Buy-to-let specialist Onesavings Bank sees uptick in lending after bruising 2023

Buy-to-let specialist Onesavings Bank (OSB) has posted an uptick in lending and deposits for the first three months of this year as it looks to rebound from a bruising 2023.

The FTSE 250 bank – which specialises in subsections of the mortgage market like buy-to-let – reported a “stable” financial and operational performance in the first quarter.

Its new loan originations came in at £1bn, down £200m from the same period last year. Meanwhile, OSB’s net loans and advances rose one per cent during the quarter to £25.8bn.

The bank grew its retail deposits by four per cent, or £1bn, to £23.1bn during the three months. It used these funds to repay £1.1bn to the Bank of England for emergency Covid-19 loans, with £2.2bn of drawings left outstanding.

OSB’s balances over three months in arrears rose 10 basis points from the previous quarter to 1.5 per cent of its loan book, which it said was “inside modelled expectation” largely due to the higher cost of living and borrowing.

The buy-to-let specialist’s shares tanked in March after it revealed a 30 per cent drop in profit last year, driven by a £181.6m adverse interest rate adjustment.

It was hit by customers choosing to refinance their mortgage earlier than expected and, therefore, spending less time on the higher rate, which mortgages revert to at the end of a fixed-term deal.

Chief executive Andy Golding, whose pay was cut by 40 per cent for last year, said on Wednesday that despite “dynamic” market conditions, OSB was on track to deliver its full-year guidance.

This includes a “broadly flat” underlying net interest margin, underlying net loan book growth of around five per cent and a “broadly flat” underlying cost-to-income ratio.

“The group is well positioned to deliver attractive and sustainable returns across the cycle, with a strong and resilient business model, robust capital and liquidity position, secured loan book and proven risk management capabilities,” Golding added.

Shares in OSB rose 4.6 per cent in early trading on Wednesday. They have now pared most of their losses from two months ago.