OSB Group (LON:OSB) management told investors its 2025 full-year results were “in line with our 2025 guidance,” pointing to steady loan growth, continued progress in its multi-year technology transformation, and further shareholder distributions through a higher dividend and a new share buyback.
2025 performance and strategic progress
In opening remarks, management said 2025 represented the first year of a transition period outlined at the prior year’s investor update, and that the group had delivered against its targets while building toward a medium-term plan. Net loans grew 3.2% in 2025, which management said reflected discipline in maintaining attractive returns on tangible equity (ROTE) in new lending and was supported by “particularly strong growth in commercial lending.”
Management highlighted underwriting and credit performance as a key strength, pointing to a low loan loss ratio and stable arrears metrics. The CFO said three-month-plus arrears were unchanged at 1.7% at the end of 2025.
Income statement highlights, NIM, and 2026 guidance
CFO Victoria (no surname provided in the transcript) reported net interest income of £679.4 million, down 2% year-on-year, with net interest margin (NIM) down 2 basis points to 228 basis points (using 2024 NIM on an underlying basis for comparability). She attributed year-on-year pressure primarily to a higher cost of funds as savings “recycle onto more costly spreads versus SONIA,” which was broadly offset by improved lending spreads as back book dynamics rolled through and new business was written at sustainable margins.
The group also disclosed NIM excluding liquid assets for the first time, which the CFO said was 267 basis points in 2025 and was intended to better reflect underlying business performance and improve comparability with peers.
For the second half of 2025, the CFO said net interest income increased 4% and NIM improved 10 basis points to 226 basis points. Profit before tax in the second half was “only marginally lower” at £190.2 million, delivering EPS up 6% to £0.378 per share.
Looking ahead, management guided to NIM of circa 225 basis points in 2026, describing the outlook as driven by the same factors seen in 2025: sustainable front book margins, ongoing back book roll-off, and the cost of funding. Management emphasized that the 2026 NIM guidance assumes funding costs normalize from elevated levels seen in late 2025 and into early 2026.
In Q&A, the CFO said the 2026 plan is based on an average blended front book and retention funding assumption of “SONIA plus 30,” adding that current market levels were roughly 10–15 basis points above that. Management said it would update investors on funding cost progression over coming quarters.
Costs, transformation investment, and operational milestones
Administrative expenses were £270.1 million, up 5% year-on-year and in line with guidance, the CFO said. Despite inflationary pressures, core U.K. and India costs increased only 0.8%, while additional investment in the transformation program drove a £9.4 million increase in the P&L transformation charge versus 2024.
The cost-to-income ratio increased to 40.4% from 38.7%, and the management expense ratio rose to 90 basis points from 85, both “in line with our expectations,” the CFO said, reflecting transformation expenditure. For 2026, OSB guided to group expenses of circa £280 million, with core costs rising no more than inflation and transformation investment increasing in line with plan.
Management said the technology transformation is entering the fourth year of a five-year plan and remains on track and within budget. On the savings side, the group has launched more products on the new platform, including joint accounts and easy access, and cited customer adoption of self-service features. It also said 40,000 existing Kent Reliance accounts have been transferred, with a full migration planned, and that Charter Savings Bank operations will be moved in-house and onto the new platform.
On lending, management said it launched a new platform starting with buy-to-let mortgages and introduced the Rely buy-to-let brand as a step toward simplifying its mortgage offering. Management highlighted improved broker service metrics, including agreements in principle delivered in under 10 minutes and mortgage offers, in some cases, in less than two hours. As of the presentation date, management said more than 40% of mortgage applications were being processed on the new platform. Residential mortgages on the new platform are “well underway” and expected to launch later in the year under the Precise brand.
Credit quality, funding, and capital position
OSB recorded an impairment charge of £13 million in 2025, compared with an impairment credit of £12.8 million in 2024. The CFO said the total expected credit loss (ECL) provision reduced to £123.6 million at the end of 2025, with releases driven by model enhancements and positive stage migration, partly offset by higher provisions for accounts with arrears of three months or more, new lending, and other charges.
The CFO said the total coverage ratio reduced to 47 basis points, and that the provision balance was eight times higher than the average yearly write-offs over the last five years. She added that if OSB moved IFRS 9 weighting to 100% downside, ECLs would rise by £25 million.
On funding, OSB remained predominantly funded by retail deposits through Kent Reliance and Charter Savings Bank. Retail deposit balances were £24.3 billion at December 31, up 2% year-on-year, supporting loan growth of 3.2%. The group repaid its TFSME drawings in September and increased its Indexed Long-Term Repo (ILTR) balance to £1.5 billion at year-end. In Q&A, management characterized ILTR as a “smoothing tool” to manage peaks and troughs in funding costs, noting it had multi-billions of collateral available with the Bank of England, while also referencing encumbrance limits.
OSB reported profit before tax of £382.5 million and basic EPS of 75.6p per share. Profit before tax translated to ROTE of 13.7%, and tangible net asset value (TNAV) per share increased to £5.79 from £5.44. The full-year dividend rose 5% and management announced a further £100 million share buyback program for 2026, stating the 2025 buyback was completed.
The group generated 150 basis points of capital in 2025 and ended the year with a CET1 ratio of 15.8%. The CFO said the board has set a new CET1 target range of 13%–13.5% following greater clarity on Basel III.1 and confirmed MREL status. She also noted that before the effect of the £100 million buyback announced in March 2025, CET1 would have been 16.6%, and that the buyback had a 0.8 percentage point impact on the ratio.
Outlook and investor Q&A themes
Management reiterated expectations for net loan book growth in 2026 to be broadly similar to 2025 and said it remains focused on maintaining pricing discipline in a competitive buy-to-let market. It also reiterated ROTE expectations: low teens in 2026, mid-teens in 2027 and 2028, and “the top end of mid-teens” in 2029. Executives linked the longer-term ROTE trajectory to strategy execution, capital optimization, and the anticipated benefit as MREL instruments reach their call dates.
In Q&A, management repeated that its guidance is not predicated on any mortgage Foundation IRB approval. The CEO said the group was seeking clarity from regulators on “size of the prize versus the effort equation” before deciding on an approach, and that assumptions were based on remaining standardized under Basel III.1.
About OSB Group (LON:OSB)
OSB Group Plc, through its subsidiaries, operates as a specialist mortgage lending and retail savings company in the United Kingdom and the Channel Islands. It provides private rented sector related buy-to-let, commercial and semi-commercial mortgages, residential development finance, secured funding, bridging, and asset finance services. The company also provides buy-to-let and specialist residential mortgages, mortgage servicing, administration and analytical, mortgage originator and servicer, and retail savings products; and back office processing services.
