Demand for buy-to-let mortgages has boosted challenger bank OneSavings’ profits, reflecting its strategy of targeting buy-to-let landlords.
Shares in the FTSE 250-listed Kent based challenger bank, OneSavings, rose 12 per cent this week on the back of results which showed its focus on buy-to-let lending is paying off.
The bank specialises in buy-to-let mortgages and loans to small businesses, and saw its underlying pretax profits jump 36% to £64.6million for the six months to the end of June. Over the year the bank’s loan book increased by 10 per cent reaching £5.4billion.
Although it’s share price had decreased by 30% this year, and plunged by 24% on the Brexit vote in June, reflecting all the uncertainty before and after the vote. The 12% rise defies this, with a bank spokesperson stating that a focus on professional buy-to-let investors makes the bank “better positioned to withstand market volatility”, given the stability of renting demand and its tightening of lending criteria for smaller property investors and small businesses.
The bank, which has so far concentrated its lending in London and the South East, confirmed that it would lower its standard variable rate by the same amount as the Bank of England’s base rate to 0.25%, from September this year.
These results sent shares in rival challenger banks north, with Shawbrook, Aldermore and Virgin Money all adding an average of 5%.
Bank profits from Buy-to-Let Success https://t.co/WWXCqJy5Pa
— LandlordZONE (@LandlordZONE) August 26, 2016