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Edited Transcript of OSB.L earnings conference call or presentation 21-Aug-19 8:30am GMT

Q2 2019 OneSavings Bank PLC Earnings Call

CHATHAM Sep 7, 2019 (Thomson StreetEvents) -- Edited Transcript of OneSavings Bank PLC earnings conference call or presentation Wednesday, August 21, 2019 at 8:30:00am GMT

TEXT version of Transcript

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Corporate Participants

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* Andrew John Golding

OneSavings Bank Plc - Group CEO & Director

* April Carolyn Talintyre

OneSavings Bank Plc - CFO & Director

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Conference Call Participants

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* Ian David Gordon

Investec Bank plc, Research Division - Head of Banks Research

* John Cronin

Goodbody Stockbrokers, Research Division - Financials Analyst

* Nicholas Herman

Citigroup Inc, Research Division - Assistant VP and Analyst

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Presentation

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Andrew John Golding, OneSavings Bank Plc - Group CEO & Director [1]

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All right. If we are all sitting comfortably, we will begin. Good morning, everybody, and welcome to OneSavings Bank's sixth year on presenting its results to the market as a listed entity. Thank you for so many of you coming along on weeks when I know a lot of people are on holiday. So thank you very much for making the effort to come here this morning.

So I'm just going to cover 1 or 2 highlights in terms of the performance for the first half of 2019. And then I'm going to hand over to April who will take you through some of the more detailed elements of the numbers. And then you'll hear a little bit more from me around our lending and our savings franchises as well as some outlook detail before we hand over to you for Q&A.

I think the first half of the year is a story of continued growth, efficient distribution, combined with our usual robust cost management, delivering a strong set of results. We like to deliver what we said we were going to deliver, and we believe we had with perhaps a little more growth in terms of loan book than the market was expecting, kind of as usual.

In terms of the results, gross organic lending was up 13% to GBP 1.6 billion. Loans and advances were up 10% on a net basis to GBP 9.9 billion in the first half of the year. Our cost-to-income ratio was well-controlled at 28% despite further investments in the business. And underlying profit before tax was up 6% to GBP 96.9 million, delivering strong earnings per share to shareholders and a strong interim dividend.

Return on equity was excellent for a fully secured mortgage lender in relatively mainstream markets at 23% annualized for the first half. And our CET1 ratio was strong at 13% despite the higher loan book growth than forecasted.

So those are the highlights, but I'll hand you over to April now who will take you through some more of the detail.

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April Carolyn Talintyre, OneSavings Bank Plc - CFO & Director [2]

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Thank you, Andy, and good morning, everyone. I'd like to start by summarizing the key drivers of our strong annualized return on equity of 23% for the first half. I'm very pleased that we delivered a 6% increase in underlying profit before tax versus the comparative period. Underlying profit before tax was GBP 97 million in the first half and benefited from the high growth in the net loan book that Andy just walked us through and our continued focus on cost efficiency.

Net interest income rose by 12% to GBP 151 million, and the net interest margin reduced to 278 basis points. The main driver behind the expected reduction in net interest margin, as previously indicated, was the change in mix of the loan book despite broadly stable asset pricing. The mix of the loan book continued to change as the high-yielding back book refinanced onto front-book pricing. However, I'm very pleased to say that the impact of this mix effect has now largely run its course, assuming current mortgage pricing, cost of funds and swap spreads continue.

The bottom left-hand chart shows our efficiency metrics: the management expense ratio, which is the ratio of operating cost to total average assets; and our cost-to-income ratio. The ManEx ratio, which I think is the best measure of efficiency, improved by 5 basis points in the first half to 74 basis points, demonstrating our ability to deliver further efficiencies and economies of scale as we grow despite further planned investments in the business. And the cost-to-income ratio remained strong at 28%.

The bottom right-hand chart shows our loan loss ratio of 12 basis points for the period, which includes the impacts of a small number of high-value Buy-to-Let cases having LPA receivers appointed at the end of the period. And these attract high provisional requirements under IFRS 9 modeling approach. The 3-months-plus arrears percentage remains flat to year-end at 1.5%.

The next slide shows the comparison of the income statement for the first half of this year versus the same period in 2018. I'll just call out a few items. Other expenses of GBP 7.2 million include a GBP 4.6 million loss on unmatched swaps due primarily to fair value movements on our mortgage pipeline swaps prior to them being matched against completed mortgages through hedge accounting, and that followed a significant flattening of the LIBOR curve. This unrealized loss will unwind over the life of the swaps.

The group recognized GBP 5.9 million exceptional transaction expenses relating to the recommended combination with Charter Court in the first half. These costs exclude approximately GBP 9 million of success and other fees which are contingent on the combination completing. Finally, on this slide, we're very pleased to have delivered a 5% improvement in underlying earnings per share to 29p per share, reflecting the overall growth in underlying profit.

Turning to the balance sheet. The net loan book growth of 10% for the first half was supported by 13% growth in organic originations to GBP 1.6 billion and continued strong retention through our broker-led Choices program where we saw an impressive 76% of borrowers take a new product with us within 3 months of their original product term expiring.

On the funding side, our retail savings book increased by 14% in the period. We also took the opportunity to raise funds under the Bank of England's business-as-usual Indexed Long-Term Repo facility with GBP 100 million of funding outstanding as of the end of June, and we still have GBP 1.5 billion up from the Term Funding Scheme. Our liquidity ratio increased from 14.5% at year-end to 15.3% as at 30th of June after a very successful ISA season.

Moving to the strong credit quality of our balance sheet. Our weighted average total loan book loan-to-value of 68% was up slightly during the first half, predominantly driven by the strong Buy-to-Let/SME lending within the period, which continues to have an average LTV of around 70%. We continue to observe a tight clustering of loan-to-values around the weighted average.

The average loan-to-value of new residential origination in the first half increased by 2 percentage points to 70% due to the new Residential product range launched in the second half of 2018. These sensible loan-to-values are complemented by a stable low arrears rate of 1.5%. And we remain particularly pleased with the credit performance of the front book of loans, which Andy will talk you through in more detail in a moment.

Turning to our segments. I'm going to start with the Buy-to-Let/SME segment, which experienced strong net loan book growth in the period of 10% to GBP 8.2 billion, driven by GBP 1.4 billion of new organic origination and targeted strong retention. Period-on-period growth in the loan book, partially offset by the impact of the back-book refinancing onto the lower but stable front-book pricing, drove a 17% increase in net interest income in the segment to 121 -- GBP 120 million. The contribution to profit from this segment rose 11% to GBP 110 million compared to the first half of 2018, driven by the growth in net interest income, partially offset by the fair value losses on unmatched swaps I mentioned a little bit earlier.

The loan loss ratio in this segment increased to 13 basis points in the first half from 9 basis points in the first half of 2018 due primarily to that small number of Buy-to-Let cases having LPA receivers appointed at the end of the period, which I mentioned earlier. Average loan-to-values remained low at 72% at the end of the first half with less than 1% of loans with LTVs exceeding 90%. And the average loan-to-value of new origination in this segment remained flat at 70%.

The next slide gives you a subsegment view of the Buy-to-Let/SME loan book, and it shows a 9% growth in the Buy-to-Let subsegment gross loan book since the end of the year to GBP 7.1 billion. The average interest coverage ratio of new Buy-to-Let originations strengthened to 175%, demonstrating our conservative approach to assessing customer affordability. We saw good opportunities to sensibly grow our InterBay semi-commercial small commercial loan book in the first half with some high-quality lending at sensible loan-to-values as competition reduced primarily from wholesale-funded lenders. The gross loan book grew by 32% as a result to GBP 725 million. At the end of June, the book had a weighted average loan-to-value of just 66% at an average loan size of GBP 380,000.

Turning to our Residential development finance business. Heritable had a total loan book of GBP 141 million at the end of June with a further GBP 100 million committed. We continue to run stringent stress tests for both the value and timing of sales and build costs and are very pleased with the performance of this business. We have been targeting small- to medium-sized developers. And we're now funding over 1,800 residential units, the majority of which are relatively affordable family houses outside of London.

The approved credit limits on our secured funding lines to nonbank lenders grew to GBP 470 million in this segment, including total loans outstanding of GBP 193 million. During the period, one new GBP 30 million funding line was added and credit approved limits were increased by a further GBP 30 million across 2 existing funding lines. The pipeline remains robust. However, given the macroeconomic uncertainty, the bank continues to adopt a cautious risk approach in this segment.

Turning to the next slide. The gross Residential loan book increased by 7% in the first 6 months to GBP 1.7 billion as new organic lending exceeded redemptions on the back book. The organic Residential lending was GBP 260 million, up 134% on the comparative period as our newly launched Residential product range gained good traction with borrowers. Net interest income of GBP 31 million was down 6% from the comparative period primarily due to the runoff of mortgages from the high-yielding back book.

Contribution to profit was down a corresponding 6% versus the comparative period, reflecting the lower net interest income. The loan loss ratio in the Residential segment fell to 8 basis points in the first half from 16 basis points in the prior period due to strong credit performance of the Residential book. Average loan-to-values remained low at 58% with just 3% of loans with LTVs exceeding 90%, the same as with the 2018 year-end.

The next slide shows the subsegment view of the gross Residential loan book, showing an increase of 9% in the first charge loan book in the first half due to the positive response to the new Residential products we launched last year. The second charge gross loan book was largely flat at GBP 373 million with organic originations matching redemptions. And we continue to maintain appropriate pricing for risk in this subsegment as competitive pricing pressures continued in this market.

We also provide secured funding lines to nonbank lenders in this segment with total credit approved limits of GBP 51 million at the end of the period, which includes loans outstanding of GBP 24 million. And we continue to apply conservative approach to lending in this subsegment, too.

Turning to capital. You can see the bank's capital position remained strong with a fully loaded CET1 ratio of 13% and total capital ratio of 15.2% with the leverage ratio of 5.7%. The decrease in these capital ratios was primarily due to the growth in the loan book but also the impact of the exceptional transaction costs.

I'll now pass back to Andy who will give you an update on lending and savings franchises and the outlook.

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Andrew John Golding, OneSavings Bank Plc - Group CEO & Director [3]

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Thank you, April. So the lending franchise continues to perform strongly due to both organic originations and also our Choices retention program, which we talked to you about before, which continues to perform well and pay dividends with 76% of borrowers choosing a new product with us within 3 months of the maturity of their existing mortgage. Those things combined delivered excellent net loan book growth in the first half of 10%.

Loan performance has been discussed from an impairment point of view, but I thought it important to repeat a stat that we regularly give you. Out of 54,000 loans that OneSavings Bank has written since it was established, we still only have 273 loans in 3-months-plus arrears with sensible loan-to-values. We're well positioned, we believe, in our core market. We are the go-to lender in the professional Buy-to-Let landlord space, and those professional Buy-to-Let and specialist landlords accounted for 81% of our Buy-to-Let completions by value during the first half of 2019. That's up 2% on the prior period.

And of course, I never miss an opportunity for a shameless plug. It's always nice to win awards in a space where you believe you're strong. And in the first half of 2019, we won the Mortgage Strategy Awards for both Best Specialist Lender and Best Buy-to-Let Lender, which we were particularly pleased with. We were also awarded the Best Specialist Lender from the U.K.'s largest mortgage distributor, the L&G Mortgage Club.

On this slide, we demonstrate the increased strength of our funding model, supporting the bank's intentions to remain predominantly retail funded. Our Kent Reliance savings franchises had a good first 6 months of the year with retail deposits up 14% during the first half of 2019, now with GBP 9.2 billion under management. We continue to attract new savings customers, and nearly 30,000 new savers brought their money to us during the first half of this year.

We've made significant process -- progress though in diversifying our liquidity alongside our retail deposit program. In July, we were pleased to successfully complete our first issuance of the Canterbury Finance RMBS program, securitizing GBP 500 million of organically originated Buy-to-Let mortgages, adding further diversification to our funding. This was well-received by the market and paved the way for future optimization of our funding model. At the end of June, we held balances of GBP 1.5 million in the Bank of England's TFS and also GBP 100 million under the Indexed Long-Term Repo program.

Retention rates on our retail products are superb, or we certainly think they are, with 93% of our customers whose bonds or ISAs coming to maturity chose to renew their product with us. This helps because it keeps the cost of acquisition down, but also demonstrates that our customers are happy with the product set and happy with the service they receive. And again, highly consistent Net Promoter Scores from our savers, 64 plus, demonstrating, I think, that our savers believe we do a pretty good job for them.

I'm going to summarize now and touch on some of the outlook points. And then, of course, as usual, we'll happily tackle any questions that you may have. The first half was another strong period for us with strong loan growth, good originations and hopefully a sort of "it does what it says on the tin" set of numbers. Trading conditions remain competitive, but we are well positioned in our core markets, particularly lending to professional landlords. We got a strong credit profile, low arrears and a sensible loan-to-value set clustered around those averages that April mentioned with high interest coverage on our Buy-to-Let portfolio at 175% interest coverage on average.

We're really pleased that our customers continue to value what we do, showing their loyalty through retention and our customer Net Promoter Score. Again, the securitization we completed paves the way for further transactions and diversifies our funding. We are happy that the recommended combination between ourselves and Charter Court received shareholder approval from shareholders of both banks on the 6th of June and unconditional CMA clearance on the 30th of July. Of course, the combination remains subject to some outstanding conditions, including receipt of regulatory approvals from the FCA and the PRA, but we will update on those when it's appropriate.

Because of the combination, we're not able to give you the usual guidance, but we can say a few things. Based on the strong growth we've seen so far this year, our current pipeline and application levels year-to-date, we now expect to deliver high-teens growth for 2019. We continue to invest in the business, and we'll maintain a strong focus on cost efficiency and control.

For net interest margin, as we discussed, there was a decrease in the first half primarily due to the changing mix of the loan book, but broadly stable asset pricing. However, the impact of the mix effect has now largely run its course, assuming current mortgage pricing, cost of funds and swaps spreads continue. Our capital and dividend policy remain the same with a minimum of 12% CET1 and a target payout ratio of at least 25%. Thank you very much for listening.

And we'll now open up the floor to your questions.

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Questions and Answers

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Andrew John Golding, OneSavings Bank Plc - Group CEO & Director [1]

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Yes? One over there.

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Nicholas Herman, Citigroup Inc, Research Division - Assistant VP and Analyst [2]

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It's Nicholas Herman from Citigroup. Three questions, please. First one on net interest margin. Yes, I mean, clearly, you referenced that there's a notable drop in net interest margin this period. I guess I was just a bit surprised that it came so much all at once. And I assume that this mix effect has been an ongoing process. So what was it that in previous periods mitigated that pressure? Such as -- I think most obvious example is second half of last year when NIM actually rose. And then I guess what also -- you referenced that it is largely done. Could you give a percentage or proportion around that, please?

Second question is on funding. You've grown deposits I think much faster than the market expected. If I look back to previous periods, not just now, I mean how does that affect your funding plans and including wholesale issuance securitization? And does it make you consider repaying TFS early?

And then my final question is on first charge residential. Just curious as to how the returns on your new first charge mortgages compare to Buy-to-Let and your overall group ROE.

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Andrew John Golding, OneSavings Bank Plc - Group CEO & Director [3]

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Okay. April, do you want to take the NIM one and then I'll talk about funding?

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April Carolyn Talintyre, OneSavings Bank Plc - CFO & Director [4]

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Sure. So I guess your question is why did we not see this ongoing pattern of mix change in previous periods. I mean I think we did. I mean there was a significant drop last year as well, but I think last year also had some quite strong mitigants. We had the benefit of having drawn down sort of substantial additional funds under the TFS which would have offset that. I think that's probably the largest mitigant.

And I can't tell you what percentage largely is. Unfortunately, takeover panel rules still apply and, therefore, giving more specific guidance is viewed as profit forecast, and my lawyers won't allow me to say any more. But clearly, the change of mix was the real dominant driver. There were other bits and pieces on the margin as well, but very small impacts, which will continue such as TFS, which is the cheaper funding, does, of course, become a smaller part of the whole. So there's a little bit of that mix effect in the liability side as well, but it's not so significant that we really needed to call it out in the published information. But largely done would indicate small ongoing impacts.

Does that answer your question? Sorry, not much more I can say and I can't be more specific, unfortunately.

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Andrew John Golding, OneSavings Bank Plc - Group CEO & Director [5]

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In terms of the funding piece, I mean we have a desire to be a predominantly retail-funded institution. That doesn't mean we don't want to optimize the funding model. Clearly, we have a funding plan which we approved at Board level and we share with the regulator. For us, it's important to have some diversification in the funding. Previously, we had access to TFS. And of course, it was cheaper than everything else, so you would, wouldn't you? Rather than other sources, but now you've seen us sort of reenter the RMBS market and start to make use of the BAU facility under the Indexed Long-Term Repo as a complementary funding equation to retail. The RMBS that we issued is marginally more expensive than retail. But of course, it has a longer duration to it in terms of the funding and matches to the mortgages specifically.

You mentioned, would we pay back TFS early? I don't think so. We have a funding plan that has worked out for us when we want to start refinancing that TFS, but over time, you can keep relatively inexpensive funding on the balance sheet. Albeit it's becoming a smaller and smaller part of the overall, I think we would want to keep it.

And then if I just dive into first charge resi returns, look, the margins on Residential are not as high as the margins on Buy-to-Let. And you can see that from looking at anyone's pricing in any of the sort of tables of mortgage pricing available. And of course, as a standardized firm, that means the return on equity is lower on Residential. But part of our desire to get back into that market is because we are on a journey towards becoming an IRB firm. And actually, lower loan-to-value residential really comes to the party in terms of its return on equity once you are that. And we don't want to wait for 3 years post becoming an IRB firm to start benefiting from that price. So that's why it became part of our strategy sort of 12 months ago to originate more.

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Nicholas Herman, Citigroup Inc, Research Division - Assistant VP and Analyst [6]

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And what is the average LTV on your new lending within these products?

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Andrew John Golding, OneSavings Bank Plc - Group CEO & Director [7]

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Yes. We got it somewhere, haven't we?

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April Carolyn Talintyre, OneSavings Bank Plc - CFO & Director [8]

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We've given the residential LTV.

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Nicholas Herman, Citigroup Inc, Research Division - Assistant VP and Analyst [9]

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That isn't as a whole, though, was that? Is that just -- you provided us the first charge, have you?

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April Carolyn Talintyre, OneSavings Bank Plc - CFO & Director [10]

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Not individually. But of course, looking at the numbers, you can see that the majority of our residential lending, of course, is first charge. But we haven't disclosed an LTV for the subsegments.

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Andrew John Golding, OneSavings Bank Plc - Group CEO & Director [11]

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Okay. Other questions?

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April Carolyn Talintyre, OneSavings Bank Plc - CFO & Director [12]

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They're being very shy today.

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Andrew John Golding, OneSavings Bank Plc - Group CEO & Director [13]

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They are very shy. Ian, I knew you would. Thank you.

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Ian David Gordon, Investec Bank plc, Research Division - Head of Banks Research [14]

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Ian Gordon, Investec. Just 2, please. Just to follow up on the funding point. It feels like a bit of a repeat of last year. Last year, you had a bonanza in the ISA season. And obviously, you've increased your liquidity ratios in the first half and you've subsequently done a securitization. So it feels like other things being equal, you've got significant scope to slow your pace of retail funding in the second half, which is obviously NIM supportive, other things being equal, and I assume that part of the rationale for your excess liquidity buffer is due to alleged economic uncertainty. So is...

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April Carolyn Talintyre, OneSavings Bank Plc - CFO & Director [15]

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Absolutely right on all fronts, yes.

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Ian David Gordon, Investec Bank plc, Research Division - Head of Banks Research [16]

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Okay. And then the second point, just on distribution policy. It feels like you're not really getting sufficient bang for your buck in terms of your ever-increasing dividend yield. So at what point do you contemplate accretive buybacks as an alternative? I noticed that you've reaffirmed your distribution policy today. I guess I'm saying I'd rather you haven't.

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April Carolyn Talintyre, OneSavings Bank Plc - CFO & Director [17]

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Oh, okay. What I think -- I think it's probably this time last year, I kind of outlined our kind of capital management strategy, which is that if we see capital excess building up and there's no opportunity to deploy it at sort of high-return lending, at that point, of course, we would consider increasing the dividend or, in fact, doing a share buyback. But we're just not at that stage now. I mean we typically will run at around 13% CET1, plus or minus. We saw 13% at the end of the first half. So I think if you look forward, depending on what your assumptions are in your models for growth, it's perfectly possible to see a situation in the future where that may happen.

But we're certainly not wanting to hold excess capital. We want to hold the right amount of capital, very conscious of our shareholder returns. But if we continue to see opportunities to invest the capital we generate through profitability at returns which are significantly higher than any perceived cost of equity, then I think we want to manage within our target dividend policy to retain as much of that as we can to put that return growth on for our shareholders. But it's a future question, but we're not there yet.

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Ian David Gordon, Investec Bank plc, Research Division - Head of Banks Research [18]

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I mean no disclaimers at all. While you're generating front-book spreads this strong, it would be rude not to continue this rate of growth while you can help yourself to it. I guess my point was rather more basic. While these shares are trading at the wrong price, wouldn't it be a more sensible use of your 25% payout to deploy it there? And I guess you're telling me no for now.

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April Carolyn Talintyre, OneSavings Bank Plc - CFO & Director [19]

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Yes. Okay?

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Andrew John Golding, OneSavings Bank Plc - Group CEO & Director [20]

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Ian, just picking up on ISA season because you're right to say we had a bonanza last year, I like that phraseology, and a bit of a bonanza again this year. I mean there is some sense to why we do that. We like ISA funding because it tends to be traditionally a bit more sticky than standard funding. So once you've got an ISA customer transfer in, as long as you do a good job for them and you keep their interest rate fair and equitable, they tend to stay with you because it's a grotty process to transfer your ISA back out again. And people won't do that unless you really do undercut the pricing to the extent where they feel they have to move.

And the other thing is ISA funding is actually marginally cheaper than the standard 1- or 2-year bond funding, for example. And therefore, it's just part of the way in which we optimize the overall cost of funds in the retail play. So it does mean we sort of bump up a bit in terms of cash around ISA season. But actually, as the year progresses, we think that's the right thing to do.

Thank you. Yes?

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John Cronin, Goodbody Stockbrokers, Research Division - Financials Analyst [21]

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It's John Cronin from Goodbody. Firstly, can I come back to the net interest margin pressures?

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April Carolyn Talintyre, OneSavings Bank Plc - CFO & Director [22]

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Absolutely.

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John Cronin, Goodbody Stockbrokers, Research Division - Financials Analyst [23]

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On the funding side, just curious in terms of very recent deposit costs evolution and how that's playing out in the half year to date.

Secondly, on that point as well, just on the -- going back to the new residential mortgage asset yields, clearly below, as you've confirmed, the beta of that yield. But what kind of trends are you experiencing at present in that market in terms of competition? Or indeed, any erosion on an ongoing basis in that yield?

And secondly, just notably, I don't pick up any comments on IRB this morning. Just want to confirm that plans are progressing, afoot in that respect and anything you can confirm on time lines or expectations, notwithstanding that's potentially somewhat complicated by your discussions with Charter Court. But anything there that would be helpful to us, I'd appreciate.

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Andrew John Golding, OneSavings Bank Plc - Group CEO & Director [24]

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Thanks, John. You got [a sort of virus] as well. There's a few of them about this week. I mean I'll just talk about the resi asset yield and the kind of competitive dynamic to that. We launched back into that market with a new product set last year. And actually, we haven't changed the pricing on the product set, and volumes have been increasing. Part of that, I think, is due to the fact of the way in which we deliver the proposition and brokers sort of getting very comfortable with how we do things in what we're doing.

I think the resi market, you can't avoid, is uber-competitive in the sort of 3 payslips of P60 and 50% LTV high-street end because you've gotten people at HSBC, and most of us can't do that on funding cost grounds. But we're certainly not seeing erosion on the original sort of set of asset pricing that we've put out to the market when we went back into it.

April, do you want to take NIM and IRB?

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April Carolyn Talintyre, OneSavings Bank Plc - CFO & Director [25]

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Yes. I think just reiterating something Andy mentioned earlier, which is ISA funding is a little bit cheaper. So a lot of the funding we had in the first half was ISA. The sort of pricing seems broadly stable that I can see in the sort of area of the best buy table that we play in. We've raised some chunky wholesale funding in the first half, so we're not really that active in the retail savings market at the moment. And that why it's always quite hard to call an exact trend because you sort of see people coming in and out. We're currently pricing to really not have much of a net inflow.

But I don't think I've seen anything that I would describe as a negative trend through the first half. Obviously, you saw markets coming out with that 1.5% sort of easy access with which others matched. But we always look for sort of a blended portfolio of around 60% being 1-, 2-year term and the 40% being easy access. So we continue to sort of look there or thereabouts at that blend.

But I don't think there's anything sort of negative outlook-wise that I'm seeing in the market for retail funds at the moment and because we only do up to 2 years, as you know. So -- and we have a lot of natural hedging with our 2-year savings bonds versus our 2-year fixed mortgages, which means we're not sort of suffering so much from having to swap out on a much flatter LIBOR curve when it comes to our savings liability.

And maybe if I just go on to IRB. Yes, I'm -- we're always a little bit reticent to sort of give exact time lines because obviously this is somewhat out of our control. We have ongoing dialogue with the PRA team on our applications from a solo perspective, putting the transaction -- proposed transaction to one side. And we're pleased with where we are. It's on progress. It's on plan. And happy to sort of talk about sort of theoretically about the impacts of the proposed transaction. I mean I think one of the positives is that we've said before that we've got each firm have some really strong people working on the IRB program, whether that's internal staff for sure, but also the advisers we're using. And we actually think pooling our sort of intellectual firepower should actually result in a better application. And it's not about so much about timing. It's the actual result you get, I think, which is the thing that we're particularly focused on.

But I certainly can't say that the transaction will make it any quicker. But what we're trying to do is make sure we have as best an application process as possible, which I think the extra sort of firepower help with. And we're currently actively working with our advisers to find the optimum path for when we come together, assuming the transaction gets approved, to sort of keep that on track. But we sort of -- it's a dangerous game, I think, to start giving too much specifics as we've seen elsewhere in the market on timing given that it is somewhat up to the regulator. But so far so good.

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Andrew John Golding, OneSavings Bank Plc - Group CEO & Director [26]

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Anything further from the room? In the absence of hands, we'll just ask the operator if there are any questions from the telephone.

There are no questions from the telephone. I know a number of you will want to be attending the Charter Court presentation, which is taking place in this very room a little bit later.

But for now, thank you very much for coming. Thank you for your attention, and enjoy the rest of the day. And it's not raining, which is great. Thank you.

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April Carolyn Talintyre, OneSavings Bank Plc - CFO & Director [27]

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Actually, if anyone does want to have any one-on-one Q&A, we're just going to go into the other room so that we can clear this room, but we're not running off if you see us heading for the door.

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Andrew John Golding, OneSavings Bank Plc - Group CEO & Director [28]

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I might run off for a cigarette, but I will be back.