OSB GROUP PLC Preliminary Results

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OSB GROUP PLC

Preliminary results

For the year ended 31 December 2024

LEI: 213800ZBKL9BHSL2K459

This announcement contains inside information

13 March 2025

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 acquisition-related items (see the reconciliation in the Financial review). In 2024, the acquisition-related items were fully amortised and therefore, from 2025 the Group's results will be presented on a statutory basis only.

OSB GROUP PLC (OSBG or the Group), the specialist lending and retail savings group, announces today its results for the year ended 31 December 2024. The Group has also published today its guidance for 2025 and its medium-term aspirations for 2027-29, see below for more details.

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.”

Investor update

Along with the 2024 preliminary results, the Group updates the market with its medium-term aspirations, strengthening its position as the UK's leading specialist lender.

The Group's strategy to deliver higher returns is supported by its key strengths:

• Intermediary strategy - trusted leadership with intermediaries, offering a single point of entry to access the Group's diversified product range, through its 100+ sales relationship managers with deep product expertise
• Deep experience and credit expertise in a range of higher yielding specialist segments - with increasing diversification and ability to grow, delivering strong risk adjusted returns
• Structurally increasing operational leverage - focus on delivering cost efficiency and an increasing proportion of colleagues based in our fully integrated subsidiary OSB India
• Building our bank for the future - entering the third year of a five-year transformation programme optimising operations for a digital future
• Improving the broker and customer experience - combining our successful intermediary lending strategy with our transformation programme to deliver our optimised lending growth plan with a higher yielding, diversified loan book

This will maintain the Group's position as the number one specialist lender, enabling us to deliver margin expansion, positive cost jaws, improved returns and enhanced distributions to shareholders.

2025 and 2026 will be transition years during which the Group will continue to invest, whilst lower margin mortgages will continue to roll-off. The Group today guides to the following metrics for these years:

From 2027, with the transformation largely complete, the Group will be set on a trajectory of attractive growth with a higher yielding mix, improved returns and commitment to returning excess capital to shareholders. The Group today provides the following medium-term aspirations:

Transformation programme

The Group completed two years of its five-year transformation programme with c.£60m spend to-date, of which 68% was capitalised. The Group expects to spend a further c.£130m until the programme completes in 2027, of which 33% will be capitalised.

Enquiries:

OSB GROUP PLC                                            Brunswick Group

Alastair Pate, Investor Relations                         Robin Wrench/Simone Selzer

t: 01634 838973                                                t: 020 7404 5959

Results presentation

A Preliminary results webcast presentation for analysts will be held at 8.00am on Thursday 13 March, followed by an Investor update commencing at 10.00am

Both presentations will be webcast and available on the OSB Group website at www.osb.co.uk/investors/results-reports-presentations.

The UK dial in number is 020 3936 2999 and the password is 133425 for the 8.00am Preliminary results webcast. Registration is open immediately.

About OSB GROUP PLC

OneSavings Bank plc (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 for 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)

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 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, experience-based manual underwriting and efficient operating model.

OSB is predominantly funded by retail savings originated through the long-established Kent Reliance name, which takes deposits online and through 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 and retail savings products. It operates through its brands: Precise 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 any other documents or announcements distributed by OSB GROUP PLC (OSBG) 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 OSBG, its current goals, beliefs, intentions, strategies and expectations relating to its future financial condition, performance and results, and ESG ambitions, targets and commitments described herein. 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 or current facts, including statements about OSBG's, 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 OSBG or on its behalf include, but are not limited to: general economic and business conditions in the UK and internationally, including any changes in global trade policies; market related trends and developments; fluctuations in exchange rates, stock markets, inflation, deflation, interest rates, energy prices and currencies; policies of the Bank of England, the European Central Bank and other G7 central banks; the ability to access sufficient sources of capital, liquidity and funding when required; changes to OSBG'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 OSBG's control; inadequate or failed internal or external processes, people and systems; acts of war and terrorist acts or hostility and responses to those acts; geopolitical events and diplomatic tensions; the impact of outbreaks, epidemics and pandemics or other such events; changes in laws, regulations, taxation, ESG reporting standards, 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 OSBG'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 OSBG in managing the risks of the foregoing; and other risks inherent to the industries and markets in which OSBG operates.

Accordingly, no reliance may be placed on any forward-looking statement. Neither OSBG, 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, OSBG 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 OSBG'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 OSBG's business, (which may cause actual results to differ materially from those expressed or implied in any forward-looking statement), please see the Risk review section in the OSBG Annual Report and Accounts 2023. Copies of this are available at www.osb.co.uk and on request from OSBG.

Nothing in this document or any subsequent discussion of this document 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.

In regard to any information provided by third parties, neither OSBG nor any of its directors, officers or employees explicitly or implicitly guarantees that such information is exact, up to date, accurate, comprehensive or complete. In no event shall OSBG be liable for any use by any party of, for any decision made or action taken by any party in reliance upon, or for inaccuracies or errors in, or omission from, any third-party information contained herein. Moreover, in reproducing such information by any means, OSBG may introduce any changes it deems suitable, may omit partially or completely any aspect of the information from this document, and accepts no liability whatsoever for any resulting discrepancy.

Liability arising from anything in this document shall be governed by English law, and neither OSBG 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

OSBG believes that any 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 OSBG is most directly able to influence or which are relevant for an assessment of OSBG. 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. Refer to the "Alternative performance measures” section below for further details, reconciliations and calculations of non-IFRS performance measures included throughout this document, and the most directly comparable IFRS measures.

Chief Executive's Statement 

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 housing market continued to display subdued levels of activity in 2024, with affordability pressures and lack of buyer confidence caused primarily by political and economic uncertainty. Against this backdrop, the Group continued to assist property investors and other borrowers with their financing needs and to provide savers with attractive options to deposit their savings.

I am proud that for 2023, we were ranked the fourth largest Buy-to-Let lender in the UK in terms of gross new lending.¹ The Group's share of new Buy-to-Let mortgages was c.6% at the end of December 2024.²

Financial performance

The Group delivered an underlying pretax profit of £442.9m in 2024, up 4% from £426.0m in 2023, with underlying basic earnings per share of 82.2 pence (2023: 75.0 pence). On a statutory basis, profit before tax increased to £418.1m and basic earnings per share was 77.6 pence (2023: £374.3m and 66.1 pence, respectively).

The underlying and statutory net interest margins reduced to 230bps and 221bps (2023: 251bps and 231bps, respectively), inclusive of a further EIR adjustment of £15.9m, due to lower prevailing spreads to SONIA from mortgages and deposits as products written in prior years reached maturity in addition to the cost of MREL issuance as the Group serviced the £950m of MREL qualifying debt raised since April 2023. These were partially offset by the non-recurrence of the adverse EIR adjustment recorded in 2023.

The Group focused on reducing EIR sensitivity and the potential for future EIR adjustments from changes in customer behaviour when Precise Buy-to-Let customers reach product maturity. In December, we completed a securitisation of £1.25bn of Precise Buy-to-Let mortgages which were derecognised from the Group's balance sheet, and in the second half of the year we reviewed recent customer behaviour and made the decision to reduce the expected time that Precise borrowers would spend on the reversion rate from five to four months. Both of these actions, along with the continued seasoning of the Precise Buy-to-Let book, reduced the EIR sensitivity and the potential for future EIR adjustments bringing them to the business-as-usual level seen before 2023.

We demonstrated again our strong cost discipline and efficiency with core operating expenditure across the UK and India increasing by just 3%. Including investment in the Group's transformation programme, cost of redundancy and the new Bank of England levy, the underlying administrative expenses increased by 11% to £257.4m, from £232.9m in 2023.

In the fourth quarter, the Group implemented a redundancy programme which affected 139 roles in the UK and India and resulted in a £4.5m one-off expense.

We have completed two years of our transformation programme, delivering tangible results. We now have a scalable, secure and high-performing infrastructure with agile customer-focused architecture in place ready to use in the future. This will enable us to deliver the customer delivery phase which will allow us to grow efficiently in the long term. We launched a broker app in July and a savings platform for new Kent Reliance customers in October and in 2024 we expensed a total of £15m for the transformation programme.

The management expense ratio increased to 85bps, both on an underlying and statutory basis (2023: 81bps and 82bps, respectively), primarily due to higher non-core administrative expenses. The cost to income ratios also increased to 37% and 39% on an underlying and statutory basis (2023: 33% and 36%, respectively).

The Group delivered an underlying return on equity of 16% for 2024 (2023: 16%) and 15% on a statutory basis (2023: 14%).

Our lending franchises

The UK mortgage market remained subdued in 2024 although there was some increase in gross mortgage lending, as reductions in the Bank of England base rate and lower SONIA swap rates were reflected in mortgage pricing. UK Finance reported growth of 14% in gross Buy-to-Let advances in the year compared to the historically low levels of 2023. The balance of outstanding Buy-to-Let mortgages increased by 1% in the year, reflecting ongoing affordability pressures faced by some amateur landlords.²

The Group's underlying and statutory net loan book reduced by 2% to £25.1bn (31 December 2023: £25.7bn and £25.8bn, respectively), as a result of the derecognition from the balance sheet of £1.25bn of Precise Buy-to-Let mortgages following the completion of the securitisation in December. The underlying net loan book would have increased by 2.5% since 31 December 2023 excluding this transaction, supported by originations of £4.0bn in the year (2023: £4.7bn). The planned reduction in originations was the result of our disciplined approach to pricing new business and prioritising returns. We chose not to follow as some lenders reduced their new business spreads in certain sub-segments, which led to an improved and attractive blended front book margin for the year.

Our focus on returns was supported by a planned increase in diversification with originations in our well-established, higher yielding commercial and residential development finance sub-segments up by c.10% in the year to £446.8m and £189.1m respectively, and bridging originations were up by 5%. We continued to provide finance to professional, multi-property landlords investing and extending their portfolios despite the subdued market activity.

Refinancing was robust in the year with 62% of Buy-to-Let completions in Kent Reliance represented by remortgages, unchanged from 2023. For Precise, refinancing decreased to 46% of completions from 48% in the prior year, reflecting the Group's disciplined approach to mortgage pricing.

Under Kent Reliance's well-established product transfer programme, Choices, 70% of borrowers refinanced with the Group within three months of their fixed rate product ending (2023: 78%). The proportion of Precise borrowers who chose another product with the Group reduced to 51% from 66% in 2023, as we continued to be selective in offering retention products.

The Group's mortgage propositions continued to win industry awards in 2024, including Best Lender for Partnership with Mortgage Club from L&G Mortgage Club and Best Specialist Lender from Mortgage Strategy Awards. Our relationships with brokers were reflected in strong Net Promoter Scores (NPS) of +57 for OSB and +52 for CCFS (2023: +57 OSB and CCFS).

Credit and risk management

The Group has a high-quality loan book with balances over three months in arrears at 1.7% of the loan book at 31 December 2024 (31 December 2023: 1.4%). The increase in arrears was largely due to the impact of borrowers with maturing fixed rate mortgages facing significantly higher prevailing rates. We continued to work closely with those needing assistance. As anticipated, the Group's arrears stabilised in the fourth quarter of the year as affordability for remortgaging customers improved.

The Group recorded an impairment credit of £12.8m on an underlying basis representing an underlying loan loss ratio of (5)bps for the year (2023: £48.5m charge and 20bps, respectively). The impairment credit resulted largely from updated macroeconomic scenarios, particularly an improvement in house prices. The statutory impairment credit was £11.7m, equivalent to a loan loss ratio of (4)bps (2023: £48.8m charge and 20bps, respectively).

The weighted average loan to value (LTV) of the Group's loan book remained strong at 64% as at 31 December 2024, unchanged from the end of 2023 and the weighted average LTV of new business written by the Group remained stable at 68%. Interest coverage ratios remained strong at 186% for OSB and 160% for CCFS, despite mortgage rates remaining elevated, reflecting the long-term income improvement enjoyed by professional landlords (2023: 176% and 154%, respectively).

Multi-channel funding model

Retail deposits were the primary source of funding for the Group and grew by 8% to £23.8bn by the end of 2024 (31 December 2023: £22.1bn). The growth was due to our consistently fair and attractively priced products, as well as the continued repayment of the TFSME drawings which were largely replaced with retail funding.

We opened more than 237k new savings accounts in the year, and retention rates remained very high: 90% for customers with maturing fixed rate bonds and ISAs at Kent Reliance and 85% for Charter Savings Bank (2023: 91% and 85%, respectively). We maintained a strong focus on customer service, which was reflected in Net Promoter Scores for the year of +72 for Kent Reliance and +62 for Charter Savings Bank (2023: +71 and +62, respectively).

We complemented funding from retail deposits with our expertise in the wholesale markets and, in 2024, the Group completed three transactions: a £509m securitisation of Buy-to-Let mortgages in February, a £330m securitisation of owner-occupied mortgages in May and a £1.25bn securitisation of Buy-to-Let mortgages in December. All securitisations saw strong demand from our growing investor base which allowed us to achieve attractive pricing. I am particularly pleased with the December securitisation which supported our proactive approach to reducing the earnings volatility from revenue recognition under the EIR methodology. 

We will continue to access the wholesale markets when conditions are favourable, to benefit from diversification of funding and to support a smooth transition as we continue to repay TFSME drawings with a mix of retail savings and wholesale funds. In 2024, we repaid £1.9bn of TFSME funding with the remainder due by October 2025. As at 31 December 2024, the Group's drawings under this Bank of England facility reduced to £1.4bn (31 December 2023: £3.3bn).

Capital management

The Group's capital position, which reflects the £100m of share repurchase programmes announced in 2024, remained strong with a CET1 ratio of 16.3% as at 31 December 2024 (31 December 2023: 16.1%).

We completed a review of the latest Basel 3.1 rules and we now estimate the impact on the Group's CET1 ratio as at 31 December 2024 to reduce to just over 1% when the rules are introduced in January 2027. We continue to target a CET1 ratio of 14%, post the implementation of Basel 3.1.

The Group has met the interim MREL requirement, plus regulatory buffers, of 22.5% of risk-weighted assets, under the current standardised rules and is now carrying a total of £950m of MREL qualifying debt securities. The Group has a deadline of 1 July 2026 to meet the end-state MREL requirement. The new implementation date for Basel 3.1 rules has delayed the potential need for further MREL debt issuance beyond 2025.

The Board has recommended a final dividend per share of 22.9 pence (2023: 21.8 pence), which together with the interim dividend per share of 10.7 pence (2023: 10.2 pence), results in a total ordinary dividend per share for the year of 33.6 pence, an increase of 5% (2023: 32.0 pence), in line with our stated desire to deliver a progressive dividend per share. When combined with the share repurchase programmes announced in 2024, this represented a total return to shareholders of £226m for the year. 

The Board remains committed to returning excess capital to shareholders and has today announced a new £100m share repurchase programme over the next twelve months to commence on 14 March.

Investing in our future

2024 marked the second year of our transformation programme building the number one UK specialist lender of the future. Good progress was made, delivering tangible results with strong, scalable and agile systems architecture in place that will form the foundation for all new lending and savings products that will be launched in 2025 and beyond. Our first customer and broker facing digital tools were launched and material progress was made to deliver an enhanced experience for our customers, partners and colleagues as we introduce the next phases.

The Group is recognised for its efficiency and excellent customer service and, in 2024, we launched our pioneering, first-of-a-kind, mobile app for intermediaries, demonstrating our commitment to mortgage brokers, as well as a savings platform with self-serve account management tools for new Kent Reliance savers.

Our success is dependent on our nearly 2,500 employees across the UK and India and it was with great regret that I announced the redundancy programme in November which affected 139 roles in the UK and India.

Throughout the year, we continued to make progress against our sustainability commitments, including the publication of our inaugural Climate Transition Plan in April. Direct emissions were 41% lower in 2024 compared to a year earlier, benefitting from targeted investment and proactive estate management. We also took steps to enhance our data quality associated with the more complex area of reducing financed emissions. Our efforts to become a more diverse and inclusive organisation were demonstrated in 36% of women in senior management roles in the UK (2023: 33%), on track to meet our target of 40% by the end of 2026.

Looking forward

The Group's focus on writing a blend of new business in segments where returns are strong and sustainable was reflected in the quality and mix of originations written during 2024. In line with our optimised lending growth plan and medium-term aspirations, we have increased new lending in diversified specialist segments where we have deep credit expertise whilst maintaining our leading position in the professional Buy-to-Let segment. These segments, which deliver strong risk-adjusted returns, include commercial lending, asset finance, development finance and bridging. This will have a positive impact on the Group's overall risk-adjusted returns as the back book matures and is replaced with an optimised mix of new business. We continued to leverage the strengths in intermediary relationships and breadth of individual customer needs that position the Group as the UK's number one specialist lender.

Our transformation programme will position us to scale in all our lending segments and grow efficiently in the medium term. It will also allow us to further enhance the experience of dealing with OSB Group for our lending and savings customers and intermediary partners in 2025 and beyond.

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 dividend increasing by 5%.

In 2026, we expect broadly similar dynamics and we have today announced our medium-term aspirations to provide further guidance on the Group's performance up to 2029, see page 3.

The Group remains well-capitalised, with strong liquidity and a high-quality secured loan book. We remain focused on delivering good outcomes for our stakeholders and strong returns for our shareholders.

Andy Golding

Chief Executive Officer

13 March 2025

1. UK Finance, Value of BTL gross lending, July 2024.

2. UK Finance, BTL mortgages outstanding and gross lending, February 2025.

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 loans and advances to customers and contribution to profit on a statutory basis:

OSB Buy-to-Let/SME sub-segment

1. Restated to exclude asset finance.

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, asset finance and residential development finance to small and medium-sized developers.

The Buy-to-Let/SME net loan book increased by 8% to £13,065.3m, supported by originations of £2,206.4m, up by 2% from £2,163.7m in 2023 as the Group focused on new lending in more specialist and higher yielding sub-segments.

Net interest income in this sub-segment decreased by 16% to £333.1m (2023: £394.4m), due to mortgages redeeming or switching faster onto lower prevailing spreads as well as the continued recycling of the fixed rate deposit book onto tighter spreads. A favourable effective interest rate (EIR) adjustment of £0.3m was recognised for the year (2023: £0.1m adverse).

Other expenses were £2.9m and related to losses from the Group's hedging activities (2023: £2.5m). The impairment credit of £8.6m (2023: £36.9m charge) reflected updated forward-looking macroeconomic scenarios, in particular improved house price outlook and the release of post-model adjustments. Overall, the Buy-to-Let/SME sub-segment made a contribution to profit of £338.8m, a decrease of 5% compared with £355.0m in 2023.

The Group remained highly focused on the risk assessment of new lending, as demonstrated by the average loan to value (LTV) for Buy-to-Let/SME originations¹ of 70%, which remained unchanged from the prior year. The average book LTV in this sub-segment¹ increased marginally to 68%, with 4.5% of loans exceeding 90% LTV (31 December 2023: 67% and 4.0%, respectively).

Buy-to-Let

The Buy-to-Let gross loan book increased by 6% to £11,201.2m at the end of December 2024 (31 December 2023: restated £10,541.8m²) benefitting from an increase in new purchase activity. Originations reduced by 5% in the year to £1,372.3m (2023: restated £1,444.9m²).

The proportion of Kent Reliance Buy-to-Let completions represented by refinance remained unchanged from 2023 at 62%. Product transfers remained popular, with 70% of existing borrowers choosing a new product, under the Choices retention programme, within three months of their initial rate mortgage coming to an end, however the Group was selective in offering retention products (2023: 78%).

The Group's new borrowers continued to favour five-year fixed rate mortgages, which represented 72% of Buy-to-Let completions in 2024 (2023: 74%), while the majority of existing customers transferring to a new product at maturity preferred the flexibility of a shorter-term.

Landlords continued to optimise their businesses from a tax perspective, with 92% of Kent Reliance mortgage purchase applications coming from landlords borrowing via a limited company (2023: 87%), and overall, professional, multi-property landlords represented 91% of completions by value for the Kent Reliance brand in 2024, in line with the prior year.

The weighted average LTV of the Buy-to-Let book as at 31 December 2024 was 67% with an average loan size of £260k (31 December 2023: 66% and £255k). The weighted average interest coverage ratio for Buy-to-Let originations remained high during 2024 at 186% (2023: 176%) supported by reducing mortgage interest rates and opportunities to increase rents.