Steady day.I have seen shares with good results tank.Holding here for good dividend and capital growth. 5 year investment for me.Good luck to all holders. |
Yes, that's better. Looks like a bit of a tree shake at the open to trigger any stops set at 400. Onwards and upwards. |
Shame on the one who sold early. |
Market is clearly unimpressed. |
Hi apple53. According to Stocko, expected profit was £317 million, EPS 81.2 and Divi 32p. |
Lord Gnome - are you talking about expected eps figures or operating profit?
See my longer note - eps is flattered by bad debt provision write back.
Please don't take this that I am negative. I still think this is worth £7-8. Though maybe 2 years ago I thought it was worth £10. |
 This remains an incredibly cheap bank.
Negatives today -
Not sure if the margin is worse than expected, but it didn't help, along with minimal volume growth, but maybe the biggest surprise is the continued jump in costs, meaning cost income ratio rising and underlying profitability a bit weaker than I'd hoped. Headline eps and RoE flattered by negative bad debt provisions (though to be fair lower provisions accompany lower volume growth).
I haven't yet got to the bottom of the developments in the EIR by half year. Given the previous para I perhaps shouldn't be surprised by the 'low teens' RoE forecast for 2025 - they have to assume an increase in bad debt provisions and no major improvements elsewhere.
No mention of the potential benefit to the margin of the change in MREL regulations.
Maybe we have to wait to 2027 for the benefits of the 5 year program, and the running off of some of the negatives of the past 2 years.
They remain over-capitalised, again the corollary of lower volume growth and lower operating profit growth, so easy to fund another £100m of buyback program, which will presumably help to underpin the share price, as will the fact that analysts have obviously been heavily guided over the past 6 months so that market forecasts for 25-26 have come down significantly.
Generally these results are the opposite of STB's today! (high growth, capital constrained, jump in operating profit, unsustainably high bad debt provision). |
Looking at the expected figures on Stocko, that looks like a pretty good beat. Hopefully the market will concur. |
Preliminary results for the year ended 31 December 2024
Financial and operational highlights
Underlying profit before tax increased by 4% to £442.9m (2023: £426.0m) and statutory profit before tax increased by 12% to £418.1m (2023: £374.3m)
Underlying and statutory net loan book decreased by 2% to £25.1bn (2023: £25.7bn and £25.8bn, respectively) due to the £1.25bn securitisation and deconsolidation transaction in December. The underlying net loan book would have increased by 2.5% since 31 December 2023 excluding this transaction
Underlying and statutory net interest margin (NIM) reduced to 230bps and 221bps (2023: 251bps and 231bps respectively) inclusive of a further adverse EIR adjustment of £15.9m, largely due to lower prevailing spreads to SONIA from mortgages and deposits as products written in prior years reached maturity and the cost of MREL
Underlying and statutory cost to income ratios increased to 37% and 39% (2023: 33% and 36%, respectively) as a result of continued investment in the transformation programme, redundancy costs and the new Bank of England levy. Core costs increased by 3% in the year
Underlying and statutory loan loss ratios were (5)bps and (4)bps, respectively (2023: 20bps) due to improved house price outlook in the updated forward-looking macroeconomic scenarios
Underlying and statutory return on equity of 16% and 15% (2023: 16% and 14%, respectively), broadly stable as higher profit was offset by an increase in the average equity balance
Basic earnings per share (EPS) increased to 82.2 pence and 77.6 pence on an underlying and statutory basis (2023: 75.0 pence and 66.1 pence) due to higher profit and a lower number of shares in issue following the completion of our share repurchase programmes totalling £100m in the year
The Common Equity Tier 1 capital ratio of 16.3% and total capital ratio of 19.7% remained strong (2023: 16.1% and 19.5%, respectively)
A new share repurchase programme of £100m over the next 12 months to commence on 14 March 2025
Total dividend of 33.6 pence per share (2023: 32.0 pence) including a recommended final dividend of 22.9 pence per share, in line with our stated commitment to provide a progressive dividend per share
Andy Golding, Group CEO, said: “The results delivered by OSB Group in 2024 demonstrate the strong fundamentals which underpin our business and also the focused and disciplined strategic choices made in the year by the Board and management that will shape the Group’s future. The Group’s actions are delivering results, with an improved and attractive blended front book margin for new business originated in 2024, and progress with the planned increase in diversification into our well-established higher yielding specialist segments. The Group focused on reducing EIR sensitivity from changes in customer behaviour at product maturity in our Precise Buy-to-Let book. In December we completed a £1.25bn securitisation of Precise Buy-to-Let loans which was derecognised from the Group’s balance sheet and based on observed customer behaviour, we made the decision to reduce the expected time that Precise borrowers spend on the reversion rate from 5 months to 4 months. This led to an adverse EIR adjustment of £15.9m. These actions helped reduce the sensitivity of interest income to a two month reduction in the expected time Precise borrowers spend on the reversion rate to £27m. This is within the business-as-usual levels seen prior to 2023.
2024 marked the second year of our five-year transformation programme, delivery of which will ensure we remain competitive, deliver at scale with cost efficiency and also enhance the experience of dealing with the Group for our customers, our broker partners and our colleagues. The Group continued to demonstrate strong capital generation and the Board remains committed to returning excess capital to shareholders. The recommended final dividend for 2024 of 22.9 pence per share, together with the interim dividend of 10.7 pence per share, resulted in a progressive total ordinary dividend per share of 33.6 pence, representing a 40% payout ratio. Together with the £100m of share repurchases completed in the year, this represents a total return to shareholders of £226m for the year. In addition, we have announced a further £100m share repurchase programme over the next 12 months commencing on 14 March.
Given our focus on returns we anticipate low single digit loan book growth in 2025 with similar dynamics to those seen in 2024. NIM in 2025 is expected to be c.225bps, as both lending spreads to SONIA and net funding impacts on NIM began to stabilise in the second half of 2024. We anticipate c.£270m of administrative expenses in 2025, as we continue to invest in our transformation programme, with core costs increasing below the rate of inflation. We anticipate a low teens RoTE ratio in 2025 and we will continue to prioritise returns to shareholders with total dividend increasing by 5%. In 2026, we expect broadly similar dynamics.
Today, we also set out our medium-term aspirations building on our actions over the next two years where we will focus on growing across all our segments and in particular increasing origination volumes where yields are strong and sustainable such as commercial lending, asset finance, development finance and bridging. The Group remains well capitalised, with strong liquidity and a high-quality secured loan book. We remained focused on delivering good outcomes for our stakeholders and strong returns for our shareholders.” |
I'm actually feeling quite positive about the update. I would be surprised if there is not an additional buy back announced plus a small increase in the dividend. |
So what do we think about March 13th?
Have we had enough bad news on mortgage repricing and margins (including the presumed hit from repaying Covid loans)?
Modest loan growth already highlighted, and results in excess capital - will they announce a new buyback? Last one finished 31st Jan.
MREL- does anyone know when the PRA announced the higher thresholds? The FT has pointed out these are still well below where they should be given nominal GDP etc. I also don't fully understand how the MREL issuance requirement by mid 2026 works when within the range rather than above it, ie the sliding scale. A sensible uplift in the MREL range could take OSB out of it entirely, but is too optimistic at this stage.
Essentially, the question is probably "what new bad news can catch us out"?
I have lightened up modestly and must admit I am nervous. |
OSB Group PLC (LSE:OSB) was hit with a 'buy' rating too, alongside Vanquis Banking Group PLC (LSE:VANQ), which Panmure said had "enormous" promise in the "underserved credit market". |
Eh, Gunwalloe? Have you seen the three-year chart? Creeping ever lower, more like. Bags of potential here, I agree, but just when you think it's going to deliver, something always knocks it back down. |
Hold a position here and like the steady and consistent growth in the share price Comparing UK’s economy with other markets, it’s either sluggish (glass empty) or stable (glass full). Whichever is right, it’s helping solid and safe banking stocks like OSB, creep ever upwards… |
Some momentum here recently with the shareprice rising by 18% over the past month. Todays price yield is 7.5% but is even higher for those who invested at circa 375p last year. Results due March 13. |
Interesting rise today on fairly average volume. |
Reduced in December, topped up today. Quality company at bargain price. |
I have bought some more. I did sell some around 420, and my position is not that large compared to normal. |
Exited when 400p didn't hold. But fall seems excessive at the moment. Time to re-enter? p/tb 0.63, yield 9% |
What happened was just about to buy ? |
Perhaps berenberg ( valuation 18/12/24 just 31 days ago )and Peel hunt analyst should get there heads together as i might be mistaken but i doubt that a valuation of 4.15 and 7.45 can be based on the same information.Osb should perhaps make a statement telling its shareholders whats is correct would be nice |
Thanks Penpont and Popit.
Did anyone see a valuation section of the Peel Hunt note? I was wondering how they were justifying a PE of 4-5.
I also wonder what they do about the spare capital freed up in their forecasts by the lower loan growth, which either makes the bank even safer, or can be used for highly accretive buybacks (yes please!), which may be more profitable than loan growth.
Some of the lower NIM relates to lower loan growth (change in mix vs previous forecast), which is also not a big negative (the offset is associated with the unused capital I mentioned above), but to the degree it relates to repricing of the stocks of deposits and loans, or lower than expected margins on new business, it is an unalloyed negative. |
Exactly you could just view OSB as a giant portfolio of mortgage loans which are generating a ROE of more than 20%. Even if lending dries up for a couple of years, there's still a huge amount of value in the balance sheet. |
Other recent broker views are also available :
Analysts at Berenberg raised their target price on financial services firm OSB Group from 750p to 800p stating that the group was "sustainably strong" and "unsustainably cheap".
Analysts at Shore Capital have the shares on a forecast p/e ratio of 5
"Our fair value currently stands at 745p. OSB is a high-quality specialist bank, in our view, benefitting from a structurally high return on equity and a strong capital base” |
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