16th Mar 2023 14:05
(Alliance News) - OSB Group PLC's better-than-expected earnings and decent outlook impressed analysts at Shore Capital Markets.
OSB's shareholder distribution plans also grabbed attention. Like some of its larger peers, OSB announced a share buyback alongside its annual results, amid an earnings glut on rising interest rates.
The company, previously known as OneSavings Bank, said net interest income climbed 21% to GBP709.9 million in 2022 from GBP587.6 million. Pretax profit improved 14% to GBP531.5 million from GBP464.6 million.
Boosted by rising interest rates, OSB's net interest margin expanded to 2.78% from 2.53%.
Adjusted pretax profit rose 13% to GBP591 million, beating a Shore forecast of GBP558 million and market consensus of GBP570 million.
The net underlying loan book grew 12%, beating guidance of a 10% rise. It took the loan book to GBP23.5 billion, ahead of a Shore prediction of GBP23.0 billion.
"Notwithstanding the uncertain macro-economic environment (which appears to be improving, in our view), the outlook remains constructive with the group reporting that it is building a healthy pipeline of new business. Guidance for 2023 is for loan book growth of [around 5%], a broadly stable net interest margin and an increase in the underlying cost-to-income ratio to 29%. The loan book growth and net interest margin guidance are in line with our expectations with the cost-to-income ratio a little higher, albeit this is still best in class," Shore commented.
OSB announced a final dividend of 21.8 pence per share, up 3.3% from 21.1p a year earlier. In addition, it declared an 11.7p special dividend. Including its interim payout, this meant its total dividend grew 62% to 42.2p for 2022 from 26.0p for 2021.
OSB also announced a share buyback with its annual results. It will repurchase GBP150 million worth of stock between now and this time next year.
Shore said the distributions plans were chunkier than expected.
"The board has been generous with shareholder distributions, proposing a higher than (we had) expected full year ordinary dividend of 30.5p, a special dividend worth GBP50 million and a further share buyback worth GBP150 million," Shore added.
OSB shares traded 8.2% higher at 514.50 pence each in London on Thursday afternoon. Shore rates the stock a 'buy'.
By Eric Cunha, Alliance News news editor
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