OSB Group reported profit before tax of £382.5m for 2025 as the specialist lender expanded its loan book and originations despite a more challenging funding environment.
The group said its net loan book increased by 3.2% to £25.9bn in the year to 31 December 2025, up from £25.1bn a year earlier, supported by a 19% rise in originations to £4.7bn.
Retail deposits also grew, increasing by 2% to £24.3bn, while net interest income reached £679.4m with a net interest margin of 228bps.
Profit before tax fell to £382.5m from £418.1m in 2024, which the group attributed primarily to an impairment charge compared with an impairment credit in the previous year, alongside higher administrative expenses and increased fair value losses.
Administrative expenses rose to £270.1m from £258.1m, reflecting further investment in the group’s transformation programme, although core administrative costs increased by just 0.8% year-on-year.
Arrears remained stable during the year, with balances of three months or more unchanged at 1.7%, while the loan loss ratio stood at 5bps.
The group’s return on tangible equity declined to 13.7%, down from 14.9% in the previous year.
STRATEGY AND TRANSFORMATION
Andy Golding (pictured), group chief executive, said: “The Group delivered resilient financial performance in the first year of the transition period, which was in line with our 2025 guidance. We also made tangible progress against our strategy that we set out at the Investor update last year.
“The loan book diversification has been gaining momentum and in 2025, combined originations in our higher-yielding sub-segments grew by 53%.
“The buy-to-let gross loan book represented 68% of the Group’s total gross loan book, a reduction from 70% a year ago, on track with our 2029 target.
MISSION MILESTONES
“Finally, many milestones were achieved in the transformation programme in the year. I am particularly pleased with the launch of our new lending platform, a new brand dedicated to buy-to-let borrowers: Rely as well as a successful migration of some of our existing savers onto to the new savings platform. All this was achieved on time and to budget.
“I am pleased that the Group’s MREL resolution strategy was reclassified to Transfer from Bail-in, which will bring benefits in the later stages of our Plan.
“With greater clarity over the Basel 3.1 rules and our confirmed MREL status and therefore our capital requirements, the Board set a new CET1 target for the Group of 13 – 13.5% post implementation of the Basel 3.1 rules.”
DIVIDEND AND CAPITAL RETURN
The board recommended a final dividend of 24.1 pence per share for 2025, compared with 22.9 pence in 2024.
Together with the interim dividend of 11.2 pence, this brings the total ordinary dividend for the year to 35.3 pence per share, representing a 5% increase on the prior year.
The lender also announced a new £100m share repurchase programme, which is due to begin on 6 March 2026.
Golding said: “The Board is committed to returning excess capital to shareholders and has today announced a new £100m share repurchase programme to commence on 6 March 2026.”
OUTLOOK
Looking ahead, OSB Group said net loan book growth in 2026 is expected to be broadly similar to the 2025 outcome.
Net interest margin is forecast to be around 225bps, reflecting lending back book dynamics, new business written at sustainable margins and a gradual normalisation of retail funding costs.
Administrative expenses are expected to be around £280m, with core costs increasing at no more than the rate of inflation while the group continues to invest in its transformation programme.
The lender expects a low-teens return on tangible equity in 2026 and has guided that dividend per share will increase by 5%.
Golding said: “Return on tangible equity remains our key focus. We continue to expect mid teens RoTE in 2027 – 28, increasing to the top end of mid teens in 2029 driven by the successful execution of our strategy, capital optimisation and the MREL qualifying debt securities reaching their respective call dates.
“The Group is well-capitalised, with strong liquidity and a high-quality secured loan book. We are focused on making progress through the transition period to deliver on our medium-term aspirations, prioritising positive outcomes for our stakeholders and strong returns for our shareholders.”
