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OneSavings Bank Sees Fourfold Pretax Profit Gain Post IPO

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Aug. 27 (Bloomberg) -- OneSavings Bank Plc, the U.K. bank that sold shares in June, said first-half profit increased more than fourfold as it boosted lending.

Underlying pretax profit before costs related to the initial public offering jumped to 29.7 million pounds ($49 million) from 7.3 million pounds a year ago, the Chatham, England-based company said in a statement today. Lending rose 13 percent to 3.4 billion pounds, led by loans to residential landlords as well as small and medium-sized companies.

British challenger banks including Aldermore Bank Plc, TSB Banking Group Plc and Shawbrook Bank Ltd. are vying to win market share from the nation’s biggest banks, which have been hit by scandals including mis-selling of payment-protection insurance. The Financial Conduct Authority said on July 8 that savers tend to stick with their banks, making it “very difficult” for smaller lenders to attract customers.

“The trajectory for our business looks strong,” Chief Executive Officer Andy Golding said in a phone interview. “We trade in those niche spaces, those gaps that the larger players leave behind, where we have the skills and expertise.”

The shares closed at 200 pence in London, up 7.5 percent on the day. They have gained 18 percent so far this year.

OneSavings Bank, which focuses on lending to landlords and small businesses, said total assets increased 12 percent to 4.2 billion pounds in the first half, while winning more than 12,000 new savings customers. The common equity Tier 1 capital ratio, a measure of financial strength, was at 11 percent, up from 8.4 percent at the end of 2013.

OneSavings Bank reported a “strong first set” of earnings as a public company, analysts at Barclays Plc led by Daniel Garrod, wrote in a note to clients today. Barclays has an overweight rating on the stock.

The lender, which owns the Kent Reliance Building Society, became the first challenger to raise funds through an initial public offering when it sold shares worth 134 million pounds in June. TSB sold shares worth 455 million pounds later that month, while Aldermore and Shawbrook are also among new lenders considering stock offerings.

OneSavings Bank said expenses related to its IPO were 5.6 million pounds in the period.

To contact the reporter on this story: Richard Partington in London at rpartington@bloomberg.net

To contact the editors responsible for this story: Simone Meier at smeier@bloomberg.net Keith Campbell

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