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OneSavings, Charter Court post bigger loan books ahead of merger

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(Reuters) – OneSavings Bank Plc reported a bigger loan book for the first three months of the year on Wednesday, but said it is seeing slightly lower margins.

The bank, set to create one of Britain’s biggest specialist lenders in a merger with Charter Court Financial Services Group Plc, said its loan book rose 5% for the quarter ended March 31, ahead of the lender’s expectations.

Net loans and advances grew by 448 million pounds to 9.4 billion pounds, boosted by commercial and residential lending.

“It is still early in the year, and given the continued uncertainty surrounding Brexit, there is no change in our outlook for 2019,” OneSavings Chief Executive Officer Andy Golding said.

Separately, Charter Court reported a 17.9% rise in its loan book to 6.5 billion pounds for the quarter.

Charter Court’s common equity tier 1 ratio – a gauge of a bank’s financial strength – was 16.3%.

Charter Court and OneSavings announced their intention to merge in March, in a move that will bolster their defences in the face of uncertainty around Brexit.

The marriage marks a major step towards consolidation among “challenger banks” and gives the firms more heft to take on the biggest lenders in Britain.

The deal is also happening as the housing market in London softens after Britain voted to leave the European Union three years ago.

The sector faces a string of tax and regulatory changes, while margins remain constrained in a mortgage market where competition is high and growth elusive.

OneSavings, founded in 2011 as part of a private equity buyout of Kent building society KRBS, has been well protected so far by its focus on providing mortgage credit to professional landlords and tightened lending criteria for financing smaller developments.

(Reporting by Noor Zainab Hussain and Pushkala Aripaka in Bengaluru; Editing by Shounak Dasgupta, Bernard Orr)

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