OneSavings Soars as Flowers-Backed Bank Posts Profit Gain

  • CEO says in interview capital ratio has beat his expectations
  • Stock rises while most British lenders drop in market slide

OneSavings Bank Plc, the J.C. Flowers & Co.-backed British lender that went public last year, said first-half profit rose 60 percent as it cut costs and increased lending. The stock soared.

Underlying pretax profit, which excludes costs from the bank’s initial public offering, rose to 47.6 million pounds ($74.7 million) from 29.7 million pounds in the year-earlier period, the Chatham, England-based company said in a statement Wednesday. Loans and advances rose 17 percent to 4.6 billion pounds, while the firm’s costs as a share of income fell to 26 percent from 29 percent a year ago.

OneSavings Bank is among smaller British lenders including Aldermore Group Plc and Shawbrook Group Plc that have been seeking to gain customers from Britain’s four largest banks. Its majority shareholder is J.C. Flowers, the private-equity firm that focuses on financial companies.

“Despite recent political and regulatory announcements, and some increasing competition in certain lending niches, the market remains supportive of our core businesses,” Chief Executive Officer Andy Golding said in the statement. “We continue to see strengthening levels of new business applications and good opportunities for growth at attractive returns.”

The shares rose 9 percent to 346.2 pence at 11:24 a.m. in London trading, even as other British banks fell and the U.K.’s FTSE 100 index declined 1.5 percent. OneSavings stock has doubled since the bank’s IPO in June last year. 

Return on equity, a measure of profitability, increased one percentage point to 31 percent from the same period a year ago. The common equity Tier 1 capital ratio, a measure of financial strength, fell to 11 percent from 11.4 percent at the end of 2014. The bank will pay a first-half dividend of 2 pence per share.

Golding said by phone that the bank’s capital ratio beat his expectations given its March acquisition of a mortgage loan portfolio for 260 million pounds, a deal he said should have pushed the measure below 11 percent.

“Our organic originations and the profit that has spun off has got us back up to that 11 percent number,” he said. “It’s bang in line with where we want it to be.”

Before it's here, it's on the Bloomberg Terminal. LEARN MORE