OSB Group PLC (LSE:OSB) shares fell 13.9% to 489.8p, making it the FTSE 250’s biggest faller, after the specialist lender missed profit forecasts and cut its margin guidance amid intense competition for savers’ deposits.
The owner of Charter Savings Bank, Precise Mortgages and Kent Reliance reported a 3% decline in first-half pre-tax profit to £187 million, 2% below the market consensus forecast.
Its net loan book grew 1.3% to £26.3 billion, supported by a 10% rise in originations. However, the net interest margin fell to 2.23% from 2.30%.
CEO Andy Golding, who will retire at the end of August and be replaced by Santander UK's retail and business banking chief Enrique Alvarez Labiano, said: "The group delivered a resilient financial and operational performance in the first half of 2026 against a volatile macroeconomic backdrop."
He said an ongoing transformation programme "continued at pace" and the group has "soft launched" residential products on its new lending platform, with a savings migration "progressing well".
"We have seen strong competition in the retail savings market and elevated retail funding costs so far this year. We have made the conservative assumption that these pressures will not ease, if that is the case, we now expect net interest margin for 2026 to be 215bps to 220bps."
OSB now expects a return on tangible equity of around 12.5%, while warning that continued pressure could moderately affect its mid-teens target for 2027.
Panmure Liberum analyst Abid Hussain said more expensive new retail funding had outweighed business written at sustainable margins.
Impairments increased to £16 million from £2 million, coming in worse than expected. Hussain said this appeared to be a normalisation from an unusually low base rather than evidence of borrower stress, as arrears declined to 1.6% from 1.7%.
The interim dividend was increased to 11.8p from 11.2p.
