OneSavings Bank PLC (LON:OSB) shares tanked 20% as the challenger bank said it could not issue any financial guidance due to the unprecedented uncertainty from the coronavirus pandemic.
In the first set of final results since completing the merger with fellow mid-sized lender Charter Court last summer, the FTSE 250 bank was confident enough to recommend the payment of a final dividend of 11.2p per share, meaning the full payout was increased 10% to 16.1p.
READ: Banks face flood of bad debt but “have capacity” to deal with coronavirus shock
However, despite coming into 2020 with strong capital levels and a “robust pipeline, strong application levels in our core businesses and stable margins”, the FTSE 250 group said the situation around coronavirus made it “too soon to say what the impact will be”.
Last year ended with a CET1 capital ratio of 16%, up from 13.3% a year before, which it said reflected the benefits of the merger and “the capital generation capability of the business to support significant growth through profitability”.
Proforma adjusted profit before tax increased 8.6% to £381.1mln, with statutory PBT up up 14% to £209.1mln even though net interest margin reduced by 20 basis points to 2.86%.
Analysts at Shore Capital said the CET1 level was much better than expected, presumably benefited from combination accounting, which “puts the group in a very strong position to weather the upcoming economic challenges, in our view”.
At Peel Hunt they said there was of course a “lack of visibility over future performance, which, as for other banks, will likely weigh on the share price until greater clarity emerges”.