Shares of OSB Group, a specialist lending and retail savings group, dropped 17% in early trade on Friday following the company’s announcement regarding an expected interest rate reversion adjustment in its half-year accounts. The adjustment is projected to be up to £180 million ($229.4 million).
During the first half of the year, OSB noted that its customers, particularly those owning occupied properties and engaged in Buy-to-Let deals, opted to refinance their fixed-term interest rate agreements sooner than anticipated, prompted by the rise in bank base rates. As a result, the company reviewed customer behavior and now expects them to remain on new rates for an average duration of five months.
Based on this analysis, OSB anticipates recording an effective interest rate adjustment ranging from £160 million to £180 million in the first half of 2023.
Despite this adjustment, OSB remains positive about its overall performance. The company forecasts a 7% growth in its underlying net loan book for the current year and expects the net interest margin for the first half to slightly exceed expectations.
Additionally, OSB reported that its administrative expenses for the first half are slightly lower than projected by the board.
OSB Group is scheduled to release its earnings report for the half year ended June 30 on August 10.
Contact: Ian Walker