PBT up 29%, Cost:Income remains low at 27%. OSB trading under 10x 2017 cons EPS
Companies: OSB Group PLC
Across the board, OneSavings delivered a solid continuation of its recent operational performance today with a great set of FY Results.
Shares surprisingly opened flat this morning after have rallied over 20% since the start of the year, and are up over 60% on a 12-month view. Perhaps the muted response today is to be expected and it clearly shows investors were pricing in the solid beat to expectations that OneSavings delivered.
Looking into the detail of the Results, PBT for 2016 came in at £137m, a rise of 29% versus the previous year, and a healthy 6% over consensus forecasts.
The Cost:Income ratio remains very low at 27%. This is "Best In Class" as described by the Naked Fund Manager earlier this week. This ratio measures admin expenses as a percentage of total operating income and OneSavings lower cost structure allows it to operate at that level, whereas competitors have ratios from around 45% to over 100%.
Panmure put out an upbeat note this morning covering the Results:
"Customer loans grew by 16% YoY to £5.9bn, with NIM at 3.14% being better than PG forecast of 3.1%. Loan origination was up 28% to £2.3bn, with both BTL and Residential mortgage volumes remaining robust, up 27% and 14% respectively...
...Overall these are a solid set of results but largely reflected in the 22% YTD share price rally."
The low-cost structure of the business contributes to its high Return on Tangible Equity of 29%. Tier One capital ratio was a healthy 13.3% and Tangible NAV rose an impressive 33% over the year.
Dividends also came in ahead of consensus estimates with a 10.5p distribution.
Looking at valuations, the shares trade on a Price to Tangible Book Value of 2.6x and a PE ratio of 9.7x consensus 2017 EPS forecasts of 43p per share.
Shares edged down 1% this morning.
