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(Sharecast News) - Shares of OSB Group slid on Thursday after the lender downgraded its margin and return on tangible equity guidance for https://www.investegate.co.uk/announcement/gnw/osb-group--osb/osb-group-plc-interim-report-for-the-six-mont-/9707254the year.
In the six months to the end of June, pre-tax profit nudged down 3% to 187.2m, due to a higher impairment charge and higher administrative expenses which more than offset an increase in net interest income and a lower fair value loss on financial instruments.
The net loan book ticked up 1.3% to 26.3bn, underpinned by 10% growth in originations to 2.3bn, with continued focus on sustainable lending margins. Net interest income nudged 1% higher to 339.8m, while the net interest margin fell to 223 basis points from 230bps. Earnings per share dipped 3% to 38.5p.
OSB - which owns Kent Reliance and Charter Savings Bank, among others - now expects 12.5% ROTE for 2026, versus previous guidance for "low teens", while the net interest margin is seen at 215 to 220 basis points, down from previous guidance of around 225.
Chief executive Andy Golding said: "The group delivered a resilient financial and operational performance in the first half of 2026 against a volatile macroeconomic backdrop.
"Our Buy-to-Let and Residential franchises performed well in the period. Originations grew moderately in our higher-yielding sub-segments compared to the prior period, despite macroeconomic uncertainty and elevated mortgage rates. The transformation programme continued at pace and I am pleased that we have soft launched residential products on the new lending platform and our savings migration is progressing well.
"We have seen strong competition in the retail savings market and elevated retail funding costs so far this year. We have made the conservative assumption that these pressures will not ease, if that is the case, we now expect net interest margin for 2026 to be 215bps to 220bps."
Golding said that while it is too early to be more precise about the company's ROTE expectations, if the funding cost pressures seen so far this year continue, there could be a "modest" impact on its 2027 mid-teens aspiration.
At 1352 BST, the shares were down 10.7% at 508p.
See latest RNS on Investegate
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