(Reuters) - OSB Group said on Thursday that its 2024 profit margins would be broadly flat year-on-year due to rising funding costs and a subdued mortgage market, sending the British lender's shares down as much as 29.5%.
The bank's net interest margin (NIM) forecast - a closely-watched measure of how much it makes from lending - is also below current market estimates, according to RBC and Peel Hunt (LON:PEEL) analysts. For 2023, the company reported underlying NIM of 251 basis points.
The weakness reflects higher costs of funding, OSB said, as UK banks start to repay the Bank of England more than 180 billion pounds ($230.44 billion) it doled out to support pandemic-era lending, and mortgage pricing delays amid high interest rates and higher swap costs.
The company's annual underlying profit before tax also dropped 28% to 426 million pounds, while its net loan book growth slowed to 9% from 12% in 2022. OSB expects its loan book to grow by about 5% this year.
Shares were last down 19% to a three-month low of 373 pence at 0854 GMT, topping losses on London's midcap index.
The company also announced a new 50 million pounds share buyback over the next six months.
($1 = 0.7811 pounds)