Sustained property loan demand helps OneSavings Bank profits soar
(31 August 2015 – Britain) OneSavings Bank has had a boost in profits, reporting a 60 percent increase in the first half of the year to £47.6 million (A$103.2 million) as its lending books surged.
Sustained demand for property loans, including to property investors and developers have beefed up OneSavings’ loan book.
The bank completed £778 million worth of loans in the period and bought a portfolio of mortgages for £260 million.
That sent the value of loans on its books soaring 17 percent to £4.6 billion, compared with the same time last year.
Following the result, the bank upgraded its full-year forecasts, now expecting the loan book to grow at a faster rate than last year's impressive 29 percent increase, breaking the usual pattern of small business growth.
At the same time, OneSavings’ cost-to-income ratio fell further - down from 29 percent to 26 percent – a rate roughly half of the biggest United Kingdom banks.
Lower costs in relation to income mean the bank’s underlying return on equity increased to 31 percent, which is roughly three times the returns achieved by the big four banks.
“Our cost base has been growing, but in line with the asset growth of business,” said chief executive Andy Golding.
“The one unique structural advantage we have over our peers is that 50 percent of our staff are in a subsidiary in India.
“We have graduates doing the back end and processing work at a cost of £4500 per head.”
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