OSB Group has reported a fall in originations to £1.9bn in its opening first half, down from £2.3bn in H1 2023.

The specialist lending and retail savings group said it had faced a “backdrop of subdued mortgage market volumes” as it instead focused on maintaining a return on equity.

OSB’s latest trading statement, which covered the six months to 30 June, revealed the group’s underlying return on equity increased to 18% in H1, up from 8% a year earlier, as its statutory return on equity was 17%, up from 5%.

The group also still posted an increase in its underlying profit before tax to £249.9m in H1, up from £116.6m a year earlier, while its underlying and statutory net loan book grew by 1.5% and 1.4% to £26.1bn in H1.

“I am pleased with the group’s performance in the first six months of 2024, demonstrating a disciplined approach to new lending, as we focused on maintaining our return on equity against a backdrop of subdued mortgage market volumes,” commented group CEO, Andy Golding.

“We have seen an improvement in the macroeconomic outlook recently which supports our cautious re-entry into more cyclical, higher margin sub-segments, which will contribute to returns in the medium term.

“We are now past peak interest rates, which will also provide a much-needed stimulus to the mortgage market.”

Based on current market activity, Golding added that the group now expects to deliver an underlying net loan book growth of 3% for 2024.

He also said that the group’s underlying net interest margin is expected to be in a range of “230 to 240 basis points for the full year”, as increased competition in the mortgage market leads to maturing fixed term mortgages redeeming or switching onto lower prevailing spreads more quickly.

“The group is well-capitalised and well-positioned to successfully leverage our unique multi-brand structure and benefit from the opportunities as they arise,” added Golding.

“I remain confident in the outlook for the group and our ability to deliver sustainable and attractive returns for our shareholders.”

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