-positioned to
serve this growing audience.
In addition, OSB continued to retain customers under its Choices
retention programme, with 62% of existing borrowers choosing a new
product with us within three months of their initial rate ending
(H1 2021: 76%).
The weighted average loan to value (LTV) of the Buy-to-Let book
as at 30 June 2022 was 63% with an average loan size of GBP250k (31
December 2021: 64% and GBP250k). The weighted average interest
coverage ratio for Buy-to-Let originations during the first six
months of 2022 was 211% (H1 2021: 197%).
Commercial
Through its InterBay brand, the Group lends to borrowers
investing in commercial and semi-commercial property, reported in
the Commercial total, and more complex Buy-to-Let properties,
reported in the Buy-to-Let total. We have seen increased levels of
interest and applications throughout the period as the Group
launched a new product set under its InterBay brand. Organic
originations increased to GBP72.0m in the period (H1 2021:
GBP20.3m) supporting the gross loan book of GBP789.5m as at 30 June
2022 (31 December 2021: GBP794.4m).
The weighted average LTV of the commercial book remained low at
65% and the average loan size was GBP375k for the first six months
of 2022 (31 December 2021: 69% and GBP380k).
InterBay Asset Finance, which predominantly targets UK SMEs and
small corporates financing business-critical assets, performed
strongly in the first half of 2022, with an increase in the average
deal size and an improvement in customer credit covenants as
businesses continued to recover from the pandemic. The gross
carrying amount under finance leases was GBP141.3m as at 30 June
2022 (31 December 2021: GBP116.2m).
Residential development
Our Heritable residential development business provides
development finance to small and medium-sized residential property
developers. The preference is to fund house builders which operate
outside central London and provide relatively affordable family
housing, as opposed to complex city centre schemes where
affordability and construction cost control can be more
challenging. New applications represent repeat business from the
team's extensive existing relationships.
The residential development finance gross loan book at the end
of June 2022 was GBP132.9m, with a further GBP172.9m committed (31
December 2021: GBP120.7m and GBP188.0m, respectively). Total
approved limits were GBP491.2m, which exceeds drawn and committed
funds due to the revolving nature of the facility where
construction is phased and facilities are redrawn as sales on the
initially developed properties occur (31 December 2021: GBP500.3m).
The increased rates of sale experienced by Heritable's developer
customers continued in 2022, leading to high levels of loan
repayments in the first half of the year.
At the end of June 2022, the business had commitments to finance
the development of 2,099 residential units, the majority of which
are houses located outside central London. Heritable continue to
take an exacting approach to approving funding for new customers
given the macroeconomic uncertainty.
Funding lines
OSB continued to provide secured funding lines to non-bank
lenders which operate in certain high-yielding, specialist
sub-segments, primarily secured against property-related mortgages.
Total credit approved limits as at 30 June 2022 were GBP380.0m with
total loans outstanding of GBP129.4m (31 December 2021: GBP450.0m
and GBP153.3m, respectively). During the period, the Group
maintained a cautious risk approach and closed four
property-related funding lines and did not extend any new
facilities, choosing to focus on servicing existing borrowers.
OSB Residential sub-segment
Loans and advances to customers
30-Jun-2022 31-Dec-2021
GBPm GBPm
-------------------------------------- ----------- -----------
First charge 1,971.2 1,895.9
Second charge 196.3 224.7
Funding lines - 0.6
Gross loans and advances to customers 2,167.5 2,121.2
Expected credit losses (8.7) (10.2)
Net loans and advances to customers 2,158.8 2,111.0
-------------------------------------- ----------- -----------
This sub-segment comprises lending to owner-occupiers, secured
via first charge against a residential home and under the shared
ownership scheme.
The Residential sub-segment net loan book grew by 2% to
GBP2,158.8m as at 30 June 2022 (31 December 2021: GBP2,111.0m) with
organic originations of GBP244.9m during the period (H1 2021:
GBP299.4m).
Net interest income in the Residential sub-segment increased by
6% to GBP42.9m (H1 2021: GBP40.6m) due to growth in the loan book
and the beneficial impact of base rate rises. The Group recognised
a net EIR reset gain of GBP2.5m (H1 2021: GBP6.0m) due to updated
prepayment assumptions based on observed customer behaviour. This
segment also recorded other income of GBP0.7m (H1 2021: GBP1.0m)
relating to hedging gains and an impairment credit of GBP0.7m (H1
2021: GBP2.4m credit), as the updated forward-looking macroeconomic
scenarios and weightings were more than offset by a release of
pandemic-related post model adjustments and strong house price
appreciation. Overall, the contribution to profit from this segment
was GBP44.3m broadly flat to GBP44.0m in the same period of
2021.
The average book LTV reduced to 46% (31 December 2021: 48%)
benefitting from house price appreciation with only 0.6% of loans
with LTVs exceeding 90% (31 December 2021: 0.8%). The average LTV
of new residential origination in the first six months of 2022
increased to 61% (H1 2021: 48%) as a result of a smaller proportion
of shared ownership originations than in the prior period which
complete at lower LTVs and an increase in higher LTV owner occupied
originations.
First charge
First charge mortgages are provided under the Kent Reliance
brand, which largely serves prime credit quality borrowers with
more complex circumstances. This includes high net worth
individuals with multiple income sources and self-employed
borrowers, as well as those buying a property in conjunction with a
housing association under shared ownership schemes.
The first charge gross loan book increased 4% in the period to
GBP1,971.2m from GBP1,895.9m at the end of 2021, as the Group
relaunched its residential proposition under the Kent Reliance
brand introducing a new range for complex prime borrowers.
Second charge
The OSB second charge loan book under Prestige Finance is in
run-off with total gross loans of GBP196.3m as at 30 June 2022 (31
December 2021: GBP224.7m).
Funding lines
As at the end of June 2022, OSB provided no secured funding
lines with the final exposure repaid in the period (31 December
2021: GBP0.6m).
Charter Court Financial Services (CCFS) segment
The following tables present the segment's contribution to
profit and loans and advances to customers on an underlying basis,
excluding acquisition-related items and the reconciliation to the
statutory results.
Contribution to profit for the period
For the six Total Total
months to 30 Buy-to-Let Residential Bridging Second charge Other(1) underlying Acquisition- related items(2) statutory
June 2022 GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Net interest
income 102.4 45.6 2.1 3.0 (2.5) 150.6 (25.8) 124.8
Other income - - - - 10.7 10.7 5.3 16.0
Total income 102.4 45.6 2.1 3.0 8.2 161.3 (20.5) 140.8
Impairment of
financial
assets (2.6) 2.5 (0.1) 0.1 - (0.1) 0.4 0.3
Contribution
to profit 99.8 48.1 2.0 3.1 8.2 161.2 (20.1) 141.1
For the six Total Total
months to 30 Buy-to-Let Residential Bridging Second charge Other(1) underlying Acquisition- related statutory
June 2021 GBPm GBPm GBPm GBPm GBPm GBPm items(2) GBPm GBPm
Net interest
income 67.0 37.7 3.0 3.4 (0.7) 110.4 (33.7) 76.7
Other income - - - - 12.4 12.4 7.3 19.7
Total income 67.0 37.7 3.0 3.4 11.7 122.8 (26.4) 96.4
Impairment of
financial
assets 6.7 1.8 1.2 0.3 - 10.0 (0.5 ) 9.5
Contribution
to profit 73.7 39.5 4.2 3.7 11.7 132.8 (26.9) 105.9
1. Other relates to net interest income from acquired loan
portfolios as well as gains on structured asset sales, fee income
from third party mortgage servicing and gains or losses on the
Group's hedging activities.
2. For more details on acquisition-related adjustments, see
Reconciliation of statutory to underlying results in the Financial
review.
Loans and advances to customers
Total
As at 30 June Buy-to-Let Residential Bridging Second charge Other(1) underlying Acquisition-related items(2) Total statutory
2022 GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Gross loans
and advances
to customers 6,748.4 2,443.9 83.8 133.4 17.1 9,426.6 116.1 9,542.7
Expected
credit
losses (16.5) (2.6) (0.4) (0.2) - (19.7) 0.7 (19.0)
Net loans and
advances to
customers 6,731.9 2,441.3 83.4 133.2 17.1 9,406.9 116.8 9,523.7
Risk-weighted
assets 2,708.0 1,026.6 41.4 54.8 6.3 3,837.1 112.5 3,949.6
Total
As at 31 Buy-to-Let Residential Bridging Second charge Other(1) underlying Acquisition-related items(2) Total statutory
December 2021 GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Gross loans
and advances
to customers 6,301.9 2,451.8 56.3 153.7 17.7 8,981.4 143.1 9,124.5
Expected
credit
losses (13.9) (5.1) (0.3) (0.3) - (19.6) 0.3 (19.3)
Net loans and
advances to
customers 6,288.0 2,446.7 56.0 153.4 17.7 8,961.8 143.4 9,105.2
Risk-weighted
assets 2,352.1 1,011.1 29.3 62.2 6.5 3,461.2 68.7 3,529.9
1. Other relates to acquired loan portfolios.
2. For more details on acquisition-related adjustments, see
Reconciliation of statutory to underlying results in the Financial
review.
CCFS segment
Underlying loans and advances to customers
30-Jun-2022 31-Dec-2021
GBPm GBPm
-------------------------------------- ----------- -----------
Buy-to-Let 6,748.4 6,301.9
Residential 2,443.9 2,451.8
Bridging 83.8 56.3
Second charge 133.4 153.7
Other(1) 17.1 17.7
Gross loans and advances to customers 9,426.6 8,981.4
Expected credit losses (19.7) (19.6)
Net loans and advances to customers 9,406.9 8,961.8
-------------------------------------- ----------- -----------
1. Other relates to acquired loan portfolios
CCFS targets specialist mortgage market sub-segments with a
focus on specialist Buy-to-Let mortgages secured on residential
property held for investment purposes by both non-professional and
professional landlords. It also provides specialist residential
mortgages to owner-occupiers, secured against residential
properties, including those unsupported by the high street banks
and those borrowing under the Help to Buy scheme. In addition, it
provides short-term bridging, secured against residential property
in both the regulated and unregulated sectors.
The CCFS underlying net loan book grew by 5% to GBP9,406.9m at
the end of June 2022 (31 December 2021: GBP8,961.8m) supported by
organic originations of GBP1,204.8m, which increased by 1% from
GBP1,193.1m of new business written in the same period last
year.
Buy-to-Let sub-segment
In the first half of 2022, CCFS' organic originations in the
Buy-to-Let sub-segment through the Precise Mortgages brand
increased by 7% to GBP867.5m (H1 2021: GBP808.5m) supporting a 7%
growth in the underlying gross Buy-to-Let loan book in the period
to GBP6,748.4m from GBP6,301.9m at the end of 2021.
Originations benefitted from strong refinance business as 2022
marked the fifth anniversary of the introduction of the PRA
underwriting standards for Buy-to-Let mortgages which triggered a
shift towards five year fixed rate products. Remortgages
represented 50% of completions under the Precise Mortgages brand as
at 30 June 2022 (H1 2021: 32%) with purchases reducing as the prior
period benefitted from a spike in purchase activity due to the
stamp duty holiday. Longer term mortgages continued to be favoured
by landlords and five year fixed rate products accounted for 69% of
completions, slightly below the 71% recorded during the same period
of 2021.
In addition, borrowing via a limited company made up 66% of
Buy-to-Let completions for the Precise Mortgages brand in the first
half of 2022 (H1 2021: 72%) and loans for specialist property
types, including houses of multiple occupation and multi-unit
properties, represented 21% of completions in this sub-segment (H1
2021: 24%).
Research conducted by BVA BDRC on behalf of the Group found that
over six in ten landlords that intended to acquire new properties
planned to do so within a limited company structure, the highest
proportion for three years. This proportion increased to almost
eight in ten for portfolio landlords with six or more
properties.
Precise Mortgages remained the highest ranked specialist lending
brand for Buy-to-Let mortgages based on unprompted willingness to
recommend in the BVA BDRC's Project Mercury survey in Q1 2022.
The weighted average LTV of the loan book in this segment
remained broadly stable at 67% with an average loan size of GBP191k
(31 December 2021: 68% and GBP192k). The new lending average LTV
was 74% and the weighted average interest coverage ratio for
Buy-to-Let origination was 197% in the first half of 2022 (H1 2021:
74% and 192%, respectively).
Underlying net interest income in this sub-segment increased 53%
to GBP102.4m compared with GBP67.0m in the prior period, due
primarily to growth in the loan book and the beneficial impact of
base rate rises, partially offset by an underlying EIR reset loss
of GBP6.2m (H1 2021: GBP6.0m) to reflect updated prepayment
assumptions based on observed customer behaviour. This segment
recorded an impairment of GBP2.6m (H1 2021: GBP6.7m credit) due to
growth in Buy-to-Let lending and the updated forward-looking
macroeconomic scenarios and weightings, partially offset by house
price appreciation in the period. On an underlying basis,
Buy-to-Let made a contribution to profit of GBP99.8m in the first
half of 2022, up 35% (H1 2021: GBP73.7m).
On a statutory basis, the Buy-to-Let sub-segment made a
contribution to profit of GBP81.8m (H1 2021: GBP49.5m).
Residential sub-segment
The underlying gross loan book in CCFS' Residential sub-segment
remained broadly flat at GBP2,443.9m at the end of June 2022 (31
December 2021: GBP2,451.8m) and organic originations were GBP257.1m
in the first half of 2022 (H1 2021: GBP312.5m).
The Group continued to benefit from CCFS' expertise, with a
strong focus on first time buyers, including those purchasing
through the popular Help-to-Buy scheme, self-employed individuals
and those with minor adverse records. Despite the Help-to-Buy
scheme nearing its closure to new applications in October 2022, the
Group continued to see good but reducing activity, with 24% of
completions in this sub-segment in the period (H1 2021: 52%).
The average loan size in this sub-segment was GBP139k (31
December 2021: GBP136k) with an average LTV for new lending of 66%
(H1 2021: 65%) and book LTV of 58% as at 30 June 2022 (31 December
2021: 59%).
Underlying net interest income grew to GBP45.6m (H1 2021:
GBP37.7m) primarily reflecting the beneficial impact of base rate
rises, partially offset by an underlying EIR reset loss of GBP0.5m
(H1 2021: GBPnil) to reflect updated prepayment assumptions based
on observed customer behaviour. The Residential sub-segment
recorded an impairment credit of GBP2.5m versus GBP1.8m in the
first half of 2021 as the updated forward-looking macroeconomic
scenarios and weightings were more than offset by a release of
pandemic-related post model adjustments and strong house price
appreciation. Overall, on an underlying basis, the Residential
sub-segment made a contribution to profit of GBP48.1m, up 22%
compared with GBP39.5m in the same period in 2021.
On a statutory basis, the Residential sub-segment made a
contribution to profit of GBP41.3m (H1 2021: GBP30.2m).
Bridging sub-segment
The Group continued to improve its bridging products offering
and in April 2022 relaunched and rebranded its refurbishment
product criteria. Short-term bridging originations increased 14% to
GBP77.0m in the first half of 2022 compared with GBP67.7m in the
first half of 2021 and as a result the gross loan book in this
sub-segment increased to GBP83.8m as at 30 June 2022 (31 December
2021: GBP56.3m).
Underlying net interest income reduced to GBP2.1m from GBP3.0m
in the first half of 2021, primarily due to redemptions at the
beginning of the year. The bridging sub-segment made a contribution
to profit of GBP2.0m in the first half of 2022 on an underlying
basis compared with GBP4.2m in the same period of 2021 and recorded
an impairment of GBP0.1m (H1 2021: GBP1.2m credit). On a statutory
basis, the bridging sub-segment made a contribution to profit of
GBP1.8m (H1 2021: GBP4.1m).
Second charge sub-segment
The second charge gross loan book reduced to GBP133.4m compared
with GBP153.7m as at 31 December 2021 as the second charge products
under the Precise Mortgage brand have recently been withdrawn.
Underlying net interest income in the second charge sub-segment
remained broadly stable in the period at GBP3.0m (H1 2021: GBP3.4m)
and the contribution to profit reduced to GBP3.1m (H1 2021:
GBP3.7m) after an impairment credit of GBP0.1m versus GBP0.3m in
the first half of 2021. On a statutory basis, the contribution to
profit from the second charge sub-segment was GBP2.7m (H1 2021:
GBP2.9m).
Financial review
Summary statutory results
Review of the Group's performance on a statutory basis for the
six months to 30 June 2022 and 2021.
H1 2022 H1 2021
Summary Profit or Loss GBPm GBPm
Net interest income 343.4 265.3
Net fair value gains on financial instruments 16.4 16.1
Gain on sale of financial instruments - 4.0
Other operating income 3.7 4.6
Administrative expenses (91.3) (80.5)
Provisions 1.2 (0.1)
Impairment of financial assets (1.6) 14.6
Integration costs (3.7) (1.9)
Exceptional items - (0.2)
Profit before tax 268.1 221.9
-------- --------
Profit after tax 208.9 161.5
-------- --------
H1 2022 H1 2021
Key ratios(1)
Net interest margin 280bps 236bps
Cost to income ratio 25% 28%
Management expense ratio 73bps 70bps
Loan loss ratio 1bp -15bps
Return on equity 21% 19%
30-Jun-22 31-Dec-21
GBPm GBPm
Extracts from the Statement of Financial
Position
Loans and advances to customers 21,759.2 21,080.3
Retail deposits 17,939.0 17,526.4
Total assets 25,465.2 24,532.5
Key ratios (OSB solo)
Common equity tier 1 ratio 18.7% 19.4%
Total capital ratio 20.5% 21.3%
1. For more detail on the calculation of key ratios, see the
Appendix.
Statutory profit
The Group's statutory profit before tax increased by 21% to
GBP268.1m in the first half of 2022 (H1 2021: GBP221.9m), after
integration costs and other acquisition-related items of
GBP26.0m(1) (H1 2021: GBP30.9m), primarily due to growth in the
loan book and a higher net interest margin, partially offset by
higher administration costs and an impairment charge compared to a
credit in the prior period.
Statutory profit after tax was GBP208.9m for the first half of
2022, an increase of 29% (H1 2021: GBP161.5m) and included
after-tax integration costs and other acquisition-related items of
GBP14.4m(1) (H1 2021: GBP28.3m). The Group's effective tax rate
reduced to 22.2%(2) compared to 27.1% in the prior period primarily
due to a reduction in the deferred tax provision following the
enactment of the expected decrease in the bank surcharge from 8% to
3% from April 2023.
Statutory return on equity for the first half of 2022 improved
to 21% (H1 2021: 19%) reflecting the increase in profitability in
the period.
Net interest income
Statutory net interest income increased by 29% in the period to
GBP343.4m (H1 2021: GBP265.3m), largely reflecting growth in the
loan book and a higher net interest margin. It also included a net
effective interest rate (EIR) reset loss of GBP2.6m to reflect
updated prepayment assumptions based on observed customer
behaviour.
Statutory net interest margin (NIM) was 280bps compared to
236bps in the prior period, up 44bps, primarily due to the benefit
of delays in the market passing on base rate rises to savers,
partially offset by the net EIR reset loss which accounted for 2bps
of margin.
Net fair value gains on financial instruments
Net fair value gains on financial instruments of GBP16.4m in the
first half of 2022 (H1 2021: GBP16.1m) included a GBP14.0m net gain
on unmatched swaps (H1 2021: GBP6.1m) and a net loss of GBP4.3m (H1
2021: GBP0.6m gain) in respect of the ineffective portion of
hedges. The Group also recorded a GBP6.5m gain (H1 2021: GBP0.2m)
from the amortisation of hedge accounting inception adjustments, a
GBP5.0m loss from the amortisation of de-designated hedge
relationships (H1 2021: GBP2.2m gain) and a GBP5.2m net gain from
other items (H1 2021: GBP7.0m gain), including the unwind of
acquisition-related inception adjustments.
The net gain on unmatched swaps related primarily to fair value
movements on mortgage pipeline swaps, prior to them being matched
against completed mortgages, and was caused by an increase in
interest rate outlook on the SONIA yield curve. The Group
economically hedges its committed pipeline of mortgages and this
unrealised gain unwinds over the life of the swaps through hedge
accounting inception adjustments.
The amortisation of fair value relating to de-designated hedge
relationships occurs when hedge relationships are cancelled due to
ineffectiveness.
Gain on sale of financial instruments
There were no gains on sale of financial instruments in the
first half of 2022. The gain on sale of financial instruments of
GBP4.0m in the first half of 2021 related to the disposal of class
A2 notes in the PMF 2019-1B securitisation in February 2021.
Other operating income
Statutory other operating income of GBP3.7m (H1 2021: GBP4.6m)
mainly comprised CCFS' commissions and servicing fees, including
those relating to securitised loans which have been derecognised
from the Group's balance sheet.
Administrative expenses
Statutory administrative expenses increased by 13% to GBP91.3m
in the first half of 2022 (H1 2021: GBP80.5m) largely due to higher
support and staff costs.
The Group's statutory management expense ratio increased to
73bps in the first half of 2022 (H1 2021: 70bps) reflecting the
expected gradual return to pre-pandemic levels of spending, however
the statutory cost to income ratio improved to 25% (H1 2021: 28%)
as a result of strong income generation in the period.
The Group has now entered the final quarter of the three year
integration programme and progress has been made in the closing
phase of the remaining projects. By 30 June 2022, the Group had
delivered annualised run rate savings of GBP24.6m marginally in
excess of the run-rate pledge of GBP22m by the end of the third
anniversary of the Combination in October 2022. Integration costs
to date of GBP23.3m are also lower than originally expected.
Impairment of financial assets
The Group recorded an impairment charge of GBP1.6m for the first
six months of 2022 (H1 2021: GBP14.6m credit) and the statutory
loan loss ratio was 1bp compared to -15bps in the first half of
2021.
The updated macroeconomic scenarios led to a provision release
of GBP5.9m offset by a charge of GBP6.8m as the Group increased the
downside weighting in its forward-looking macroeconomic scenarios
to account for the rising cost of living concerns. There was a
further release of GBP4.9m as a result of a strong house price
appreciation in the first half of 2022 and a GBP3.2m release from
pandemic-related post model adjustments which were more than offset
by GBP8.8m of other charges and write-offs.
Integration costs
The Group recorded GBP3.7m of integration costs in the first
half of 2022 (H1 2021: GBP1.9m), largely related to advice on the
Group's future operating structure and redundancy costs due to the
transition to the new operating model.
Exceptional items
There were no exceptional costs in the first half of 2022. The
prior period exceptional costs of GBP0.2m related to additional
costs in respect of the insertion of OSB GROUP PLC as the new
holding company and listed entity which is outside this Group with
OSB being the only 100% owned direct subsidiary of OSB GROUP
PLC.
Balance sheet growth
On a statutory basis, net loans and advances to customers grew
by 3% to GBP21,759.2m as at 30 June 2022 (31 December 2021:
GBP21,080.3m) reflecting originations of GBP2.3bn in the first
half.
Total assets grew by 4% to GBP25,465.2m (31 December 2021:
GBP24,532.5m) largely due to the growth in loans and advances to
customers and higher liquid assets.
On a statutory basis, retail deposits increased by 2% to
GBP17,939.0 as at 30 June 2022 (31 December 2021: GBP17,526.4m) as
the Group continued to attract new savers. The Group complemented
its retail deposits funding with drawings under the Bank of
England's schemes. During the first half, the Group drew down
GBP220.3m of additional funding under the Indexed Long-Term Repo
scheme. Drawings under the Term Funding Scheme for SMEs remained
unchanged from GBP4.2bn at the end of 2021.
Liquidity
OSB and CCFS operate under the Prudential Regulation Authority's
liquidity regime and are managed separately for liquidity risk.
Each Bank holds its own significant liquidity buffer of liquidity
coverage ratio (LCR) eligible high-quality liquid assets
(HQLA).
Each Bank operates within a target liquidity runway in excess of
the minimum LCR regulatory requirement, which is based on internal
stress testing. Each Bank has a range of contingent liquidity and
funding options available for possible stress periods.
As at 30 June 2022, OSB had GBP1,571.9m and CCFS had GBP1,541.9m
of HQLA (31 December 2021: GBP1,322.8m and GBP1,318.0m,
respectively).
OSB and CCFS also held portfolios of unencumbered prepositioned
Bank of England level B and C eligible collateral in the Bank of
England Single Collateral Pool. CCFS' portfolio of level C eligible
collateral increased significantly from 31 December 2021 due to the
reintroduction of previously LIBOR-linked mortgage assets following
the Bank of England's approval of the Group's LIBOR transition
plans in May 2022.
As at 30 June 2022, OSB had a liquidity coverage ratio of 269%
and CCFS 171% (31 December 2021: 240% and 158%, respectively) and
the Group LCR was 216% (31 December 2021: 196%), all significantly
in excess of the regulatory minimum of 100% plus Individual
Liquidity Guidance.
Capital
OneSavings Bank plc's solo capital position remained
exceptionally strong, with a CET1 ratio of 18.7% and a total
capital ratio of 20.5% as at the end of June 2022 (31 December
2021: 19.4% and 20.3% respectively). Both ratios reflect the impact
of the OSBG share repurchase programme.
1. See the reconciliation of statutory to underlying results
below.
2. Effective tax rate excludes GBP0.4m of adjustments relating
to prior periods.
Summary underlying results
Alternative performance measures
The Group presents alternative performance measures (APMs)
below, as Management believe they provide a more consistent basis
for comparing the Group's performance between financial
periods.
Underlying results for the six months to 30 June 2022 and 30
June 2021 exclude exceptional items, integration costs and other
acquisition-related items.
APMs reflect an important aspect of the way in which operating
targets are defined and performance is monitored by the Board.
However, any APMs in this document are not a substitute for IFRS
measures and readers should consider the IFRS measures as well
which can be found above.
For the reconciliation between APMs and the statutory
equivalents, see the Appendix.
H1 2022 H1 2021
Summary Profit or Loss GBPm GBPm
Net interest income 369.2 299.0
Net fair value gains on financial instruments 11.1 10.5
Gain on sale of financial instruments - 2.3
Other operating income 3.7 4.6
Administrative expenses (89.1) (78.6)
Provisions 1.2 (0.1)
Impairment of financial assets (2.0) 15.1
Profit before tax 294.1 252.8
-------- --------
Profit after tax 223.3 189.8
-------- --------
H1 2022 H1 2021
Key ratios(1)
Net interest margin 302bps 268bps
Cost to income ratio 23% 25%
Management expense ratio 72bps 69bps
Loan loss ratio 2bps -15bps
Return on equity 24% 24%
30-Jun-22 31-Dec-21
GBPm GBPm
Extracts from the Statement of Financial
Position
Loans and advances to customers 21,642.4 20,936.9
Retail deposits 17,938.0 17,524.8
Total assets 25,360.3 24,404.2
1. For more detail on the calculation of key ratios, see the
Appendix.
Underlying profit
The Group's underlying profit before tax was GBP294.1m in the
first half of 2022, an increase of 16% compared with GBP252.8m in
the first half of 2021, primarily due to growth in the loan book
and higher net interest margin, partially offset by higher
administration costs and an impairment charge compared to a credit
in the prior period.
Underlying profit after tax was GBP223.3m, up 18% (H1 2021:
GBP189.8m) broadly in line with the increase in profit before tax.
The Group's effective tax rate on an underlying basis reduced to
24.1% for the first half of 2022 (H1 2021: 24.9%).
On an underlying basis, return on equity for the first half of
2022 remained unchanged from 24% in the prior period which
benefitted from a GBP15.1m provision release.
Net interest income
Underlying net interest income increased by 23% to GBP369.2m in
the first half of 2022 (H1 2021: GBP299.0m) largely reflecting
growth in the loan book and a higher net interest margin. It also
included a net effective interest rate reset loss of GBP0.3m to
reflect updated prepayment assumptions based on observed customer
behaviour.
Underlying net interest margin improved by 34bps to 302bps in
the first half (H1 2021: 268bps) primarily due to the benefit of
delays in the market passing on base rate rises to savers.
Net fair value gains on financial instruments
Underlying net fair value gains on financial instruments of
GBP11.1m in the first half of 2022 (H1 2021: GBP10.5m) included a
loss of GBP4.3m (H1 2021: GBP0.6m gain) from hedge ineffectiveness,
a gain on unmatched swaps of GBP14.0m (H1 2021: GBP6.1m) and a
GBP6.5m gain from the amortisation of hedge accounting inception
adjustments (H1 2021: GBP1.3m). Other hedging and fair value
movements amounted to a loss of GBP5.1m (H1 2021: GBP2.5m
gain).
The net gain on unmatched swaps relates primarily to fair value
movements on mortgage pipeline swaps, prior to them being matched
against completed mortgages, and was due to an increase in outlook
on the SONIA yield curve. The Group economically hedges its
committed pipeline of mortgages and this unrealised gain unwinds
over the life of the swaps through hedge accounting inception
adjustments.
The amortisation of fair value relating to de-designated hedge
relationships occurs when hedge relationships are cancelled due to
ineffectiveness.
Gain on sale of financial instruments
There were no gains on sale of financial instruments in the
first half of 2022. The gain on sale of financial instruments of
GBP2.3m in the first half of 2021 related to the disposal of class
A2 notes in the PMF 2019-1B securitisation in February 2021.
Other operating income
On an underlying basis, other operating income was GBP3.7m in
the first half of 2022 (H1 2021: GBP4.6m) and mainly comprised
CCFS' commissions and servicing fees, including those relating to
securitised loans which have been deconsolidated from the Group's
balance sheet.
Administrative expenses
Underlying administrative expenses increased by 13% to GBP89.1m
in the first half of 2022 (H1 2021: GBP78.6m) largely due to higher
support and staff costs.
The Group's underlying management expense ratio increased to
72bps for the first half of 2022 (H1 2021: 69bps) reflecting the
expected gradual return to pre-pandemic levels of spending. The
underlying cost to income ratio improved to 23% (H1 2021: 25%) as a
result of strong income generation in the period.
Impairment of financial assets
The Group recorded an underlying impairment charge of GBP2.0m in
the first half of 2022 (H1 2021: GBP15.1m credit) representing an
underlying loan loss ratio of 2bps (H1 2021: -15bps).
The updated macroeconomic scenarios led to a provision release
of GBP5.9m offset by a charge of GBP6.8m as the Group increased the
downside weighting in its forward-looking macroeconomic scenarios
to account for the rising cost of living concerns. There was a
further release of GBP4.9m as a result of a strong house price
appreciation in the first half of 2022 and a GBP3.2m release from
pandemic-related post model adjustments which were more than offset
by GBP9.2m of other charges including write-offs.
Balance sheet growth
On an underlying basis, net loans and advances to customers were
GBP21,642.4m (31 December 2021: GBP20,936.9m) an increase of 3%,
reflecting gross originations of GBP2.3bn in the first six months
of 2022.
Total underlying assets grew by 4% to GBP25,360.3m (31 December
2021: GBP24,404.2m) largely due to the growth in loans and advances
to customers and higher liquid assets.
On an underlying basis, retail deposits increased by 2% to
GBP17,938.0 as at 30 June 2022 (31 December 2021: GBP17,524.8m) as
the Group continued to attract new savers.
Reconciliation of statutory to underlying results
HY 2022 HY 2021
Statutory Reverse Reverse
results acquisition- related items Underlying results Statutory results acquisition- related and exceptional items Underlying results
GBPm GBPm GBPm GBPm GBPm GBPm
--------- --------------------------- ------------------ ----------------- ------------------------------------------- ------------------
Net interest
income 343.4 25.81 369.2 265.3 33.7 299.0
Net fair value
gains on
financial
instruments 16.4 (5.3)(2) 11.1 16.1 (5.6) 10.5
Gain on sale of
financial
instruments -- -- -- 4.0 (1.7) 2.3
Other operating
income 3.7 -- 3.7 4.6 -- 4.6
------------------
Total income 363.5 20.5 384.0 290.0 26.4 316.4
Administrative
expenses (91.3) 2.2(3) (89.1) (80.5) 1.9 (78.6)
Provisions 1.2 -- 1.2 (0.1) -- (0.1)
Impairment of
financial
assets (1.6) (0.4)(4) (2.0) 14.6 0.5 15.1
Integration
costs (3.7) 3.7(5) -- (1.9) 1.9 --
Exceptional
items -- -- -- (0.2) 0.2 --
------------------
Profit before
tax 268.1 26.0 294.1 221.9 30.9 252.8
Profit after
tax 208.9 14.4 223.3 161.5 28.3 189.8
Summary Balance Sheet
Loans and
advances to
customers 21,759.2 (116.8)(6) 21,642.4 20,428.2 (174.0) 20,254.2
Other financial
assets 3,639.3 15.3(7) 3,654.6 2,732.9 29.1 2,762.0
Other
non-financial
assets 66.7 (3.4)(8) 63.3 73.1 (5.9) 67.2
--------------------------- ------------------
Total assets 25,465.2 (104.9) 25,360.3 23,234.2 (150.8) 23,083.4
Amounts owed to
retail
depositors 17,939.0 (1.0)(9) 17,938.0 17,097.2 (2.3) 17,094.9
Other financial
liabilities 5,372.7 1.5(10) 5,374.2 4,277.2 3.1 4,280.3
Other
non-financial
liabilities 59.8 (31.9)(11) 27.9 84.8 (48.4) 36.4
------------------
Total
liabilities 23,371.5 (31.4) 23,340.1 21,459.2 (47.6) 21,411.6
Net assets 2,093.7 (73.5) 2,020.2 1,775.0 (103.2) 1,671.8
--------------- --------- --------------------------- ------------------ ----------------- ------------------------------------------- ------------------
Notes to the reconciliation of statutory to underlying results
table:
1. Amortisation of the net fair value uplift to CCFS' mortgage
loans and retail deposits on Combination
2. Inception adjustment on CCFS' derivative assets and
liabilities on Combination
3. Amortisation of intangible assets recognised on
Combination
4. Adjustment to expected credit losses on CCFS loans on
Combination
5. Costs of integration of the two Banks post Combination, see
note 8 to the accounts
6. Recognition of a fair value uplift to CCFS' loan book less
accumulated amortisation of the fair value uplift and a movement on
credit provisions
7. Fair value adjustment to hedged assets
8. Adjustment to deferred tax asset and recognition of acquired
intangibles on Combination
9. Fair value adjustment to CCFS' retail deposits less
accumulated amortisation
10. Fair value adjustment to hedged liabilities
11. Adjustment to deferred tax liability and other
acquisition-related adjustments
Risk review
Key areas of focus during the six months to 30 June 2022
The Group continued to deliver against all key strategic
objectives during the first six months of 2022, including the
priority areas set out in the 2021 Annual Report and Accounts.
The macroeconomic outlook for the United Kingdom remains
uncertain, resulting from the current high levels of inflation
impacting the cost of living, the ongoing conflict in Ukraine and
the possible impact of new COVID-19 variants. The impact of the
rising cost of living in the UK and the prospect of further
increases in the Bank of England base rate continue to be a key
area of focus for the Group. The Group has a negligible exposure to
Ukrainian, Russian and Belorussian customers and continues to
closely monitor and manage this group as required. The Group
remains alert to the heightened cyber risk environment driven by
the situation in Ukraine and the embedding of the hybrid working
model for colleagues across the Group. Our cyber security
capabilities remain appropriate through continued investment and
frequent penetration testing.
The Group's well-established risk management framework ensures
risks continued to be identified, monitored and managed
effectively, which in turn supported the strong operational and
financial performance within the period. A full review of the risk
appetite statements and limits across all principal risk types was
undertaken during the six months to 30 June 2022, which informed
the management of the Group's lending and retail savings businesses
in an uncertain and competitive operating environment.
Significant investment continues to be made across the Group's
risk management capabilities and resources, to ensure that all
categories of risk continue to be managed effectively. An
independent third party review was undertaken during the period
which indicated that the Group's risk management framework was well
designed and embedded to support the Group's current and future
strategic plans. The review's recommended actions confirmed
management's existing plans and will drive further enhancements
ensuring the Group continues to meet emerging regulatory
expectations, whilst supporting shareholder returns via the
optimisation of financial risks.
A number of deep dive thematic reviews across all core loan
portfolios were conducted to ensure credit risk strategies and
operational capabilities remained appropriate. As a secured lender,
the Group has in place prudent credit risk appetite limits which,
together with well-established management capabilities, position
the Group well to manage the impact of any potential affordability
stress from the ongoing rising cost of living or further increases
in interest rates. The Group continues to conduct sensitivity and
stress testing analysis to understand the financial and operational
impact of differing scenarios on arrears levels, financial
performance metrics and prudential requirements. These scenarios
also support operational capacity planning to help ensure the
correct level of resourcing is in place within the Servicing and
Collections function. During the pandemic the Group demonstrated
the effectiveness of its capabilities in managing and supporting
customers during a period of stress.
The ongoing delivery of planned enhancements to the Group's
operational resilience capabilities remains a key area of focus.
The Group's programme of work to ensure appropriate capabilities
and processes are in place to facilitate an orderly resolution of
the Group will also evidence compliance with the Bank of England's
resolvability assessment framework.
The Group continues to deliver a programme of work to further
align the operational risk framework across the Group, including
the completion of an enhanced risk and controls self-assessment
process and delivery of a more aligned approach to the setting of
operational risk appetite.
The Group monitors and manages sub pockets of risk in an
effective manner through continued improvements in its management
information, utilising both internal and external information. In
particular, additional external information sourced from credit
bureau has helped assess the potential affordability risks across
the Group's loan portfolios, which in turn continued to underpin
sensitivity analysis to constantly assess the ongoing
appropriateness of IFRS 9 provision levels and capital
adequacy.
The Group's Internal Ratings Based (IRB) Programme made tangible
progress against plan during the period. The Group developed a full
suite of IRB models which are going through the final stages of
governance. The IRB capabilities developed by the Group continue to
be integrated into key risk and capital management processes, and
are already informing strategic decision making and business
planning activities. The Group is liaising with the Prudential
Regulation Authority with respect to its IRB approach, including
the timeline for submission and accreditation.
The Group continued to embed its approach to managing climate
risk. Key areas of priority for the second half of 2022 involve the
setting of climate risk appetite limits, whilst delivering further
enhancements to the 2022 ICAAP climate risk assessment to ensure
the Group remains appropriately capitalised against both physical
and transitional climate related risks.
Principal risks and uncertainties
The Board is responsible for determining the nature and extent
of the principal risks it is willing to take in order to achieve
its strategic objectives.
During the six months to 30 June 2022, the Board did not
identify any material change in the principal risks and
uncertainties disclosed in the Risk review section of the 2021
Annual Report on pages 41 to 53.
The table below provides a high level overview of the principal
risks which the Board believes are the most material with respect
to potential adverse impact on the business model, future financial
performance, solvency and liquidity.
Principal risks Key mitigating actions
----------------- -----------------------------------------------------------
Strategic and -- Regular monitoring by the Board and the Group
business risk Executive Committee of business and financial
performance against the Group's strategic agenda and
risk appetite.
-- The financial plan is subject to regular reforecasts
in the context of the business opportunities and
threats facing the Group.
-- The Group continued to utilise and enhance its stress
testing capabilities to assess and minimise potential
areas of macroeconomic vulnerability.
-- The Group has a mature and structured approach to
change management leveraging internal and external
expertise which allows the Group to respond
effectively to strategic and regulatory required
change.
-- The Group has sufficient scale and a diverse product
suite to respond effectively to any changes in market
competition.
----------------- -----------------------------------------------------------
Reputational risk
-- The Group actively monitors customer and broker
feedback to assess the ongoing appropriateness of
service levels.
-- Established processes are in place to review, assess
and remediate complaints in a timely manner.
-- The Group has a culture and commitment to treating
customers fairly and being open and transparent in
communication with all key stakeholders and has
established processes to proactively identify and
manage potential sources of reputational risk.
----------------- -----------------------------------------------------------
Credit risk Individual borrower defaults:
-- Across both OSB and CCFS a robust underwriting
assessment is undertaken to ensure a customer has the
ability and propensity to repay, and sufficient
security is available to support the new loan
requested.
-- Should there be problems with a loan, the Servicing
and Collections function works with customers to
reach a satisfactory conclusion while adhering to the
principle of treating customers fairly.
Macroeconomic downturn
-- The Group works within portfolio limits on LTV,
affordability, sector and geographic concentration
that are approved by the Group Risk Committee and the
Board. These are reviewed on a semi-annual basis. In
addition, stress testing is performed to ensure that
the Group maintains sufficient capital to absorb
losses in an economic downturn and continues to meet
its regulatory requirements.
Wholesale credit risk
-- The Group transacts only with high quality wholesale
counterparties. Derivative exposures include
collateral agreements to mitigate credit exposures.
----------------- -----------------------------------------------------------
Market risk
-- The Group's Treasury function actively hedges to
match the timing of cash flows from assets and
liabilities.
-- Due to the Group balance sheet structure, no active
management of basis risk was required during 2022.
----------------- -----------------------------------------------------------
Liquidity and -- The Group's funding strategy is focused on two highly
funding risk stable retail deposit franchises. The Group's large
number of depositors provides diversification and a
high proportion of balances are covered by the FSCS
lowering the risk of a retail run.
-- The Group performs in-depth liquidity stress
testing and maintains a liquid asset portfolio
sufficient to meet obligations under stress.
-- The Group proactively manages its savings
proposition through both the Liquidity Working
Group and the Group Assets and Liabilities
Committee.
-- The Group continuously monitors wholesale
funding markets, and is experienced in taking
proactive management actions where required.
The Group has a mature residential mortgage
backed securitisation programme (RMBS) to
ensure it is not solely reliant on retail
savings.
-- The Group has pre-positioned mortgage and RMBS
collateral with the Bank of England which
allows it to consider other funding sources
such as term funding schemes and indexed long
term repo.
----------------- -----------------------------------------------------------
Solvency risk -- The Group operates from a strong capital position and
has a consistent record of strong profitability.
-- The Group actively monitors its capital requirements
and resources against financial forecasts and plans
and undertakes stress testing analysis to subject its
solvency ratios to extreme but plausible stress
scenarios.
-- The Group also holds prudent levels of capital
buffers based on CRD IV requirements and expected
balance sheet growth.
-- The Group engages actively with regulators, industry
bodies and advisers to keep abreast of potential
changes and provides feedback through the
consultation process.
----------------- -----------------------------------------------------------
Operational risk IT security (including cyber risk)
-- The Group continues to make enhancements against IT
security threats, deploying a series of tools
designed to identify and prevent network/system
intrusions. This is further supported by documented
and tested procedures intended to ensure the
effective response to a security breach.
-- The Group's ongoing penetration testing
continues to drive enhancements by identifying
potential areas of risk.
IT failure
-- The Group continues to invest in improving the
resilience of its core infrastructure. It has
identified its prioritised business services and the
infrastructure that is required to support them.
Tests are performed regularly to validate the Group's
ability to recover from an incident.
Data quality and completeness
-- The Group continues to deliver against a programme of
work to ensure a consistent approach to the
maintenance and use of data. This includes both
documented procedures and frameworks and tools
intended to improve the consistency of data use
across the Group.
Change management
-- The Group recognises that implementing change
introduces operational risk and has therefore
implemented a series of control gateways designed to
ensure that each stage of the change management
process has the necessary level of oversight.
Organisational change and integration
-- Organisation change and integration activity
continues to be facilitated by an experienced and
capable project management office, with close
oversight and direction provided by the Group
Executive Committee and Board.
Fraud
-- The Group has dedicated systems and resources to
monitor fraud risk.
----------------- -----------------------------------------------------------
Conduct risk Product suitability
-- The Group has a strategic commitment to provide
simple, customer-focused products. In addition, a
Product Governance framework is established to
oversee both the origination of new products and to
revisit the ongoing suitability of the existing
product suite.
Data protection
-- In addition to a series of network/system controls
the Group performs extensive root cause analysis of
any incidents in order to ensure that the appropriate
mitigating actions are taken.
Integration risk
-- During the integration process, the Group is
committed to adopting a low-risk approach with a view
to taking reasonable steps to avoid causing poor
outcomes for its customers and the market.
Significant progress has been made across all
integration work streams with no material customer
detriment identified to date.
----------------- -----------------------------------------------------------
Compliance and Prudential regulatory changes
regulatory risk -- The Group has an effective horizon scanning process
to identify regulatory change.
-- All significant regulatory initiatives are managed by
structured programmes overseen by the Project
Management team and sponsored at Executive level.
-- The Group has proactively sought external expert
opinion to support interpretation of the requirements
and validation of its response, where required.
Conduct regulation
-- The Group has a programme of regulatory horizon
scanning linking into a formal regulatory change
management programme. In addition, the focus on
simple products and a customer oriented culture means
that current practice may not have to change
significantly to meet new conduct regulations.
-- All Group entities utilise underwriting, arrears,
repossession, forbearance and vulnerable customer
policies which are designed to comply with regulatory
rules and expectations. These policies articulate the
Group's commitment to ensuring that all customers,
especially those who are vulnerable or experiencing
financial hardship, are treated fairly, consistently
and in a way that considers their individual needs
and circumstances.
-- The Group does not tolerate any systematic failure to
deliver fair customer outcomes. On an isolated basis,
incidents can result in detriment due to human and/
or operational failures. Where such incidents occur,
they are thoroughly investigated, and the appropriate
remedial actions are taken to address any customer
detriment and prevent recurrence.
----------------- -----------------------------------------------------------
Integration risk
-- The Board continues to provide oversight of the
integration process. A dedicated Integration
Management Office is in place to manage integration
activity.
-- Independent assessment, monitoring and reporting is
being undertaken by the Risk and Internal Audit
functions.
----------------- -----------------------------------------------------------
Emerging risks
The Group proactively scans for emerging risks which may have an
impact on its operations and strategy. The Group considers its top
emerging risks to be:
Emerging risks Key mitigating actions
----------------------------------------------------------- -----------------------------------------------------------
Political and macroeconomic uncertainty
-- The Group's lending activity is focused in the United -- The Group has mature and robust monitoring processes
Kingdom and, as such, will be impacted by any risks and uses stress testing activity (i.e. ad hoc, risk
emerging from changes in the macroeconomic appetite and ICAAP) to understand how it performs
environment. over a variety of macroeconomic stress scenarios. It
-- Significant uncertainty remains around the long term has developed a suite of early warning indicators,
effects of the conflict in Ukraine, increasing which are closely monitored to identify changes in
inflation impacting the cost of living and increasing the outlook.
interest rates, which may impact customer behaviour
across both the Group's lending and savings -- The Board and management review detailed portfolio
businesses. reports to identify any changes in the Group's risk
profile.
----------------------------------------------------------- -----------------------------------------------------------
Climate change -- Progress continues to be made in developing and
Climate change risks include: embedding the Group's climate risk management
-- Physical risks which relate to specific weather approach.
events, such as storms and flooding, or to -- Updated financial impact analysis is conducted as
longer-term shifts in the climate, such as rising sea part of the ICAAP.
levels. These risks could include adverse movements -- The Group invested in developing its ESG and climate
in the value of certain properties that are in risk strategy and on development of its Task Force on
coastal and low lying areas, or located in areas Climate-Related Financial Disclosures.
prone to increased subsidence and heave. -- The Group's Chief Risk Officers have designated
-- Transitional risks may arise from the adjustment senior management responsibility for the management
towards a low-carbon economy, such as tightening of climate change risk.
energy efficiency standards for domestic and
commercial buildings. These risks could include a
potential adverse movement in the value of properties
requiring substantial updates to meet future energy
performance requirements.
-- Reputational risk arising from a failure to meet
changing societal, investor or regulatory demands.
----------------------------------------------------------- -----------------------------------------------------------
Model risk
The risk of financial loss, adverse -- The Group has well-established model risk governance
regulatory outcomes, reputational arrangements in place, with Board and Executive
damage or customer detriment resulting Committees formed to ensure robust oversight of the
from deficiencies in the development, Group's model risk profile.
application or ongoing operation
of models and ratings systems. -- Dedicated resources are in place to ensure model
The Group also notes changes in governance arrangements continue to meet any changes
industry best practice with respect in industry and regulatory expectations.
to model risk management
----------------------------------------------------------- -----------------------------------------------------------
Regulatory change
The Group remains subject to high -- The Group has established horizon scanning
levels of regulatory oversight capabilities, together with dedicated prudential and
and an extensive and broad ranging conduct regulatory experts in place to ensure the
regulatory change agenda, including Group manages future regulatory changes effectively.
meeting the requirements of the
Resolvability Assessment Framework -- The Group also has strong relationships with
and Operational Continuity in Resolution. regulatory bodies, and via membership of UK Finance
The Group is therefore required contributes to upcoming regulatory consultations.
to respond to prudential and conduct
related regulatory changes, taking
part in thematic reviews as required.
There is also uncertainty in relation
to the regulatory landscape post
the United Kingdom's exit from
the European Union.
----------------------------------------------------------- -----------------------------------------------------------
Evolving working practices
The COVID-19 pandemic has resulted -- The Group operated effectively during the COVID-19
in new ways of working which are lockdown periods, with the majority of staff working
impacting employee collaboration from home. A hybrid working model has been
and the embedding of the Group's established which continues to work well.
Purpose, Vision and Values. The
impact on labour market dynamics -- The Group has proactively benchmarked departmental
is making it more challenging to salaries and established further mechanisms to
recruit and retain talent across support internal progression.
certain positions.
----------------------------------------------------------- -----------------------------------------------------------
Risk Profile Performance Overview
Credit risk
The Group's credit risk profile across its loan portfolios
remained strong during the six months to 30 June 2022.
Statutory net loans and advances to customers increased to
GBP21.8bn as at 30 June 2022 from GBP21.1bn at the end of 2021.
Loan book growth continues to be predominantly driven by new buy to
let and residential first charge mortgage lending. Total loans and
advances fell across the Group's second charge and funding lines
segments as expected.
Average weighted interest coverage ratios across Buy-to-Let
originations remained strong at 211% for OSB and 197% for CCFS (31
December 2021: 199% for OSB and 188% for CCFS). The proportion of
the Group's residential first charge mortgage portfolios with
higher loan to income multiples remained low, with the level
remaining broadly stable during the reporting period.
Exposure to residential development finance lending remained low
at GBP135.7m as at 30 June 2022 (31 December 2021: GBP120.7m).
Weighted average gross development values remained prudent across
the development finance business at 55.2% (31 December 2021:
56.1%).
The Group's ability to absorb any future economic shocks
continued to improve as loan to value levels for existing lending
fell, driven by rising house prices. As at 30 June 2022, the total
weighted average loan to value ratio for the loan book reduced to
59% for OSB and 64% for CCFS (31 December 2021: 60% and 65%,
respectively).
Forward-looking internal and external credit scoring metrics
remained strong, taking into account internal performance and
customers' wider credit obligation performance.
Group arrears balances greater than three months have remained
unchanged since 2021 year end at 1.1%. As at 30 June 2022, there
was a marginal reduction in the OSB entity arrears which fell to
1.3% (31 December 2021: 1.4%) and offset a slight increase in
arrears for CCFS to 0.8% (31 December 2021: 0.7%) driven by
customers who moved into arrears following the removal of the
COVID-19 payment deferral scheme, in conjunction with ongoing
portfolio seasoning. Late stage arrears levels continue to be
elevated due to ongoing challenges with the courts' process of
repossessing properties.
The Group continues to observe a normalisation of forbearance
levels relative to the total number of customers and outstanding
loan balances, post the closure of the payment deferral scheme
introduced during the pandemic.
Expected credit losses
The Group recorded a statutory impairment charge of GBP1.6m for
the six months to 30 June 2022, representing an annualised loan
loss of 0.01% compared to an impairment credit of GBP14.6m and an
annualised loan loss ratio of -0.15% during the six months to 30
June 2021.
The primary drivers of the impairment trends observed in the
period were as follows:
a. Macroeconomic scenarios
The Board and management noted a more positive economic
performance than forecast as the UK successfully removed
restrictions implemented during the pandemic, observing lower than
previously forecast unemployment levels and higher house price
appreciation. During the six months to 30 June 2022, continued high
market demand supported strong residential house prices and
resulted in a GBP4.9m provision release.
The Group continued to receive regular macroeconomic scenario
updates from its advisers, which were reviewed and discussed by
management and the Board, along with the probability weightings
applied to each scenario.
The Board decided to shift a 10% weighting from the upside
scenario to the downside scenario to acknowledge the increasing
downside risks due to the uncertain economic outlook, particularly
the rising cost of living.
The updated macroeconomic scenarios led to a provision release
of GBP5.9m more than offset by a charge of GBP6.8m due to the
adjustment in scenario weightings.
Macroeconomic scenarios utilised within IFRS 9 impairment
calculations 30 June 2022:
Scenario (%)(1)
--------- ----------- ------------------- ----------------------------
Scenario Probability Economic measure Year end Year end Year end
weighting 2022 2023 2024
(%)
--------- ----------- ------------------- -------- -------- --------
Base case 40 GDP 3.7 1.8 2.1
Unemployment 3.8 3.7 3.7
House price growth 4.9 -0.8 -0.3
--------- ----------- ------------------- -------- -------- --------
Upside 10 GDP 4.7 3.8 2.6
Unemployment 3.6 3.5 3.6
House price growth 9.1 1.9 2.1
--------- ----------- ------------------- -------- -------- --------
Downside 38 GDP 0.7 0.2 1.7
Unemployment 5.9 6.1 6.3
House price growth -2.3 -9.8 -10.7
--------- ----------- ------------------- -------- -------- --------
Severe 12 GDP -0.7 -0.8 1.5
Downside Unemployment 6.2 6.4 6.6
House price growth -6.0 -14.6 -16.9
--------- ----------- ------------------- -------- -------- --------
1. Scenarios show annual movement for GDP and house price growth and year
end positions for unemployment. House price growth includes indexation up
to and including 31 March 2022 and forecast estimates thereafter
b. Staging criteria enhancements
The Group continued to leverage the enhanced staging criteria
introduced during 2020 utilising both internal and external credit
bureau data to identify higher risk cohorts, including previous or
current payment deferral accounts, moving eligible exposures to
stage 2 where a lifetime loss allowance is held. As the rule set
was unchanged since the year end and the credit profile remained
stable there was a negligible loan loss impact during the six
months to 30 June 2022.
c. Model enhancements
The Group's technical Model Governance Committee receives
regular model performance reports prepared by the Group's Models
and Ratings function. Where required, proposals were made to ensure
that modelled estimates continued to mirror recently observed
outcomes. During the period, a small number of updates were made
across the suite of IFRS 9 models which resulted in a negligible
loan loss charge during the six months to 30 June 2022.
d. Post model adjustments
During the first six months of 2022, the Group reviewed a number
of post model adjustments to ensure that they remained appropriate,
considering the continued impact of the pandemic on credit bureau
files and the ongoing risks that the end of the furlough scheme had
on loss given default and probability of default estimates. The
Group's Risk function also conducted detailed scenario analysis,
identifying specific risks relevant to each core lending line, to
triangulate whether modelled provisions remained appropriate. The
cumulative impact of changes to the Group's post model adjustments
was a loan loss release of GBP3.2m during the period.
e. Other
Other charges largely related to standard provision movements
due to loan book growth and credit profile changes and totalled
GBP8.8m, against the backdrop of the stable credit profile
performance of the loan book.
The Group continues to focus on provision adequacy and the Risk
function conducts regular provision adequacy assessments,
benchmarking the ongoing appropriateness of key judgements and
estimates made within the IFRS 9 provisioning process with industry
benchmarks and independent analysis to ensure provision levels
remain appropriate with respect to the wide range of macroeconomic
outcomes which could materialise.
The table below indicates the provision coverage levels as at 30
June 2022.
Expected credit
Gross carrying amount loss Coverage
As at 30 June 2022 GBPm GBPm ratio %(1)
Stage 1 18,702.0 8.8 0.05%
Stage 2 2,561.6 27.3 1.07%
Stage 3 + POCI(2) 580.6 66.0 11.37%
Total 21,844.2 102.1 0.47%
Gross carrying Expected credit
As at 31 December amount loss Coverage ratio
2021 GBPm GBPm %(1)
Stage 1 18,188.4 12.1 0.07%
Stage 2 2,413.6 25.0 1.04%
Stage 3 + POCI(2) 562.1 64.4 11.46%
Total 21,164.1 101.5 0.48%
1. Coverage ratios versus loans and advances is the total IFRS 9 provision
versus gross loans and advances.
2. POCI assets are purchased or originated credit impaired. These are
acquired loans that meet the Group's definition of default (90 days past
due or an unlikely to pay) at acquisition.
Provision levels remained strong with a coverage ratio of 0.47%
as at 30 June 2022 (31 December 2021:0.48%). Coverage levels
remained broadly stable in the first half of 2022, driven
predominantly by positive residential property indexing within the
period being offset by increased caution over the rising cost of
living.
Liquidity and funding risk
Liquidity and funding performance became more challenging within
the reporting period, against a rising interest rate environment
and competitive retail savings market. The Group's Liquidity
Working Group continued to monitor daily liquidity reporting and
forecasting to ensure liquidity levels remained at target
levels.
The Group continued to be predominantly funded by retail
savings. Only 6.9% of deposits remain above the FSCS protection
limit as at 30 June 2022 (31 December 2021: 6.8%). Diversification
of funding was provided by borrowing from the Bank of England under
its funding schemes. As at 30 June 2022, the Group's borrowing
under the Term Funding Scheme for SMEs totalled GBP4.2bn and the
Group drew an additional GBP220.3m under the Indexed Long-Term Repo
scheme (31 December 2021: GBP4.2bn, nil, respectively).
Securitisation remains central to the Group's liability management
strategy, as well as being a key funding source.
Liquidity coverage ratios remained strong at 269% for OSB and
171% for CCFS (31 December 2021: OSB 240% and CCFS 158%) versus the
regulatory minimum of 100%.
Market risk
Interest rate risk is the key market risk the Group is exposed
to. Gap and basis risk are managed within defined risk appetite
limits for each bank. The Group's Treasury function actively hedges
risk to match the timing of cash flows from assets and liabilities
for each bank.
The Group has a small amount of foreign exchange exposure, due
to the rupee denominated running costs of the OSB India operation.
Rupee denominated running costs during the period to 30 June 2022
totalled GBP5.1m (30 June 2021: GBP3.8m).
Solvency risk
Solvency risk is a function of balance sheet growth,
profitability, access to capital markets and regulatory
changes.
During the six months to 30 June 2022, the Group's balance sheet
grew, however the asset mix continued to trend towards less capital
intensive products. The Group's arrears profile remained broadly
stable, whilst loan to value levels improved due to rising property
prices. The Group remained profitable within the period and the OSB
solo capital position, which reflects the impact of the OSBG share
repurchase programme, remained strong with the CET1 ratio at 18.7%
(31 December 2021: 19.4 %).
The Group remains cognisant of the ongoing macroeconomic
uncertainty, which could result in a range of risk profile outcomes
impacting capital levels, together with future changes to
OneSavings Bank plc's capital requirements including announced
increases to the countercyclical buffer and the broad range of
potential outcomes with respect to how Basel 3.1 reforms are
adopted in the UK.
OneSavings Bank plc
Interim Report for the six months ended 30 June 2022
Statement of Directors' Responsibilities
We, the Directors listed below, confirm that to the best of our
knowledge:
-- the condensed financial statements have been prepared in
accordance with IAS 34, Interim Financial Reporting, as adopted by
the United Kingdom (UK);
-- the interim management report includes a fair review of the
information required by:
(a) DTR 4.2.7R of the Disclosure Guidance and Transparency
Rules, being an indication of important events that have occurred
during the first six months of the financial year and their impact
on the condensed financial statements; and a description of the
principal risks and uncertainties for the remaining six months of
the financial year; and
(b) DTR 4.2.8R of the Disclosure Guidance and Transparency
Rules, being related party transactions that have taken place in
the first six months of the financial year and that have materially
affected the financial position or performance of the Group during
that period; and any changes in the related party transactions
described in the last Annual Report and Accounts that could do
so.
Graham Allatt
Andy Golding
Noël Harwerth
Sarah Hedger
Rajan Kapoor
Mary McNamara
April Talintyre
Simon Walker
David Weymouth
By order of the Board
Date: 12 August 2022
OneSavings Bank plc
Interim Report for the six months ended 30 June 2022
Independent Review Report to OneSavings Bank plc
Conclusion
We have been engaged by the company to review the condensed set
of financial statements in the half-yearly financial report for the
six months ended 30 June 2022 which comprises Condensed
Consolidated Statement of Comprehensive Income, the Condensed
Consolidated Statement of Financial Position, the Condensed
Consolidated Statement of Changes in Equity, the Condensed
Consolidated Statement of Cash Flows and related notes 1 to 32.
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 30
June 2022 is not prepared, in all material respects, in accordance
with United Kingdom adopted International Accounting Standard 34
and the Disclosure Guidance and Transparency Rules of the United
Kingdom's Financial Conduct Authority.
Basis for Conclusion
We conducted our review in accordance with International
Standard on Review Engagements (UK) 2410 "Review of Interim
Financial Information Performed by the Independent Auditor of the
Entity" issued by the Financial Reporting Council for use in the
United Kingdom. A review of interim financial information consists
of making inquiries, primarily of persons responsible for financial
and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit
conducted in accordance with International Standards on Auditing
(UK) and consequently does not enable us to obtain assurance that
we would become aware of all significant matters that might be
identified in an audit. Accordingly, we do not express an audit
opinion.
As disclosed in note 1, the annual financial statements of the
group will be prepared in accordance with United Kingdom adopted
international accounting standards. The condensed set of financial
statements included in this half-yearly financial report has been
prepared in accordance with United Kingdom adopted International
Accounting Standard 34, "Interim Financial Reporting".
Conclusion Relating to Going Concern
Based on our review procedures, which are less extensive than
those performed in an audit as described in the Basis for
Conclusion section of this report, nothing has come to our
attention to suggest that the directors have inappropriately
adopted the going concern basis of accounting or that the directors
have identified material uncertainties relating to going concern
that are not appropriately disclosed.
This conclusion is based on the review procedures performed in
accordance with ISRE (UK), however future events or conditions may
cause the entity to cease to continue as a going concern.
Responsibilities of the directors
The directors are responsible for preparing the half-yearly
financial report in accordance with the Disclosure Guidance and
Transparency Rules of the United Kingdom's Financial Conduct
Authority.
In preparing the half-yearly financial report, the directors are
responsible for assessing the group's ability to continue as a
going concern, disclosing as applicable, matters related to going
concern and using the going concern basis of accounting unless the
directors either intend to liquidate the company or to cease
operations, or have no realistic alternative but to do so.
Auditor's Responsibilities for the review of the financial
information
In reviewing the half-yearly financial report, we are
responsible for expressing to the group a conclusion on the
condensed set of financial statement in the half-yearly financial
report. Our conclusion, including our Conclusions Relating to Going
Concern, are based on procedures that are less extensive than audit
procedures, as described in the Basis for Conclusion paragraph of
this report.
Use of our report
This report is made solely to the company in accordance with
International Standard on Review Engagements (UK) 2410 "Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity" issued by the Financial Reporting Council. Our work
has been undertaken so that we might state to the company those
matters we are required to state to it in an independent review
report and for no other purpose. To the fullest extent permitted by
law, we do not accept or assume responsibility to anyone other than
the company, for our review work, for this report, or for the
conclusions we have formed.
Deloitte LLP
Statutory Auditor
London, United Kingdom
12 August 2022
OneSavings Bank plc
Interim Report for the six months ended 30 June 2022
Condensed Consolidated Statement of Comprehensive Income
Six months Six months
ended ended
30-Jun-22 30-Jun-21
(Unaudited) (Unaudited)
Note GBPm GBPm
Interest receivable and similar income 3 452.2 349.2
Interest payable and similar charges 4 (108.8) (83.9)
Net interest income 343.4 265.3
Fair value gains on financial instruments 5 16.4 16.1
Gain on sale of financial instruments 6 - 4.0
Other operating income 3.7 4.6
Total income 363.5 290.0
Administrative expenses 7 (91.3) (80.5)
Provisions 24 1.2 (0.1)
Impairment of financial assets 18 (1.6) 14.6
Integration costs 8 (3.7) (1.9)
Exceptional items - (0.2)
Profit before taxation 268.1 221.9
Taxation 9 (59.2) (60.4)
Profit for the period 208.9 161.5
Other comprehensive expense
Items which may be reclassified to profit
or loss:
Fair value changes on financial instruments
measured as fair value through other comprehensive
income (FVOCI):
Arising in the period (0.7) 0.3
Amounts reclassified to profit or loss
for investment
securities at FVOCI - (2.0)
Tax on items in other comprehensive expense 0.1 0.7
Revaluation of foreign operations 0.1 (0.3)
Other comprehensive expense (0.5) (1.3)
---------------------------------------------------- ---- ----------- -----------
Total comprehensive income for the period 208.4 160.2
The above results are derived wholly from continuing
operations.
Notes 1 to 32 form part of these condensed consolidated
financial statements.
OneSavings Bank plc
Interim Report as at 30 June 2022
Condensed Consolidated Statement of Financial As at As at
Position 30-Jun-22 31-Dec-21
(Unaudited) (Audited)
Note GBPm GBPm
Assets
Cash in hand 0.4 0.5
Loans and advances to credit institutions 12 3,223.4 2,843.6
Investment securities 13 361.8 491.4
Loans and advances to customers 14 21,759.2 21,080.3
Fair value adjustments on hedged assets 19 (491.0) (138.9)
Derivative assets 544.7 185.7
Other assets 13.1 10.2
Deferred taxation asset 3.9 5.6
Property, plant and equipment 34.3 35.1
Intangible assets 15.4 18.4
Investments in subsidiaries and intercompany
loans - 0.6
Total assets 25,465.2 24,532.5
----------------------------------------------- ---- ----------- ----------
Liabilities
Amounts owed to credit institutions 20 4,840.5 4,319.6
Amounts owed to retail depositors 21 17,939.0 17,526.4
Investments in subsidiaries and intercompany
loans 4.3 -
Fair value adjustments on hedged liabilities 19 (52.4) (19.7)
Amounts owed to other customers 119.3 92.6
Debt securities in issue 22 367.3 460.3
Derivative liabilities 58.1 19.7
Lease liabilities 23 10.1 10.7
Other liabilities 26.9 29.5
Provisions 24 0.6 2.0
Current taxation liability 3.2 1.3
Deferred taxation liability 29.1 39.8
Subordinated liabilities 10.3 10.3
Perpetual Subordinated Bonds 15.2 15.2
23,371.5 22,507.7
Equity
Share capital 4.5 4.5
Share premium - -
Retained earnings 1,930.4 1,857.4
Other reserves 158.8 162.9
2,093.7 2,024.8
Total equity and liabilities 25,465.2 24,532.5
----------------------------------------------- ---- ----------- ----------
Notes 1 to 32 form part of these condensed consolidated
financial statements.
The condensed consolidated financial statements were approved by
the Board of Directors on 12 August 2022 and signed on its behalf
by
Andy Golding April Talintyre
Chief Executive Officer Chief Financial Officer
Company number: 07312896
OneSavings Bank plc
Interim Report for the six months ended 30 June 2022
Condensed Consolidated Statement of Changes in Equity
Foreign Share-based Additional
Share Share Capital exchange FVOCI payment Retained Tier 1
capital premium contribution reserve reserve reserve earnings securities Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
At 1 January 2022 4.5 - 1.7 (1.1) 0.6 11.7 1,857.4 150.0 2,024.8
Profit for the period - - - - - - 208.9 - 208.9
Other comprehensive expense - - - 0.1 (0.7) - - - (0.6)
Tax on items in other comprehensive
expense - - - - 0.1 - - - 0.1
Total comprehensive income - - - 0.1 (0.6) - 208.9 - 208.4
Coupon paid on Additional
Tier 1 securities - - - - - - (4.5) - (4.5)
Dividends paid(1) - - - - - - (139.3) - (139.3)
Share-based payments - - (1.7) - - (1.7) 7.9 - 4.5
Tax recognised in equity - - - - - (0.2) - - (0.2)
At 30 June 2022 (Unaudited) 4.5 - - (1.0) - 9.8 1,930.4 150.0 2,093.7
------------------------------------ -------- -------- ------------- --------- -------- ----------- --------- ----------- -------
At 1 January 2021 4.5 - - (1.0) 1.0 7.8 1,604.6 60.0 1,676.9
Profit for the period - - - - - - 161.5 - 161.5
Other comprehensive expense - - - (0.3) (1.7) - - - (2.0)
Tax on items in other comprehensive
expense - - - - 0.7 - - - 0.7
Total comprehensive income - - - (0.3) (1.0) - 161.5 - 160.2
Coupon paid on Additional
Tier 1 securities - - - - - - (2.7) - (2.7)
Dividends paid - - - - - - (64.8) - (64.8)
Share-based payments - - - - - 0.7 4.2 - 4.9
Tax recognised in equity - - - - - 0.6 (0.2) - 1.1
At 30 June 2021 (Unaudited) 4.5 - - (1.3) - 9.1 1,702.6 60.0 1,774.9
------------------------------------ -------- -------- ------------- --------- -------- ----------- --------- ----------- -------
1. Dividends paid include the 2021 final dividend of GBP94.8m
and an additional GBP44.5m to fund OSBG's share repurchase
programme.
OneSavings Bank plc
Interim Report for the six months ended 30 June 2022
Condensed Consolidated Statement of Cash Flows
Six months Six months
ended ended
30-Jun-22 30-Jun-21
(Unaudited) (Unaudited)
Note GBPm GBPm
Cash flows from operating activities
Profit before taxation 268.1 221.9
Adjustments for non-cash items 29 13.1 (18.8)
Changes in operating assets and liabilities 29 (280.3) (616.5)
Cash used in operating activities 0.9 (413.4)
Net tax paid (66.5) (44.1)
Net cash used in operating activities (65.6) (457.5)
Cash flows from investing activities
Maturity and sales of investment securities 85.5 302.0
Purchases of investment securities (7.3) (53.3)
Interest received on investment securities 2.2 1.6
Purchases of property, plant and equipment
and intangible assets (3.0) (4.0)
Cash generated from investing activities 77.4 246.3
Cash flows from financing activities
Financing received 25 512.5 469.7
Financing repaid 25 (94.2) (351.8)
Interest paid on financing (9.0) (5.0)
Coupon paid on Additional Tier 1 securities (4.5) (2.7)
Dividends paid 10 (139.3) (64.8)
Cash payments on lease liabilities 23 (1.1) (0.9)
Cash generated from financing activities 264.4 44.5
--------------------------------------------
Net increase/(decrease) in cash and cash
equivalents 276.2 (166.7)
---- ----------- -----------
Cash and cash equivalents at the beginning
of the period 11 2,736.7 2,370.6
Cash and cash equivalents at the end of
the period 11 3,012.9 2,203.9
Movement in cash and cash equivalents 276.2 (166.7)
-------------------------------------------- ---- ----------- -----------
OneSavings Bank plc
Interim Report for the six months ended 30 June 2022
Notes to the Condensed Consolidated Financial Statements
1. Accounting policies
a) Basis of preparation
The Group comprises of OneSavings Bank plc (the Company) and its
subsidiaries.
These interim condensed consolidated financial statements have
been prepared in accordance with the Disclosure Guidance and
Transparency Rules (DTR) of the Financial Conduct Authority (FCA)
and in accordance with International Accounting Standard 34 Interim
Financial Reporting as adopted by the UK.
The accounting policies, presentation and methods of computation
are consistent with those applied by the Group in its latest
audited financial statements, which were prepared in accordance
with International Financial Reporting Standards (IFRS) as adopted
by the UK and interpretations issued by the International Financial
Reporting Interpretations Committee (IFRIC). They do not include
all the information required for a complete set of IFRS financial
statements. However, selected explanatory notes are included to
explain events and transactions that are significant to an
understanding of the changes in the Group's financial position and
performance since the last Annual Report and Accounts for the year
ended 31 December 2021.
The comparative figures for the year ended 31 December 2021 are
not the Group's statutory accounts for that financial year. The
statutory accounts for the year ended 31 December 2021 have been
delivered to the Registrar of Companies in England and Wales in
accordance with section 447 of the Companies Act 2006. The auditor
has reported on those accounts. Their report was unqualified; did
not include a reference to any matters to which the auditor drew
attention by way of emphasis without qualifying their report, and
did not contain a statement under section 498(2) or (3) of the
Companies Act 2006.
These interim condensed consolidated financial statements were
authorised for issue by the Company's Board of Directors on 12
August 2022.
b) Accounting standards
There were a number of minor amendments to financial reporting
standards that were in issue and effective from 1 January 2022. The
adoption of these amendments has not had a material impact on the
Group.
All other accounting policies applied are consistent with those
set out on pages 99 to 117 of the 2021 Annual Report and
Accounts.
1. Accounting policies (continued)
c) Going concern
The Board undertakes regular rigorous assessments of whether the
Group is a going concern in light of current economic conditions
and all available information about future risks and
uncertainties.
In assessing whether the going concern basis is appropriate,
projections for the Group have been prepared, covering its future
performance, capital and liquidity for a period in excess of 12
months from the date of approval of these interim condensed
consolidated financial statements. These forecasts have been
subject to sensitivity tests, including stress scenarios, which
have been compared to the latest economic scenarios provided by the
Group's external economic advisors, as well as reverse stress
tests. In making the assessment the Board has considered all
principal and emerging risks including climate risk where the risk
is likely to emerge outside of the going concern assessment
horizon.
The assessments included the following:
-- Financial and capital forecasts were prepared under stress scenarios
which were assessed against economic forecasts provided by the Group's
external economic advisors. Reverse stress tests were also run, to assess
what combinations of House Price Index (HPI) and unemployment variables
and combinations of default rates and HPI falls would result in the Group
utilising its regulatory capital buffers in full and breaching the
Group's minimum prudential requirements, along with analysis and insight
from the Group's Internal Capital Adequacy Assessment Process (ICAAP).
The Directors assessed the likelihood of those reverse stress scenarios
occurring within the next 12 months and concluded that the likelihood is
remote.
-- The latest liquidity and contingent liquidity positions and forecasts
were assessed against the Internal Liquidity Adequacy Assessment Process
(ILAAP) stress scenarios.
-- The Group continues to assess the resilience of its business operating
model and supporting infrastructure in the context of the emerging
economic, business and regulatory environment. The key areas of focus
continue to be on the provision of critical services to customers,
employee health and safety and evolving governmental policies and
guidelines. The Group continues to invest in its information technology
platforms to support its employees with flexible working from office or
homeworking across all locations within a hybrid working model. The
Group's response to the COVID-19 pandemic demonstrated the inherent
resilience of the Group's critical processes and infrastructure. It also
demonstrated the necessary agility in responding to changing operational
demands. The operational dependencies on third party vendors and
outsourcing arrangements continue to be an important area of focus.
The Group's financial projections demonstrate that the Group has
sufficient capital and liquidity to continue to meet its regulatory
capital requirements as set out by the Prudential Regulation
Authority (PRA).
The Board has therefore concluded that the Group has sufficient
resources to continue in operational existence for a period in
excess of 12 months from the date of approval of these interim
condensed consolidated financial statements and, as a result, it is
appropriate to prepare these interim condensed consolidated
financial statements on a going concern basis.
1. Accounting policies (continued)
d) Segmental reporting
IFRS 8 requires operating segments to be identified on the basis
of internal reports and components of the Group which are regularly
reviewed by the chief operating decision maker to allocate
resources to segments and to assess their performance. For this
purpose, the chief operating decision maker of the Group is the
Board of Directors.
The Group provides loans and asset finance within the UK and the
Channel Islands only. The Group segments its lending business and
operates under two segments:
-- OneSavings Bank (OSB)
-- Charter Court Financial Services (CCFS)
The Group has disclosed relevant risk management tables in note
26 at a sub-segment level to provide detailed analysis of the
Group's core lending business.
1. Judgements in applying accounting policies and critical accounting
estimates
The preparation of the interim condensed consolidated financial
statements requires management to make judgements, estimates and
assumptions that affect the reported income and expense, assets and
liabilities and disclosure of contingencies at the date of the
interim condensed consolidated financial statements. Although these
estimates and assumptions are based on management's best judgement
at that date, actual results may differ from these estimates.
Estimates and assumptions are reviewed on an ongoing basis.
Revisions to estimates are recognised in the period in which the
estimate is revised and in any future periods affected.
As set out in the Task Force on Climate-related Financial
Disclosures (TCFD) report on page 86 of the OSBG 2021 Annual Report
and Accounts, climate change is a global challenge and an emerging
risk to businesses, people and the environment. Therefore, in
preparing the financial statements, the Group has considered the
impact of climate-related risks on its financial position and
performance, including the impact on expected credit losses and
redemption profiles included in effective interest rate (EIR).
While the effects of climate change represent a source of
uncertainty, the Group does not consider there to be a material
impact on its judgements and estimates from the physical or
transition risks in the short to medium term.
The judgements made by the Group in the application of its
accounting policies are consistent with those set out on pages 117
to 121 of the 2021 Annual Report and Accounts.
The following estimates may have a significant risk of material
adjustment to the carrying amount of assets within the next
financial period.
(i) Loan book impairments
Set out below are details of the critical accounting estimates
which underpin loan impairment calculations. Less significant
estimates are not discussed as they do not have a material effect.
The Group has recognised total impairments of GBP102.1m (31
December 2021: GBP101.5m) at the reporting date as disclosed in
note 17.
Modelled impairment
Modelled provision assessments are also subject to estimation
uncertainty, underpinned by a number of estimates being made by
management which are utilised within impairment calculations. Key
areas of estimation within modelled provisioning calculations
include those regarding the loss given default (LGD) and
forward-looking macroeconomic scenarios.
1. Judgements in applying accounting policies and critical accounting
estimates (continued)
Loss given default model
The Group has a number of LGD models, which include a number of
estimated inputs including propensity to go to possession given
default (PPD), forced sale discount (FSD), time to sale (TTS) and
sale cost estimates.
The LGD is sensitive to the application of the HPI. For the OSB
segment at 30 June 2022 a 10% fall in house prices would result in
an incremental GBP23.4m (31 December 2021: GBP22.7m) of provision
being required. For the CCFS segment at 30 June 2022 a 10% fall in
house prices would result in an incremental GBP9.2m (31 December
2021: GBP8.3m) of provision being required. The combined impact
across both OSB and CCFS businesses of a 10% fall in house prices
would result in an increase in total provisions of GBP32.6m (31
December 2021: GBP31.0m) as at 30 June 2022.
Loan book impairments -- forward-looking macroeconomic
scenarios
The Group's macroeconomic scenarios can be found in the Risk
review section. The following tables detail the expected credit
losses (ECL) scenario sensitivity analysis with each scenario
weighted at 100% probability. The purpose of using multiple
economic scenarios is to model the non-linear impact of assumptions
surrounding macroeconomic factors and ECL calculated:
Weighted 100% Severe
(see note 100% Base 100% Upside 100% Downside downside
As at 30 June 2022 (Unaudited) 17) case scenario scenario scenario scenario
Total loans before provisions,
GBPm 21,844.2 21,844.2 21,844.2 21,844.2 21,844.2
Modelled ECL, GBPm 45.3 16.6 11.4 63.0 112.7
Non-modelled ECL, GBPm 56.8 56.8 56.8 56.8 56.8
Total ECL, GBPm 102.1 73.4 68.2 119.8 169.5
ECL coverage, % 0.47 0.34 0.31 0.55 0.78
------------------------------- ---------- -------------- ----------- ------------- -----------
As at 31 December 2021
(Audited)
Total loans before provisions,
GBPm 21,164.1 21,164.1 21,164.1 21,164.1 21,164.1
Modelled ECL, GBPm 48.3 26.5 13.1 74.0 120.3
Non-modelled ECL, GBPm 53.2 53.2 53.2 53.2 53.2
Total ECL, GBPm 101.5 79.7 66.3 127.2 173.5
ECL coverage, % 0.48 0.38 0.31 0.60 0.82
------------------------------- -------- -------- -------- -------- --------
1. Judgements in applying accounting policies and critical accounting
estimates (continued)
(ii) Loan book acquisition accounting and effective interest
rate
There have been no significant changes in key judgements and
assumptions for acquisition accounting and income recognition and
EIR calculations compared to those applied at 31 December 2021, as
described on page 120 of the 2021 Annual Report and Accounts.
Sensitivities have been applied to the Precise and Kent Reliance
loan books, to illustrate the impact on interest income of a change
in the expected weighted average lives of the loan books. An
extension of the expected life will typically result in increased
expectations of post reversionary income, less early redemption
charges (ERCs) and a recognition of net fee income over a longer
period. A shortening of the expected life will lead to reduced post
reversionary income, more ERCs and a recognition of net fees over a
shorter period.
There are a number of drivers influencing customer behaviour
that can impact the expected weighted average lives of the loan
book, including the pandemic, changes in lifestyle such as working
patterns, the higher cost of living, increases in the base rate and
the macroeconomic outlook. A period of six months' variance in the
weighted average lives of the loan books was selected to show this
sensitivity. This sensitivity represents a realistic potential
change to the portfolio weighted average behavioural lives driven
by changing customer behaviour.
The Group recognised a net GBP3.2m loss in the six months to 30
June 2022 as a result of cash flows on organic books, made up of a
GBP9.4m loss due to reduced expected future cash flows
predominantly from post reversion income offset in part by a gain
of GBP6.2m from recognition of net fee income over a shorter period
from prepayments made in the period. Applying a six month extension
in the expected weighted average life of the organic loan books
would result in a gain of c. GBP76m recognised in net interest
income. Applying a six month reduction in the expected weighted
average life of the organic loan books, would result in a reset
loss of c. GBP20m.
The Group recognised a net GBP0.6m gain in the six months to 30
June 2022 as a result of resetting cash flows on acquired books.
The largest acquired book is Precise with sensitivities completed
on increasing/reducing the life of the book by six months which
results in a reset gain/loss of c. GBP31m/GBP35m.
It is reasonably possible, on the basis of existing knowledge,
that a change in estimated cash recoveries of principal and
interest which are past due at loan maturity could result in a
material increase in the value of the acquired second charge loan
portfolios with a corresponding increase in net interest income. It
is currently impracticable to estimate reliably the possible
effects of a change in cash flow recoveries as they are subject to
application of the Group's forbearance and collections policies,
following further engagement with customers and regulatory
guidance.
1. Interest receivable and similar income
Six months Six months
ended ended
30-Jun-22 30-Jun-21
(Unaudited) (Unaudited)
GBPm GBPm
At amortised cost:
On OSB mortgages 273.7 256.2
On CCFS mortgages 197.2 166.5
On finance leases 4.3 2.7
On investment securities 1.7 1.0
On other liquid assets 9.4 1.2
Amortisation of fair value adjustments on CCFS
Combination(1) (27.1) (35.3)
Amortisation of fair value adjustments on hedged
assets(2) (21.9) (17.0)
437.3 375.3
At fair value through profit or loss (FVTPL):
Net expense on derivative financial instruments
- lending activities 14.9 (26.5)
At FVOCI:
On investment securities - 0.4
452.2 349.2
------------------------------------------------- ----------- -----------
1. Amortisation of fair value adjustments on CCFS loan book at
Combination.
2. The amortisation relates to hedged assets where the hedges
were terminated before maturity and were effective at the point of
termination.
1. Interest payable and similar charges
Six months Six months
ended ended
30-Jun-22 30-Jun-21
(Unaudited) (Unaudited)
GBPm GBPm
At amortised cost:
On retail deposits 86.4 84.1
On BoE borrowings 15.1 2.0
On Perpetual Subordinated Bonds 0.3 0.8
On subordinated liabilities 0.4 0.4
On wholesale borrowings 0.7 0.4
On debt securities in issue 2.9 1.8
On lease liabilities 0.1 0.2
Amortisation of fair value adjustments on CCFS
Combination(1) (0.6) (0.8)
Amortisation of fair value adjustments on hedged
liabilities(2) (0.4) (0.5)
104.9 88.4
At FVTPL:
Net income on derivative financial instruments
- savings activities 3.9 (4.5)
108.8 83.9
------------------------------------------------- ----------- -----------
1. Amortisation of fair value adjustments on CCFS customer
deposits at Combination.
2. The amortisation relates to hedged liabilities where the
hedges were terminated before maturity and were effective at the
point of termination.
1. Fair value gains on financial instruments
Six months Six months
ended ended
30-Jun-22 30-Jun-21
(Unaudited) (Unaudited)
GBPm GBPm
Fair value changes in hedged assets (346.0) (114.5)
Hedging of assets 341.1 114.7
Fair value changes in hedged liabilities 33.3 8.8
Hedging of liabilities (32.7) (8.4)
Ineffective portion of hedges (4.3) 0.6
Net gains on unmatched swaps 14.0 6.1
Amortisation of inception adjustments(1) 6.5 0.2
Amortisation of acquisition-related inception
adjustments(2) 5.3 6.7
Amortisation of de-designated hedge relationships(3) (5.0) 2.2
Fair value movements on mortgages at FVTPL 0.4 0.2
Debit and credit valuation adjustment (0.5) 0.1
16.4 16.1
---------------------------------------------------- ----------- -----------
1. The amortisation of inception adjustment relates to the
amortisation of the hedging adjustments arising when hedge
accounting commences, primarily on derivative instruments
previously taken out against the mortgage pipeline and also on
derivative instruments previously taken out against new retail
deposits.
2. Relates to hedge accounting assets and liabilities recognised
on the Combination. The inception adjustments are being amortised
over the life of the derivative instruments acquired on Combination
subsequently designated in hedging relationships.
3. Relates to the amortisation of hedged items where hedge
accounting has been discontinued due to ineffectiveness.
1. Gain on sale of financial instruments
There were no sales of financial instruments during the six
months ended 30 June 2022.
On 10 February 2021, the Group sold the Precise Mortgage Funding
2019-1B plc A2 notes for GBP287.0m, generating a gain on sale of
GBP4.0m. Excluding the impact of the fair value adjustment on
Combination of GBP1.7m, the underlying gain on sale was
GBP2.3m.
1. Administrative expenses
Six months Six months
ended ended
30-Jun-22 30-Jun-21
(Unaudited) (Unaudited)
GBPm GBPm
Staff costs 48.7 46.7
Support costs(1) 14.7 8.7
Professional fees 10.9 10.3
Facilities costs 3.4 2.9
Marketing costs 2.2 1.8
Depreciation 2.5 2.6
Amortisation 4.5 4.2
Other costs 4.4 3.3
91.3 80.5
------------------ ----------- -----------
1. External servicing costs of GBP3.0m are now categorised as
support costs (2021: GBP3.0m categorised in professional fees).
The average number of people employed by the Group (including
Executive Directors) during the period is analysed below:
Six months Six months
ended ended
30-Jun-22 30-Jun-21
(Unaudited) (Unaudited)
UK 1,231 1,218
India 595 509
1,826 1,727
------ ----------- -----------
1. Integration costs
Six months Six months
ended ended
30-Jun-22 30-Jun-21
(Unaudited) (Unaudited)
GBPm GBPm
Consultant fees 2.3 0.3
Staff costs 1.4 1.6
3.7 1.9
---------------- ----------- -----------
Consultant fees relate to advice on the Group's future operating
structure.
Staff costs relate to personnel who will leave or have left the
Group through the transition of operations to the new operating
model.
1. Taxation
The Group publishes its tax strategy on its corporate website.
The table below shows the components of the Group's tax charge for
the period:
Six months Six months
ended ended
30-Jun-22 30-Jun-21
(Unaudited) (Unaudited)
GBPm GBPm
Corporation tax 70.9 63.3
Deferred tax (0.6) (0.9)
Adjustments in respect of earlier periods (0.4) 0.2
Release of deferred tax on CCFS Combination(1) (10.7) (2.2)
Total tax charge 59.2 60.4
------------------------------------------------ ----------- -----------
1. Release of deferred tax on CCFS Combination relates to the
unwind of the deferred tax liabilities recognised on the fair value
adjustments of the CCFS assets and liabilities at the acquisition
date GBP(6.0)m (2021: GBP(7.8)m) and the impact of the bank
surcharge decrease on these deferred tax liabilities GBP(4.7)m
(2021: impact of corporation tax rate increase GBP5.6m).
The charge for taxation on the Group's profit before taxation
differs from the charge based on the standard rate of UK
Corporation Tax of 19% (2021: 19%) as follows:
Six months Six months
ended ended
30-Jun-22 30-Jun-21
(Unaudited) (Unaudited)
GBPm GBPm
Profit before taxation 268.1 221.9
-------------------------------------------------- ----------- -----------
Profit multiplied by the standard rate of
UK Corporation Tax (19%) 51.0 42.2
Bank surcharge(1) 15.9 13.2
Taxation effects of:
Expenses not deductible for taxation purposes - 0.2
Impact of deferred tax rate change(2) (4.7) 5.4
Adjustments in respect of earlier periods (0.4) 0.2
Income not taxable (1.8) -
Tax adjustments in respect of share-based
payments 0.8 0.9
Impact of tax losses carried forward (0.1) (0.3)
Tax on coupon paid on Additional Tier 1 securities (1.2) (0.7)
Timing differences (0.4) (0.7)
Other 0.1 -
Total taxation charge 59.2 60.4
-------------------------------------------------- ----------- -----------
1. Tax charge for the two banking entities of GBP17.7m (2021:
GBP15.5m) offset by the tax impact of unwinding CCFS Combination
items of GBP1.8m (2021: GBP2.3m).
2. Due to change in bank surcharge rate from 8% to 3% on 1 April
2023 (2021: due to change in corporation tax rate from 19% to 25%
on 1 April 2023).
9. Taxation (continued)
Factors that may affect future tax charges
On 24 May 2021, the government substantively enacted legislation
to increase the corporation tax rate from 19% to 25% on 1 April
2023. Further, on 24 February 2022, the government substantively
enacted legislation to decrease the bank surcharge rate from 8% to
3% on 1 April 2023. Deferred tax expected to unwind after 1 April
2023 is recognised at the new rates.
1. Dividends
Dividends paid during the period are disclosed below:
Six months Six months
ended ended
30-Jun-22 30-Jun-21
(Unaudited) (Unaudited)
GBPm GBPm
Final dividend for the prior year 94.8 64.8
Dividends paid to fund OSBG's share repurchase
programme 44.5 -
Total dividend paid 139.3 64.8
----------------------------------------------- ----------- -----------
Dividends to fund OSBG's share repurchase programme include
GBP41.5m for shares repurchased to 30 June 2022 and GBP3.0m of
advanced funding for upcoming share repurchase activity.
1. Cash and cash equivalents
The following table analyses the cash and cash equivalents
disclosed in the Condensed Consolidated Statement of Cash
Flows:
As at As at As at As at
30-Jun-22 31-Dec-21 30-Jun-21 31-Dec-20
(Unaudited) (Audited) (Unaudited) (Audited)
GBPm GBPm GBPm GBPm
Cash in hand 0.4 0.5 0.4 0.5
Unencumbered loans and advances
to credit institutions 2,962.7 2,636.2 2,203.5 2,370.1
Investment securities 49.8 100.0 - -
3,012.9 2,736.7 2,203.9 2,370.6
-------------------------------- ----------- ---------- ----------- ----------
1. Loans and advances to credit institutions
As at As at
30-Jun-22 31-Dec-21
(Unaudited) (Audited)
GBPm GBPm
Unencumbered:
BoE call account 2,829.0 2,496.4
Call accounts 79.7 43.3
Cash held in special purpose vehicles(1) 51.6 89.6
Term deposits 2.4 6.9
Encumbered:
BoE cash ratio deposit 61.2 59.5
Cash held in special purpose vehicles(1) 83.6 48.0
Cash margin given 115.9 99.9
3,223.4 2,843.6
----------------------------------------- ----------- ----------
1. Cash held in special purpose vehicles (SPVs) is ring-fenced
for use in managing the Group's securitised debt facilities under
the terms of securitisation agreements. Cash held in internal SPVs
is treated as unencumbered in proportion to the retained interest
in the SPV based on the nominal value of the bonds held in the
Group to total bonds in the securitisation, and included in cash
and cash equivalents. Cash retained in SPVs designated as cash
reserve credit enhancement is treated as encumbered in proportion
to the external holdings in the SPV and excluded from cash and cash
equivalents.
1. Investment securities
As at As at
30-Jun-22 31-Dec-21
(Unaudited) (Audited)
GBPm GBPm
Held at FVTPL:
RMBS(1) loan notes 0.5 0.7
0.5 0.7
Held at FVOCI:
UK Sovereign debt 150.2 152.1
RMBS loan notes 14.7 15.5
164.9 167.6
Held at amortised cost:
UK Sovereign debt - 100.0
RMBS loan notes 196.4 223.1
196.4 323.1
Less: Expected credit losses - -
196.4 323.1
361.8 491.4
----------------------------- ----------- ----------
1. Residential Mortgage-Backed Securities
Movements during the period in investment securities held by the
Group are analysed below:
Six months
ended Year ended
30-Jun-22 31-Dec-21
(Unaudited) (Audited)
GBPm GBPm
At 1 January 491.4 471.2
Additions(1) 57.1 568.2
Disposals and maturities(2) (185.5) (549.7)
Movement in accrued interest (0.5) 0.6
Changes in fair value (0.7) 1.1
361.8 491.4
----------------------------- ----------- ----------
1. Additions includes GBP49.8m of UK Treasury bills which had a
maturity of less than three months from date of acquisition (2021:
GBP100.0m).
2. Disposals and maturities includes GBP100.0m of UK Treasury
bills which had a maturity of less than three months from date of
acquisition (2021: nil).
1. Loans and advances to customers
As at As at
30-Jun-22 31-Dec-21
(Unaudited) (Audited)
GBPm GBPm
Held at amortised cost:
Loans and advances (see note 15) 21,702.9 21,047.9
Finance leases (see note 16) 141.3 116.2
21,844.2 21,164.1
Less: Expected credit losses (see note 17) (102.1) (101.5)
21,742.1 21,062.6
Residential mortgages held at FVTPL 17.1 17.7
21,759.2 21,080.3
1. Loans and advances
As at 30-Jun-22 (Unaudited) As at 31-Dec-21 (Audited)
OSB CCFS Total OSB CCFS Total
GBPm GBPm GBPm GBPm GBPm GBPm
Gross carrying
amount
Stage 1 10,601.0 7,966.8 18,567.8 10,393.2 7,685.7 18,078.9
Stage 2 1,174.5 1,386.1 2,560.6 1,142.3 1,269.8 2,412.1
Stage 3 360.0 124.5 484.5 360.4 99.1 459.5
Stage 3
(POCI)(1) 41.8 48.2 90.0 45.2 52.2 97.4
12,177.3 9,525.6 21,702.9 11,941.1 9,106.8 21,047.9
---------- --------
1. Purchased or originated credit impaired
1. Loans and advances (continued)
The tables below show the movement in loans and advances to
customers by IFRS 9 stage during the period:
Stage 3
Stage 1 Stage 2 Stage 3 (POCI) Total
GBPm GBPm GBPm GBPm GBPm
At 1 January 2021 16,060.3 2,689.6 392.6 114.6 19,257.1
Originations(1) 4,523.4 - - - 4,523.4
Acquisitions(2) 277.7 - - 2.7 280.4
Disposals(2) (214.4) - - - (214.4)
Repayments and
write-offs(3) (2,539.8) (160.3) (78.6) (19.9) (2,798.6)
Transfers:
- To Stage 1 1,401.0 (1,370.2) (30.8) - -
- To Stage 2 (1,339.7) 1,384.1 (44.4) - -
- To Stage 3 (89.6) (131.1) 220.7 - -
At 31 December 2021
(Audited) 18,078.9 2,412.1 459.5 97.4 21,047.9
Originations(1) 2,282.1 - - - 2,282.1
Repayments and
write-offs(3) (1,406.2) (170.3) (43.2) (7.4) (1,627.1)
Transfers:
- To Stage 1 782.8 (774.2) (8.6) - -
- To Stage 2 (1,130.8) 1,163.1 (32.3) - -
- To Stage 3 (39.0) (70.1) 109.1 - -
At 30 June 2022 (Unaudited) 18,567.8 2,560.6 484.5 90.0 21,702.9
--------- --------- ------- -------
1. Originations include further advances and drawdowns on
existing commitments.
2. The Group acted as co-arranger in the re-securitisation of
GBP229.6m of third party mortgages from the Rochester Financing
No.2 PLC securitisation to the new Rochester Financing No.3 PLC
securitisation on 15 June 2021. Neither securitisation is a
subsidiary of the Group. Under the terms of the mortgage sale
agreements, the Group recognised the mortgages as a purchase from
Rochester Financing No.2 PLC and immediately derecognised them as a
sale to Rochester Financing No.3 PLC. OneSavings Bank plc is the
master servicer of the mortgages, and has retained 5% of these
mortgages, as required under the retention rules. In addition to
the Group acting as co-arranger for the re-securitisation of
Rochester Financing No.2 PLC, the Group purchased an external
mortgage book, a c. GBP55m portfolio of UK residential mortgages,
at a discount to the then current balances.
3. Repayments and write-offs include customer redemptions.
1. Finance leases
The Group provides asset finance lending through InterBay Asset
Finance Limited.
As at As at
30-Jun-22 31-Dec-21
(Unaudited) (Audited)
GBPm GBPm
Gross investment in finance leases, receivable
Less than one year 50.4 39.7
Between one and five years 105.1 87.0
More than five years 0.8 0.9
156.3 127.6
Unearned finance income (15.0) (11.4)
Net investment in finance leases 141.3 116.2
----------------------------------------------- ----------- ----------
Net investment in finance leases, receivable
Less than one year 43.9 34.7
Between one and five years 96.7 80.6
More than five years 0.7 0.9
141.3 116.2
-----------
The Group has recognised GBP4.7m of ECLs on finance leases as at
30 June 2022 (31 December 2021: GBP4.3m).
1. Expected credit losses
The ECL has been calculated based on various scenarios as set
out below:
As at 30-Jun-22 (Unaudited) As at 31-Dec-21 (Audited)
ECL Weighted ECL Weighted
provision Weighting ECL provision provision Weighting ECL provision
GBPm % GBPm GBPm % GBPm
Scenarios
Upside 11.4 10 1.1 13.1 20 2.6
Base case 16.6 40 6.6 26.5 40 10.6
Downside scenario 63.0 38 24.1 74.0 28 20.7
Severe downside
scenario 112.7 12 13.5 120.3 12 14.4
Total weighted
provisions 45.3 48.3
Non-modelled
provisions:
Individually assessed
provisions 43.2 40.4
Post model
adjustments1 13.6 12.8
Total provision 102.1 101.5
---------------------- --------- --------- -------------- --------- --------- --------------
1. To ensure that provision coverage levels remain appropriate,
the Group holds a number of post model adjustments, to capture any
specific risks not captured within the models and economic
forecasts as highlighted by the Group's risk functions' top-down
lending segment analysis or adjustments that still remain relevant
from those introduced due to COVID-19 observations, restrictions
and economic support measures. Additional information can be found
in the Credit risk section of the Risk profile performance review
on pages 53 to 62 of the 2021 Annual Report and Accounts.
The Group's ECL by segment and IFRS 9 stage is shown below:
As at 30-Jun-22 (Unaudited) As at 31-Dec-21 (Audited)
OSB CCFS Total OSB CCFS Total
GBPm GBPm GBPm GBPm GBPm GBPm
Stage 1 6.9 1.9 8.8 9.3 2.8 12.1
Stage 2 15.8 11.5 27.3 14.2 10.8 25.0
Stage 3 58.8 4.1 62.9 56.6 3.8 60.4
Stage 3 (POCI) 1.6 1.5 3.1 2.1 1.9 4.0
83.1 19.0 102.1 82.2 19.3 101.5
-------------- --------- -------- ---------- -------- -------- ---------
1. Expected credit losses (continued)
The tables below show the movement in the ECL by IFRS 9 stage
during the period. ECLs on originations and acquisitions reflect
the IFRS 9 stage of loans originated or acquired during the period
as at 30 June 2022 and not the date of origination. Re-measurement
of loss allowance relates to existing loans which did not redeem
during the period and includes the impact of loans moving between
IFRS 9 stages.
Stage Stage Stage Stage
1 2 3 3 (POCI) Total
GBPm GBPm GBPm GBPm GBPm
At 1 January 2021 21.2 31.0 51.7 7.1 111.0
Originations 5.7 - - - 5.7
Acquisitions 0.1 - - 0.1 0.2
Repayments and write-offs (2.8) (3.3) (7.4) (1.1) (14.6)
Re-measurement of loss allowance (21.8) (0.8) 12.8 (2.1) (11.9)
Transfers:
- To Stage 1 11.3 (10.5) (0.8) - -
- To Stage 2 (2.3) 5.1 (2.8) - -
- To Stage 3 (0.3) (3.1) 3.4 - -
Changes in assumptions and
model parameters 1.0 6.6 3.5 - 11.1
At 31 December 2021 (Audited) 12.1 25.0 60.4 4.0 101.5
Originations 2.6 - - - 2.6
Repayments and write-offs (0.5) (1.3) (3.3) (0.3) (5.4)
Re-measurement of loss allowance (11.1) 12.8 5.5 (0.6) 6.6
Transfers:
- To Stage 1 7.3 (7.0) (0.3) - -
- To Stage 2 (1.1) 2.1 (1.0) - -
- To Stage 3 - (1.6) 1.6 - -
Changes in assumptions and
model parameters (0.5) (2.7) - - (3.2)
At 30 June 2022 (Unaudited) 8.8 27.3 62.9 3.1 102.1
------ ------ ----- --------- ------
The table below shows the stage 2 ECL balances by transfer
criteria:
As at 30-Jun-22 (Unaudited) As at 31-Dec-21 (Audited)
Carrying Carrying
value ECL Coverage value ECL Coverage
GBPm GBPm % GBPm GBPm %
Criteria:
Relative PD
movement 1,451.5 20.0 1.38 1,251.6 17.1 1.37
Qualitative
measures 1,074.7 6.9 0.64 1,125.0 7.4 0.66
30 days past
due backstop 35.4 0.4 1.13 37.0 0.5 1.35
Total 2,561.6 27.3 1.07 2,413.6 25.0 1.04
-------------- ----------- ------ ---------- ---------- ----- ----------
1. Expected credit losses (continued)
The Group has a number of qualitative measures to determine
whether a significant increase in credit risk (SICR) has taken
place. These triggers utilise both internal performance
information, to analyse whether an account is in distress but not
yet in arrears, and external credit bureau information, to
determine whether the customer is experiencing financial difficulty
with an external credit obligation.
1. Impairment of financial assets
The charge for impairment of financial assets in the Condensed
Consolidated Statement of Comprehensive Income comprises:
Six months Six months
ended ended
30-Jun-22 30-Jun-21
(Unaudited) (Unaudited)
GBPm GBPm
Write-offs in period 0.9 2.0
Increase/(decrease) in ECL provision 0.7 (16.6)
1.6 (14.6)
------------------------------------- ----------- -----------
2. Hedge accounting
As at As at
30-Jun-22 31-Dec-21
(Unaudited) (Audited)
GBPm GBPm
Hedged assets
Current hedge relationships (538.9) (190.9)
Swap inception adjustment (8.1) (26.2)
Cancelled hedge relationships 56.0 78.2
Fair value adjustments on hedged assets (491.0) (138.9)
--------------------------------------------- ----------- ----------
Hedged liabilities
Current hedge relationships 53.4 19.6
Swap inception adjustment (0.1) 3.3
Cancelled hedge relationships (0.9) (1.4)
De-designated hedge relationships - (1.8)
Fair value adjustments on hedged liabilities 52.4 19.7
--------------------------------------------- ----------- ----------
The swap inception adjustment relates to hedge accounting
adjustments arising when hedge accounting commences, primarily on
derivative instruments previously taken out against the mortgage
pipeline and on derivative instruments previously taken out against
new retail deposits.
De-designated hedge relationships relates to hedge accounting
adjustments on failed hedge accounting relationships. These
adjustments are amortised over the remaining lives of the original
hedged items.
Cancelled hedge relationships predominantly represent the
unamortised fair value adjustment for interest rate risk hedges
that have been cancelled and replaced due to IBOR transition,
securitisation activities and legacy long-term fixed rate mortgages
(c. 25 years at origination).
3. Amounts owed to credit institutions
As at As at
30-Jun-22 31-Dec-21
(Unaudited) (Audited)
GBPm GBPm
BoE TFSME(1) 4,211.9 4,203.1
BoE ILTR(2) 220.3 -
Commercial repo 11.7 0.5
Loans from credit institutions 0.5 0.6
Cash collateral and margin received 396.1 115.4
4,840.5 4,319.6
------------------------------------ ----------- ----------
1. Term Funding Scheme for SMEs
2. Indexed Long-Term Repo
4. Amounts owed to retail depositors
As at 30-Jun-22 (Unaudited) As at 31-Dec-21 (Audited)
OSB CCFS Total OSB CCFS Total
GBPm GBPm GBPm GBPm GBPm GBPm
Fixed rate
deposits 6,972.2 5,302.2 12,274.4 6,221.7 4,703.4 10,925.1
Variable rate
deposits 3,111.0 2,553.6 5,664.6 3,517.7 3,083.6 6,601.3
10,083.2 7,855.8 17,939.0 9,739.4 7,787.0 17,526.4
-------------- ---------- -------- --------- -------- -------- ---------
5. Debt securities in issue
As at As at
30-Jun-22 31-Dec-21
(Unaudited) (Audited)
GBPm GBPm
Asset backed loan notes at amortised cost 367.3 460.3
Amount due for settlement after 12 months 367.3 460.3
------------------------------------------ ----------- ----------
The asset-backed loan notes are secured on fixed and variable
rate mortgages and are redeemable in part from time to time, but
such redemptions are limited to the net principal received from
customers in respect of underlying mortgage assets. The maturity
date of the funds matches the contractual maturity date of the
underlying mortgage assets. The Group expects that a large
proportion of the underlying mortgage assets, and therefore these
notes, will be repaid within five years.
Asset-backed loan notes may all be repurchased by the Group at
any interest payment date on or after the call dates, or at any
interest payment date when the current balance of the mortgages
outstanding is less than or equal to 10% of the principal amount
outstanding on the loan notes on the date they were issued.
Interest is payable at fixed margins above SONIA.
1. Debt securities in issue (continued)
As at 30 June 2022, notes were in issue through the following
funding vehicles:
As at As at
30-Jun-22 31-Dec-21
(Unaudited) (Audited)
GBPm GBPm
CMF 2020-1 plc 166.2 199.8
Canterbury Finance No.3 plc 42.2 76.9
Canterbury Finance No.4 plc 158.9 183.6
367.3 460.3
---------------------------- ----------- ----------
6. Lease liabilities
As at As at
30-Jun-22 31-Dec-21
(Unaudited) (Audited)
GBPm GBPm
At 1 January 10.7 11.7
New leases 0.4 0.7
Lease termination - (0.1)
Lease repayments (1.1) (1.9)
Interest accruals 0.1 0.3
10.1 10.7
------------------ ----------- ----------
7. Provisions and contingent liabilities
The Group has reviewed its current exposure to Payment
Protection Insurance (PPI) claims, following the FCA deadline for
PPI claims on 29 August 2019 and has reduced its provision to
GBP0.1m as at 30 June 2022 (31 December 2021: GBP0.3m).
The Group has released its provision for conduct related
exposures of GBP1.2m following completion of an internal
review.
An analysis of the Group's Financial Services Compensation
Scheme (FSCS) and other provisions is presented below:
Other regulatory ECL on undrawn
FSCS provisions loan facilities Total
GBPm GBPm GBPm GBPm
At 1 January 2021 0.1 1.5 0.2 1.8
Charge - - 0.2 0.2
At 31 December 2021
(Audited) 0.1 1.5 0.4 2.0
(Credit)/charge (0.1) (1.4) 0.1 (1.4)
At 30 June 2022 (Unaudited) - 0.1 0.5 0.6
---------------------------- ----- ---------------- ---------------- -----
In January 2020, the Group was contacted by the FCA in
connection with a multi-firm thematic review into forbearance
measures adopted by lenders in respect of a portion of the mortgage
market. The Group has responded to information requests from the
FCA. It is not possible to reliably predict or estimate the outcome
of the review and therefore its financial effect, if any, on the
Group.
8. Reconciliation of cash flows for financing activities
The tables below show a reconciliation of the Group's
liabilities classified as financing activities within the Condensed
Consolidated Statement of Cash Flows:
Amounts owed Perpetual
to credit Debt securities Subordinated Subordinated
institutions in issue liabilities Bonds Total
(see note (see note
20) 22)
GBPm GBPm GBPm GBPm GBPm
At 1 January
2022 4,319.6 460.3 10.3 15.2 4,805.4
Cash
movements:
Principal
drawdowns 512.5 - - - 512.5
Principal
repayments (1.2) (93.0) - - (94.2)
Non-cash
movements:
Accrued
interest
movement 9.6 - - - 9.6
At 30 June
2022
(Unaudited) 4,840.5 367.3 10.3 15.2 5,233.3
------------ ------------- --------------- ------------ ------------- -------
Amounts owed Perpetual
to credit Debt securities Subordinated Subordinated
institutions in issue liabilities Bonds Total
GBPm GBPm GBPm GBPm GBPm
At 1 January
2021 3,570.2 421.9 10.5 37.6 4,040.2
Cash
movements:
Principal
drawdowns 469.7 - - - 469.7
Principal
repayments (286.8) (65.0) - - (351.8)
Non-cash
movements:
Accrued
interest
movement (0.1) 0.2 - (0.1) -
At 30 June
2021
(Unaudited) 3,753.0 357.1 10.5 37.5 4,158.1
9. Risk management
The tables below are a summary of the Group's risk management
and financial instruments disclosures, of which a complete
disclosure for the year ended 31 December 2021 is included in the
2021 Annual Report and Accounts. The tables do not represent all
risks the Group is exposed to and should be read in conjunction
with the Risk review above.
Credit risk
The following tables show the Group's maximum exposure to credit
risk and the impact of collateral held as security, capped at the
gross exposure amount, by impairment stage. Capped collateral
excludes the impact of forced sale discounts and costs to sell.
As at 30-Jun-22 (Unaudited)
OSB CCFS Total
--------------------------- ---------------------------
Capped Capped Capped
Gross carrying collateral Gross carrying collateral Gross carrying collateral
amount held amount held amount held
GBPm GBPm GBPm GBPm GBPm GBPm
Stage 1 10,735.2 10,711.2 7,966.8 7,965.8 18,702.0 18,677.0
Stage 2 1,175.5 1,174.2 1,386.1 1,385.9 2,561.6 2,560.1
Stage 3 366.1 334.7 124.5 124.5 490.6 459.2
Stage 3
(POCI) 41.8 40.6 48.2 48.2 90.0 88.8
12,318.6 12,260.7 9,525.6 9,524.4 21,844.2 21,785.1
------- -------------- ----------- -------------- ----------- -------------- -----------
As at 31-Dec-21 (Audited)
OSB CCFS Total
--------------------------- ---------------------------
Capped Capped Capped
Gross carrying collateral Gross carrying collateral Gross carrying collateral
amount held amount held amount held
GBPm GBPm GBPm GBPm GBPm GBPm
Stage 1 10,502.7 10,478.1 7,685.7 7,684.6 18,188.4 18,162.7
Stage 2 1,143.8 1,141.9 1,269.8 1,269.7 2,413.6 2,411.6
Stage 3 365.6 337.9 99.1 99.1 464.7 437.0
Stage 3
(POCI) 45.2 43.6 52.2 52.2 97.4 95.8
12,057.3 12,001.5 9,106.8 9,105.6 21,164.1 21,107.1
------- -------------- ----------- -------------- ----------- -------------- -----------
The Group's main form of collateral held is property, based in
the UK and the Channel Islands.
1. Risk management (continued)
The Group uses indexed loan to value (LTV) ratios to assess the
quality of the uncapped collateral held. Property values are
updated to reflect changes in the HPI. A breakdown of loans and
advances to customers by indexed LTV is as follows:
As at 30-Jun-22 (Unaudited) As at 31-Dec-21 (Audited)
OSB CCFS Total OSB CCFS Total
GBPm GBPm GBPm % GBPm GBPm GBPm %
Band
0% - 50% 2,528.1 737.3 3,265.4 15 2,293.3 428.2 2,721.5 13
50% - 60% 2,248.1 1,021.9 3,270.0 15 1,935.3 490.1 2,425.4 11
60% - 70% 4,481.1 3,694.6 8,175.7 38 4,179.0 1,241.9 5,420.9 26
70% - 80% 2,442.6 3,748.9 6,191.5 28 2,887.7 6,100.7 8,988.4 43
80% - 90% 374.7 319.7 694.4 3 513.2 844.4 1,357.6 6
90% - 100% 62.1 3.2 65.3 - 77.8 1.5 79.3 -
>100% 181.9 - 181.9 1 171.0 - 171.0 1
Total loans before
provisions 12,318.6 9,525.6 21,844.2 100 12,057.3 9,106.8 21,164.1 100
------------------ -------- ------- -------- --- -------- ------- -------- ---
The table below shows the LTV banding for the OSB segments' two
major lending streams:
As at 30-Jun-22 (Unaudited) As at 31-Dec-21 (Audited)
BTL/SME Residential Total BTL/SME Residential Total
OSB GBPm GBPm GBPm % GBPm GBPm GBPm %
Band
0% - 50% 1,150.7 1,377.4 2,528.1 21 1,007.6 1,285.7 2,293.3 19
50% - 60% 2,005.4 242.7 2,248.1 18 1,693.7 241.6 1,935.3 16
60% - 70% 4,205.4 275.7 4,481.1 36 3,903.0 276.0 4,179.0 35
70% - 80% 2,262.5 180.1 2,442.6 20 2,647.7 240.0 2,887.7 24
80% - 90% 297.0 77.7 374.7 3 452.8 60.4 513.2 4
90% - 100% 54.0 8.1 62.1 1 66.2 11.6 77.8 1
>100% 176.1 5.8 181.9 1 165.1 5.9 171.0 1
Total loans
before provisions 10,151.1 2,167.5 12,318.6 100 9,936.1 2,121.2 12,057.3 100
------------------ -------- ----------- -------- --- ------- ----------- -------- ---
1. Risk management (continued)
The tables below show the LTV analysis of the OSB BTL/SME
sub-segment:
As at 30-Jun-22 (Unaudited)
Residential Funding
Buy-to-Let Commercial development lines Total
OSB GBPm GBPm GBPm GBPm GBPm
Band
0% - 50% 921.2 156.9 21.9 50.7 1,150.7
50% - 60% 1,844.6 97.4 54.3 9.1 2,005.4
60% - 70% 3,986.7 158.5 56.7 3.5 4,205.4
70% - 80% 2,037.1 225.4 - - 2,262.5
80% - 90% 148.4 113.0 - 35.6 297.0
90% - 100% 36.1 17.9 - - 54.0
>100% 125.2 20.4 - 30.5 176.1
Total loans before
provisions 9,099.3 789.5 132.9 129.4 10,151.1
--------------------- ---------- ---------- ------------ ------- --------
As at 31-Dec-21 (Audited)
Residential Funding
Buy-to-Let Commercial development lines Total
OSB GBPm GBPm GBPm GBPm GBPm
Band
0% - 50% 804.0 118.9 19.0 65.7 1,007.6
50% - 60% 1,532.0 105.1 40.1 16.5 1,693.7
60% - 70% 3,708.1 130.1 61.6 3.2 3,903.0
70% - 80% 2,423.7 224.0 - - 2,647.7
80% - 90% 249.5 165.9 - 37.4 452.8
90% - 100% 46.4 19.8 - - 66.2
>100% 104.0 30.6 - 30.5 165.1
Total loans before
provisions 8,867.7 794.4 120.7 153.3 9,936.1
---------------------- ---------- ---------- ------------ ------- -------
1. Risk management (continued)
The tables below show the LTV analysis of the OSB Residential
sub-segment:
As at 30-Jun-22 (Unaudited) As at 31-Dec-21 (Audited)
First Second Funding First Second Funding
charge charge lines Total charge charge lines Total
OSB GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Band
0% - 50% 1,267.7 109.7 - 1,377.4 1,173.3 111.8 0.6 1,285.7
50% - 60% 197.8 44.9 - 242.7 189.8 51.8 - 241.6
60% - 70% 249.9 25.8 - 275.7 240.2 35.8 - 276.0
70% - 80% 168.3 11.8 - 180.1 221.3 18.7 - 240.0
80% - 90% 75.7 2.0 - 77.7 56.5 3.9 - 60.4
90% - 100% 7.1 1.0 - 8.1 10.3 1.3 - 11.6
>100% 4.7 1.1 - 5.8 4.5 1.4 - 5.9
Total loans before
provisions 1,971.2 196.3 - 2,167.5 1,895.9 224.7 0.6 2,121.2
------------------ ------- ------- ------- ------- ------- ------- ------- -------
The table below shows the LTV analysis of the four CCFS
sub-segments:
As at 30-Jun-22 (Unaudited)
Second
charge
Buy-to-Let Residential Bridging lending Total
CCFS GBPm GBPm GBPm GBPm GBPm %
Band
0% - 50% 239.3 413.5 38.7 45.8 737.3 8
50% - 60% 544.2 425.5 14.2 38.0 1,021.9 11
60% - 70% 2,578.1 1,065.8 16.3 34.4 3,694.6 39
70% - 80% 3,243.1 475.0 14.2 16.6 3,748.9 39
80% - 90% 222.8 95.4 0.4 1.1 319.7 3
90% - 100% 1.6 1.6 - - 3.2 -
Total loans before
provisions 6,829.1 2,476.8 83.8 135.9 9,525.6 100
------------------- ---------- ----------- -------- -------- ------- ---
As at 31-Dec-21 (Audited)
Second
charge
Buy-to-Let Residential Bridging lending Total
CCFS GBPm GBPm GBPm GBPm GBPm %
Band
0% - 50% 104.8 261.0 30.2 32.2 428.2 5
50% - 60% 205.4 246.8 9.3 28.6 490.1 5
60% - 70% 702.4 480.1 14.9 44.5 1,241.9 14
70% - 80% 4,827.7 1,234.5 1.4 37.1 6,100.7 67
80% - 90% 560.5 268.9 0.5 14.5 844.4 9
90% - 100% 0.1 1.4 - - 1.5 -
Total loans before
provisions 6,400.9 2,492.7 56.3 156.9 9,106.8 100
------------------- ---------- ----------- -------- -------- ------- ---
1. Risk management (continued)
Forbearance measures undertaken
The Group has a range of options available where borrowers
experience financial difficulties that impact their ability to
service their financial commitments under the loan agreement. These
options are explained in the Principal risks and uncertainties Risk
review on page 57 to 58 of the 2021 Annual Report and Accounts.
A summary of the forbearance measures undertaken (excluding
COVID-19 related payment deferrals) during the period is shown
below. The balances disclosed reflect the period end balance of the
accounts where a forbearance measure was undertaken during the
period.
Six months ended Year ended
30-Jun-22 31-Dec-21
(Unaudited) (Audited)
Number of Number of
Forbearance type accounts GBPm accounts GBPm
Interest-only switch 33 10.7 159 18.6
Interest rate reduction 49 1.4 437 8.1
Term extension 31 1.7 271 16.6
Payment deferral 58 6.6 499 43.0
Voluntary-assisted sale 2 0.1 7 0.8
Payment concession (reduced monthly
payments) 45 13.6 51 12.1
Capitalisation of interest 11 7.7 65 1.1
Full or partial debt forgiveness 225 5.1 1,078 22.6
Total 454 46.9 2,567 122.9
------------------------------------ ------------ ---- --------- -----
Loan type
First charge owner-occupier 88 11.4 424 34.8
Second charge owner-occupier(1) 294 5.9 1,931 38.7
Buy-to-Let 47 20.9 160 34.6
Commercial 25 8.7 52 14.8
Total 454 46.9 2,567 122.9
------------------------------------ ------------ ---- --------- -----
1. Through 2021 and the first quarter of 2022, the Group
undertook an exercise and provided a series of forbearance
solutions and options to long-term arrears customers on our Second
charge portfolio to support and remedy the accrued delinquency.
1. Risk management (continued)
Geographical analysis by region
An analysis of loans, excluding asset finance leases, by region
is provided below:
As at 30-Jun-22 (Unaudited) As at 31-Dec-21 (Audited)
OSB CCFS Total OSB CCFS Total
Region GBPm GBPm GBPm % GBPm GBPm GBPm %
East Anglia 375.1 1,019.0 1,394.1 6 361.8 967.1 1,328.9 6
East Midlands 552.7 606.1 1,158.8 5 543.8 555.8 1,099.6 5
Greater London 5,075.4 3,127.5 8,202.9 39 4,983.7 3,052.6 8,036.3 39
Guernsey 24.5 - 24.5 - 26.3 - 26.3 -
Jersey 87.3 - 87.3 - 99.3 - 99.3 -
North East 160.0 251.4 411.4 2 153.9 244.4 398.3 2
North West 814.6 812.1 1,626.7 7 762.3 755.0 1,517.3 7
Northern Ireland 10.6 - 10.6 - 10.9 - 10.9 -
Scotland 32.4 236.4 268.8 1 35.2 226.0 261.2 1
South East 2,848.8 1,502.9 4,351.7 21 2,792.6 1,452.4 4,245.0 20
South West 841.7 576.0 1,417.7 7 825.5 544.3 1,369.8 7
Wales 263.1 253.2 516.3 2 272.1 240.6 512.7 2
West Midlands 711.0 677.1 1,388.1 6 706.9 629.8 1,336.7 7
Yorks and
Humberside 380.1 463.9 844.0 4 366.8 438.8 805.6 4
Total loans before
provisions 12,177.3 9,525.6 21,702.9 100 11,941.1 9,106.8 21,047.9 100
------------------- -------- ------- -------- --- -------- ------- -------- ---
1. Risk management (continued)
Approach to measurement of credit quality
The Group categorises the credit quality of loans and advances
to customers into internal risk grades based on the 12 month PD
calculated at the reporting date. The PDs include a combination of
internal behavioural and credit bureau characteristics. The risk
grades are further grouped into the following credit quality
segments:
-- Excellent quality -- where there is a very high likelihood the asset will
be recovered in full with a negligible or very low risk of default.
-- Good quality -- where there is a high likelihood the asset will be
recovered in full with a low risk of default.
-- Satisfactory quality -- where the assets demonstrate a moderate default
risk.
-- Lower quality -- where the assets require closer monitoring and the risk
of default is of greater concern.
The credit grade for the Group's investment securities and loans
and advances to credit institutions is based on the external credit
rating of the counterparty.
The following tables disclose the credit risk quality ratings of
loans and advances to customers by IFRS 9 stage:
As at 30-Jun-22 (Unaudited)
Stage
Stage Stage 3
Stage 1 2 3 (POCI) Total
GBPm GBPm GBPm GBPm GBPm
OSB
Excellent 5,200.8 122.3 - - 5,323.1
Good 5,421.7 700.9 - - 6,122.6
Satisfactory 110.2 265.4 - - 375.6
Lower 2.5 86.9 - - 89.4
Impaired - - 366.1 - 366.1
POCI - - - 41.8 41.8
CCFS
Excellent 5,316.7 343.0 - - 5,659.7
Good 2,608.8 770.0 - - 3,378.8
Satisfactory 38.2 152.4 - - 190.6
Lower 3.1 120.7 - - 123.8
Impaired - - 124.5 - 124.5
POCI - - - 48.2 48.2
18,702.0 2,561.6 490.6 90.0 21,844.2
------------- -------- ------- ----- ------- --------
1. Risk management (continued)
As at 31-Dec-21 (Audited)
Stage
Stage Stage 3
Stage 1 2 3 (POCI) Total
GBPm GBPm GBPm GBPm GBPm
OSB
Excellent 5,305.7 148.4 - - 5,454.1
Good 5,079.2 687.1 - - 5,766.3
Satisfactory 113.5 232.4 - - 345.9
Lower 4.3 75.9 - - 80.2
Impaired - - 365.6 - 365.6
POCI - - - 45.2 45.2
CCFS
Excellent 5,126.6 319.1 - - 5,445.7
Good 2,519.6 693.9 - - 3,213.5
Satisfactory 35.0 147.7 - - 182.7
Lower 4.5 109.1 - - 113.6
Impaired - - 99.1 - 99.1
POCI - - - 52.2 52.2
18,188.4 2,413.6 464.7 97.4 21,164.1
------------- -------- ------- ----- ------- --------
The tables below show the Group's other financial assets by
credit risk rating grade:
As at 30-Jun-22 (Unaudited)
Excellent Good Satisfactory Total
GBPm GBPm GBPm GBPm
Investment securities 361.8 - - 361.8
Loans and advances to credit
institutions 3,025.4 196.1 1.9 3,223.4
Derivative assets 218.3 326.4 - 544.7
3,605.5 522.5 1.9 4,129.9
------------------------------------- --------- ----- ------------ -------
As at 31-Dec-21 (Audited)
Excellent Good Satisfactory Total
GBPm GBPm GBPm GBPm
Investment securities 491.4 - - 491.4
Loans and advances to credit
institutions 2,688.9 151.8 2.9 2,843.6
Derivative assets 43.0 142.7 - 185.7
3,223.3 294.5 2.9 3,520.7
------------------------------------- --------- ----- ------------ -------
2. Financial instruments and fair values
The following tables provide an analysis of financial assets and
financial liabilities measured at fair value in the Condensed
Consolidated Statement of Financial Position grouped into Levels 1
to 3 based on the degree to which the fair value is observable:
Carrying Principal Level
amount amount Level 1 Level 2 3 Total
As at 30 June 2022
(Unaudited) GBPm GBPm GBPm GBPm GBPm GBPm
Financial assets
Investment securities 165.4 165.3 150.2 14.7 0.5 165.4
Loans and advances to
customers 17.1 18.8 - - 17.1 17.1
Derivative assets 544.7 14,091.4 - 544.7 - 544.7
727.2 14,275.5 150.2 559.4 17.6 727.2
Financial liabilities
Derivative liabilities 58.1 8,063.0 - 58.1 - 58.1
Carrying Principal Level
amount amount Level 1 Level 2 3 Total
As at 31 December 2021
(Audited) GBPm GBPm GBPm GBPm GBPm GBPm
Financial assets
Investment securities 168.3 166.2 152.1 15.5 0.7 168.3
Loans and advances to
customers 17.7 19.7 - - 17.7 17.7
Derivative assets 185.7 12,968.3 - 185.7 - 185.7
371.7 13,154.2 152.1 201.2 18.4 371.7
-----------------------
Financial liabilities
Derivative liabilities 19.7 7,378.0 - 19.7 - 19.7
Level 1: Fair values that are based entirely on quoted market
prices (unadjusted) in an actively traded market for identical
assets and liabilities that the Group has the ability to access.
Valuation adjustments and block discounts are not applied to Level
1 instruments. Since valuations are based on readily available
observable market prices, this makes them most reliable, reduces
the need for management judgement and estimation and also reduces
the uncertainty associated with determining fair values.
Level 2: Fair values that are based on one or more quoted prices
in markets that are not active or for which all significant inputs
are taken from directly or indirectly observable market data. These
include valuation models used to calculate the present value of
expected future cash flows and may be employed either when no
active market exists or when there are no quoted prices available
for similar instruments in active markets.
Level 3: Fair values for which any one or more significant input
is not based on observable market data and the unobservable inputs
have a significant effect on the instrument's fair value. Valuation
models that employ significant unobservable inputs require a higher
degree of management judgement and estimation in determining the
fair value. Management judgement and estimation are usually
required for the selection of the appropriate valuation model to be
used, determination of expected future cash flows on the financial
instruments being valued, determination of the probability of
counterparty default and prepayments, determination of expected
volatilities and correlations and the selection of appropriate
discount rates.
1. Financial instruments and fair values (continued)
The following tables provide an analysis of financial assets and
financial liabilities not measured at fair value in the Condensed
Consolidated Statement of Financial Position grouped into Levels 1
to 3 based on the degree to which the fair value is observable:
Estimated fair value
Carrying Principal Level Level Level
amount amount 1 2 3 Total
As at 30 June 2022
(Unaudited) GBPm GBPm GBPm GBPm GBPm GBPm
Financial assets
Cash in hand 0.4 0.4 - 0.4 - 0.4
Loans and advances to
credit institutions 3,223.4 3,223.4 - 3,223.4 - 3,223.4
Investment securities 196.4 196.0 - 197.0 - 197.0
Loans and advances to
customers 21,742.1 21,755.7 - 3,237.1 18,114.3 21,351.4
Other assets(1) 2.7 2.7 - 2.7 - 2.7
25,165.0 25,178.2 - 6,660.6 18,114.3 24,774.9
----------------------- -------- --------- ----- -------- -------- --------
Financial liabilities
Amounts owed to retail
depositors 17,939.0 17,881.5 - 5,664.6 12,189.1 17,853.7
Amounts owed to credit
institutions 4,840.5 4,359.8 - 4,840.5 - 4,840.5
Amounts owed to other
customers 119.3 118.8 - - 119.3 119.3
Debt securities in
issue 367.3 367.0 - 367.3 - 367.3
Other liabilities(2) 26.2 26.2 - 26.2 - 26.2
Subordinated
liabilities 10.3 10.1 - - 9.7 9.7
Perpetual Subordinated
Bonds 15.2 15.0 14.2 - - 14.2
23,317.8 22,778.4 14.2 10,898.6 12,318.1 23,230.9
----------------------- -------- --------- ----- -------- -------- --------
1. Balance excludes prepayments.
2. Balance excludes deferred income.
27. Financial instruments and fair values (continued)
Estimated fair value
Carrying Principal Level Level Level
amount amount 1 2 3 Total
As at 31 December 2021
(Audited) GBPm GBPm GBPm GBPm GBPm GBPm
Financial assets
Cash in hand 0.5 0.5 - 0.5 - 0.5
Loans and advances to
credit institutions 2,843.6 2,843.6 - 2,843.6 - 2,843.6
Investment securities 323.1 322.9 - 323.8 - 323.8
Loans and advances to
customers 21,062.6 21,076.7 - 3,323.0 17,756.5 21,079.5
Other assets(1) 0.9 0.9 - 0.9 - 0.9
24,230.7 24,244.6 - 6,491.8 17,756.5 24,248.3
----------------------- -------- --------- ----- -------- -------- --------
Financial liabilities
Amounts owed to retail
depositors 17,526.4 17,469.0 - 6,601.3 10,923.6 17,524.9
Amounts owed to credit
institutions 4,319.6 4,318.5 - 4,319.6 - 4,319.6
Amounts owed to other
customers 92.6 92.5 - - 92.6 92.6
Debt securities in
issue 460.3 460.2 - 460.3 - 460.3
Other liabilities(2) 28.6 28.6 - 28.6 - 28.6
Subordinated
liabilities 10.3 10.1 - - 10.6 10.6
Perpetual Subordinated
Bonds 15.2 15.0 14.7 - - 14.7
22,453.0 22,393.9 14.7 11,409.8 11,026.8 22,451.3
----------------------- -------- --------- ----- -------- -------- --------
1. Balance excludes prepayments.
2. Balance excludes deferred income.
The valuation techniques for all the financial instruments are
consistent with those set out on page 205 of the 2021 Annual Report
and Accounts. For other assets and other liabilities fair value is
considered to be equal to carrying value.
10. Operating segments
The Group segments its lending business and operates under two
segments in line with internal reporting to the Board:
-- OSB
-- CCFS
The Group separately discloses the impact of Combination
accounting but does not consider this a business segment.
The financial position and results of operations of the above
segments are summarised below:
OSB CCFS Combination Total
GBPm GBPm GBPm GBPm
Balances as at 30 June 2022
(Unaudited)
Gross loans and advances to
customers 12,318.6 9,426.6 116.1 21,861.3
Expected credit losses (83.1) (19.7) 0.7 (102.1)
Loans and advances to customers 12,235.5 9,406.9 116.8 21,759.2
Capital expenditure 2.4 0.6 - 3.0
Depreciation and amortisation 3.2 1.6 2.2 7.0
Profit for six months ended 30
June 2022 (Unaudited)
Net interest income/(expense) 218.6 150.6 (25.8) 343.4
Other income 4.1 10.7 5.3 20.1
Total income/(expense) 222.7 161.3 (20.5) 363.5
Administrative expenses (54.8) (34.3) (2.2) (91.3)
Provisions 1.2 - - 1.2
Impairment of financial assets (1.9) (0.1) 0.4 (1.6)
Integration costs (3.1) (0.6) - (3.7)
Profit/(loss) before taxation 164.1 126.3 (22.3) 268.1
Taxation(1) (37.6) (32.3) 10.7 (59.2)
Profit/(loss) for the period 126.5 94.0 (11.6) 208.9
------------------------------------
1. The taxation on Combination credit includes release of
deferred taxation on CCFS Combination relating to the unwind of the
deferred tax liabilities recognised on the fair value adjustments
of the CCFS assets and liabilities at the acquisition date of
GBP6.0m and the impact of the bank surcharge decrease on these
deferred tax liabilities of GBP4.7m.
28. Operating segments (continued)
OSB CCFS Combination Total
GBPm GBPm GBPm GBPm
Balances as at 31 December 2021
(Audited)
Gross loans and advances to
customers 12,057.3 8,981.4 143.1 21,181.8
Expected credit losses (82.2) (19.6) 0.3 (101.5)
Loans and advances to customers 11,975.1 8,961.8 143.4 21,080.3
Capital expenditure 5.0 1.8 - 6.8
Depreciation and amortisation 6.5 3.2 4.8 14.5
Profit for six months ended 30
June 2021 (Unaudited)
Net interest income/(expense) 188.6 110.4 (33.7) 265.3
Other income 5.0 12.4 7.3 24.7
Total income/(expense) 193.6 122.8 (26.4) 290.0
Administrative expenses (48.9) (29.7) (1.9) (80.5)
Provisions (0.2) 0.1 - (0.1)
Impairment of financial assets 5.1 10.0 (0.5) 14.6
Integration costs (1.3) (0.6) - (1.9)
Exceptional items (0.2) - - (0.2)
Profit/(loss) before taxation 148.1 102.6 (28.8) 221.9
Taxation(1) (36.8) (25.8) 2.2 (60.4)
Profit/(loss) for the period 111.3 76.8 (26.6) 161.5
------------------------------------ ------- -----------
1. The taxation on Combination credit includes release of
deferred taxation on CCFS Combination relating to the unwind of the
deferred tax liabilities recognised on the fair value adjustments
of the CCFS assets and liabilities at the acquisition date of
GBP7.8m offset by the impact of the corporation tax rate increase
on these deferred tax liabilities of GBP5.6m.
29. Adjustments for non-cash items and changes in operating assets and liabilities
Six months Six months
ended ended
30-Jun-22 30-Jun-21
(Unaudited) (Unaudited)
GBPm GBPm
Adjustments for non-cash items:
Depreciation and amortisation 7.0 6.8
Interest on investment securities (1.7) (1.4)
Interest on subordinated liabilities 0.4 0.4
Interest on Perpetual Subordinated Bonds 0.3 0.8
Interest on securitised debt 2.9 1.8
Interest on financing debt 15.8 2.4
Impairment charge/(credit) on loans 1.6 (14.6)
Gain on sale of financial instruments - (4.0)
Provisions (1.2) 0.1
Interest on lease liabilities 0.1 0.2
Fair value gains on financial instruments (16.4) (16.1)
Share-based payments 4.3 4.8
Total adjustments for non-cash items 13.1 (18.8)
-------------------------------------------------- ----------- -----------
Changes in operating assets and liabilities:
(Increase)/decrease in loans and advances to
credit institutions (53.3) 101.6
Increase in loans and advances to customers (680.1) (1,182.7)
Decrease in intercompany balances 5.0 -
Increase in amounts owed to retail depositors 412.6 494.1
Net increase in other assets (2.9) (1.2)
Net increase/(decrease) in derivatives and
hedged items 14.9 (17.8)
Net increase/(decrease) in amounts owed to
other customers 26.0 (9.8)
Net decrease in other liabilities (2.6) (0.4)
Exchange differences on working capital 0.1 (0.3)
Total changes in operating assets and liabilities (280.3) (616.5)
-------------------------------------------------- ----------- -----------
30. Capital management
The Company reports on an individual consolidation basis (OSB
solo) which includes the Company and subsidiaries except for the
offshore servicing entity OSBI, SPVs relating to securitisations
and the CCFS entities acquired in October 2019.
The capital management position is based on the three 'pillars'
of Basel II.
The OSB solo Pillar 1 capital information is presented
below:
As at As at
30-Jun-22 31-Dec-21
(Unaudited) (Unaudited)
GBPm GBPm
Common Equity Tier 1 capital
Called up share capital 4.5 4.5
Share premium, capital contribution and share-based
payment reserve 8.7 10.6
Retained earnings 1,705.5 1,739.5
Other reserves (1.0) (0.9)
Total equity attributable to ordinary shareholders 1,717.7 1,753.7
Foreseeable dividends (37.8) (73.1)
IFRS 9 transitional adjustment(1) 0.7 1.4
COVID-19 ECL transitional adjustment(2) 8.9 12.1
Solo consolidation adjustments (11.6) (6.8)
Deductions from Common Equity Tier 1 capital
Investment in subsidiary (542.5) (538.5)
Prudent valuation adjustment(3) (0.2) -
Intangible assets(4) (7.6) (7.9)
Deferred tax asset (0.6) (0.5)
Common Equity Tier 1 capital 1,127.0 1,140.4
---------------------------------------------------- ----------- -----------
Additional Tier 1 capital
Additional Tier 1 Securities 90.0 90.0
Total Tier 1 capital 1,217.0 1,230.4
---------------------------------------------------- ----------- -----------
Tier 2 capital
Subordinated debt and Perpetual Subordinated
Bonds 25.1 25.1
Deductions from Tier 2 capital (5.6) (4.6)
Total Tier 2 capital 19.5 20.5
---------------------------------------------------- ----------- -----------
Total regulatory capital 1,236.5 1,250.9
Risk-weighted assets (unaudited) 6,035.0 5,863.4
1. The regulatory capital includes a GBP0.7m add-back under IFRS
9 transitional arrangements. This represents 25.0% of the IFRS 9
transitional adjustment booked directly to retained earnings of
GBP2.8m.
2. The COVID-19 ECL transitional adjustment relates to the
Group's increase in stage 1 and stage 2 ECL following the impacts
of COVID-19 and for which transitional rules are being adopted for
regulatory capital purposes.
3. OSB solo has adopted the simplified approach under the
Prudent Valuation rules, recognising a deduction equal to 0.1% of
fair value assets and liabilities after adjusting for hedge
accounting.
4. All software assets continue to be fully deducted from
capital in light of the pending intention of the PRA to consult on
the Capital Requirements Regulation (CRR) 'Quick Fix' package in
this area.
31. Related parties
The Group had no related party transactions during the six
months to 30 June 2022 that materially affected the position or
performance of the Group.
Transactions with key management personnel
During the period, OSB GROUP PLC granted 282,447 (2021: 186,949)
awards under the Deferred Share Bonus Plan and 737,825 (2021:
866,508) awards under the Performance Share Plan to 11 (2021: 12)
key management personnel. The awards were granted on 23 March 2022
with a grant price of GBP5.5833. Details of these plans can be
found in note 11 of the 2021 Annual Report and Accounts on pages
127 to 131.
32. Events after the reporting date
On 4 August 2022, the Group completed the Canterbury Finance
No.5 securitisation, a fully retained transaction which securitised
GBP1.3bn of organically originated prime Buy-to-Let mortgage
assets.
OneSavings Bank plc
Interim Report for the six months ended 30 June 2022
Appendix
Key performance indicators
Underlying results for the six months to 30 June 2022 and 30
June 2021 exclude exceptional items, integration costs and other
acquisition-related items. The underlying results provide a more
consistent basis for comparing the Group's performance between
financial periods.
Net interest margin (NIM)
For the period of six months NIM is calculated as net interest
income annualised on an actual days basis, as a percentage of a 7
point average(1) of interest earning assets (cash, investment
securities, loans and advances to customers and credit
institutions). It represents the margin earned on loans and
advances and liquid assets after swap expense/income and cost of
funds.
HY 2022 HY 2021
GBPm GBPm
Net interest income -- statutory 343.4 265.3
Add back: acquisition-related items(2) 25.8 33.7
Net interest income -- underlying 369.2 299.0
------------------------------------------------- -------- --------
Net interest income annualised on an actual days
basis:
Net interest income -- statutory A 692.5 535.0
Net interest income -- underlying B 744.5 603.0
7 point average of interest earning assets --
statutory C 24,743.0 22,650.2
7 point average of interest earning assets --
underlying D 24,613.5 22,459.1
NIM statutory equals A/C 2.80% 2.36%
NIM underlying equals B/D 3.02% 2.68%
Cost to income ratio
The cost to income ratio is defined as administrative expenses
as a percentage of total income. It is a measure of operational
efficiency.
HY 2022 HY 2021
GBPm GBPm
Administrative expenses -- statutory A 91.3 80.5
Add back: acquisition-related items(2) (2.2) (1.9)
Administrative expenses -- underlying B 89.1 78.6
---------------------------------------- ------- -------
Total income -- statutory C 363.5 290.0
Add back: acquisition-related items(2) 20.5 26.4
Total income underlying D 384.0 316.4
---------------------------------------- ------- -------
Cost to income statutory equals A/C 25% 28%
Cost to income underlying equals B/D 23% 25%
Management expense ratio
For the period of six months the management expense ratio is
defined as administrative expenses annualised on a simple basis as
a percentage of a 7 point average(1) of total assets.
HY 2022 HY 2021
GBPm GBPm
Administrative expenses -- statutory (as in cost
to income ratio above) A 91.3 80.5
Administrative expenses -- underlying (as in cost
to income ratio above) B 89.1 78.6
7 point average of total assets -- statutory C 24,857.7 22,858.5
7 point average of total assets -- underlying 24,742.1 22,694.1
D 0.73% 0.70%
Management expense ratio statutory equals A/C 0.72% 0.69%
on an annualised basis
Management expense ratio underlying equals B/D
on an annualised basis
Loan loss ratio
For the period of six months, the loan loss ratio is defined as
impairment losses annualised on a simple basis as a percentage of a
7 point average(1) of gross loans and advances. It is a measure of
the credit performance of the loan book.
HY 2022 HY 2021
GBPm GBPm
Impairment losses -- statutory A 1.6 (14.6)
Add back: acquisition-related items(2) 0.4 (0.5)
Impairment losses -- underlying B 2.0 (15.1)
-------------------------------------------------------- --------- ---------
7 point average of gross loans -- statutory C 21,487.1 19,854.1
7 point average of gross loans -- underlying 21,356.0 19,685.6
D 0.01% (0.15)%
Loan loss ratio statutory equals A/C on an annualised 0.02% (0.15)%
basis
Loan loss ratio underlying equals B/D on an annualised
basis
Return on equity (RoE)
RoE is defined as profit attributable to ordinary shareholders,
which is profit after tax and after deducting coupons on AT1
securities, annualised on a simple basis, as a percentage of a 7
point average of shareholders' equity (excluding GBP150m of AT1
securities).
HY 2022 HY 2021
GBPm GBPm
Profit after tax - statutory 208.9 161.5
Coupons on AT1 securities (4.5) (2.7)
Profit attributable to ordinary shareholders
-- statutory A 204.4 158.8
Add back: acquisition related items(2) 14.4 28.3
--------------------------------------------- ------- -------
Profit attributable to ordinary shareholders
-- underlying B 218.8 187.1
--------------------------------------------- ------- -------
7 point average of shareholders' equity (excluding AT1
securities) -- statutory C
1,933.5 1,684.7
7 point average of shareholders' equity (excluding AT1
securities) -- underlying D 1,851.3 1,564.2
Return on equity statutory equals A/C on an annualised basis
21% 19%
Return on equity underlying equals B/D on an annualised
basis
24% 24%
1. 7 point average is calculated as an average of opening
balance and closing balances for six months to 30 June.
2. The acquisition-related items are detailed in the
reconciliation of statutory to underlying results in the Financial
review.
OneSavings Bank plc
Interim Report for the six months ended 30 June 2022
Company information
Registered office
Reliance House
Sun Pier
Chatham
Kent, ME4 4ET
Registered in England, company number: 07312896
Internet
www.osb.co.uk
Auditor
Deloitte LLP
1 New Street Square
London
EC4A 3HQ
Media and Public Relations
Brunswick Group LLP
16 Lincoln's Inn Fields
London, WC2A 3ED
(END) Dow Jones Newswires
August 12, 2022 08:42 ET (12:42 GMT)
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