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OneSavings, Charter Court grow loan books in first result after merger

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By Reuters

(Reuters) – OneSavings Bank Plc <OSBO.L> and Charter Court Financial on Wednesday said they expect to report bigger loan portfolios for the full year, as both the lenders’ loan books swelled in their first set of results after completing their merger.

Lending franchises of both banks were performing “very well”, OneSavings said. The lender has focused on providing mortgage credit to professional landlords and tightened lending criteria, which has shielded it from major impact of Brexit.

However, margins at the banks have been pressured due to uncertainty ahead of Britain’s planned exit from the European Union, which is weighing on their mortgage business as homes values dip and consumers put off major spending amid slack sentiments.

The bank said its annual net interest margin, a key measure of profitability, would roughly be flat compared to last year, while Charter Court expects it to be slightly lower than the first half.

“We remain cognisant of the continued uncertain macroeconomic and political outlook, however we believe that as a combined business we are well placed to continue to deliver on our strategy and generate attractive shareholder returns through the cycle,” OneSavings Chief Executive Andy Gilding said.

2020 could pose challenges as possible interest rates cuts by the Bank of England could hurt banks’ margins as the central bank looks to ward off an economic slowdown and ease headwinds as the fourth Brexit deadline of Jan. 31 approaches.

OneSavings’ loan book rose 15% to 10.3 billion pounds in the nine months ended Septa. 30, with Charter Court reporting a 4% growth in the same period.

OneSavings continues to expect to grow its loan books in the high-teens rate for 2019, while Charter Court’s portfolio is forecast to grow in the high-twenties range.

(Reporting by Pushkala Aripaka in Bengaluru; Editing by Aditya Soni)