OneSavings and Charter Court post higher loan books as merger draws near
OneSavings Bank and Charter Court Financial have both reported higher loan books for the first half of this year as they gear up for a £1.6bn tie-up aimed at creating a leading specialist lender.
Shares in both groups tumbled by roughly five per cent in morning trading, as lower net margins and Brexit-related uncertainty in the market dented investor confidence.
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Pre-tax profits at OneSavings Bank were flat during the first six months of the year, but rose six per cent on an underlying basis to £96.9m.
Net interest margin cooled to 278 basis points from 301 basis points.
However, a boost from the professional buy-to-let segment and some more specialist businesses helped deliver a 10 per cent rise in the firm’s net loan book.
“By-and-large, the bank had a good first half…but the guarded outlook weighed on the stock. The share price has been in a downtrend for four months, and a break below the 320p region, might bring 300p into play,” said David Madden, market analyst at CMC Markets UK.
Group chief executive Andy Golding told City PM: “I genuinely thought this is a strong set of results, lots of people have concerns about opportunities to grow in somewhat unconfident market but actually we’ve demonstrated strong growth in organic lending and net loans.”
He added that the firm was “exceptionally well-placed to continue to generate attractive returns for our shareholders, regardless of potential political scenarios that may take place and we look to the future with confidence.”
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Meanwhile, Charter Court’s loan book jumped by 23.8 per cent to £7bn during the half-year period.
Ian Lonergan, boss of Charter Court, said: “We continued to leverage our specialist lending platform to once again deliver against all our targets in the first half of 2019. Steady loan book growth continued to be driven by strong originations of £1.5 billion across our lending portfolio. This positive result was achieved whilst maintaining a disciplined approach to underwriting, reflected in the high quality of our mortgage book.”
In March both Charter Court and One Savings recommended that their shareholders vote in favour of the merger, which still requires approval from the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA).