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OSB Group PLCAnnual Report and Accounts 2024
2024
Annual Report
and Accounts
OSB Group is a leading specialist
mortgage lender, primarily focused
on carefully selected sub-segments
of the UK mortgage market.
Our continued success is
driven by strong relationships
with all our stakeholders.
For more information see pages 133 - 135
Our Purpose
is to help our
customers,
colleagues and
communities
prosper.
Our Values
are what our
colleagues stand
by, and support
us in achieving
our Purpose.
CAUTIONARY STATEMENT: This Annual Report contains forward-looking statements that involve inherent risks and uncertainties.
Actual results may differ materially from those contained in such forward-looking statements. See Forward-looking statements on page 265.
OSB GROUP PLC | Annual Report and Accounts 2024
Strategic Report
Governance Financial StatementsOverview Appendices
Overview
02 Highlights
05
06
Why invest in OSB Group?
Investor update
09 Chair’s statement
Strategic Report
11 Market review
14 Our business model
20 Chief Executive Officer’s statement
24 Strategic framework
27 Segments review
37 Key performance indicators
40 Financial review
46 Risk review
54 Principal risks and uncertainties
70 Viability statement
72 Sustainability Report
100 Task Force on Climate-related
FinancialDisclosures
116 Non-financial and sustainability
information statement
Governance
118 Board of Directors
120 Executive Committee
122 Corporate Governance Report
136 Group Nomination and
Governance Committee Report
143 Group Audit Committee Report
150 Group Risk Committee Report
154 Group Remuneration and People
Committee Report
158 Directors’ Remuneration Report
180 Statement of Directors’ Responsibilities
182 Directors’ Report: other information
Appendices
265 Forward-looking statements
266 Independent Assurance Statement
268 Independent Limited Assurance Report
271 Alternative Performance Measures
274 Independent auditor’s reasonable
assurance report
275 Glossary
276 Company information
What’s inside…
Financial Statements
187 Independent Auditor’s Report
197 Consolidated Statement of
Comprehensive Income
198 Consolidated Statement of
Financial Position
199 Consolidated Statement of
Changes in Equity
200 Consolidated Statement of Cash Flows
201 Notes to the Consolidated
Financial Statements
257 Company Statement of Financial Position
258 Company Statement of Changes in Equity
259 Company Statement of Cash Flows
260 Notes to the Company
Financial Statements
For the latest investor relations content
www.osb.co.uk/investors
02-116
PAGES
117-185
PAGES
186-263
PAGES
264-275
PAGES
OSB GROUP PLC | Annual Report and Accounts 2024 01
Strategic Report Governance Financial StatementsOverview Appendices
2024
2024
2024
2024
2024 2024
2024
2024
2024
2023
2023
2023
2023
2023 2023
2023
2023
2023
Gross new lending
-16%
Net loan book
-2%
-2%
Net interest margin
-10bps
-21bps +4ppt
Cost to income
+3ppt
Loan loss ratio
+24bps
+25bps
£25.1bn
221bps
39%
230bps
37%
£25.1bn
£25.8bn
231bps
36%
251bps 33%
£25.7bn
Profit before tax
+12%
+4%
2024
2024
2023
2023
£418.1m
£442.9m
£374.3m
£426.0m
(4)bps
20bps
(5)bps
20bps
£4.0bn
£4.7bn
Highlights
Key:
2024
2023
Underlying
2024
Underlying
2023
Financial KPIs
Throughout the Strategic report,
the Key performance indicators
(KPIs) are presented on a statutory
and an underlying basis.
Management believes that the underlying
KPIs provide a more consistent basis for
comparing the Group’s performance
betweenfinancial periods.
Underlying KPIs exclude acquisition-related
items. In 2024, the acquisition-related items
were fully amortised and therefore, from
2025 the Group’s results will be presented
ona statutory basis only.
For definitions of financial KPIs, see pages
37-39, for a reconciliation of statutory to
underlying KPIs, see the Appendix.
OSB GROUP PLC | Annual Report and Accounts 202402
Strategic Report Governance Financial StatementsOverview Appendices
Return on equity
+1ppt
no change
Women in senior management
1
+3ppt
Reduction in direct emissions
2
41%
Ordinary dividend
+5%
Basic EPS
(pence per share)
+17%
+10%
Savings customer satisfaction –
NetPromoter Score
+1
2024
2024
2024
2024
2024
2024
2024
OSB
2024
2023
2023
2023
2023
2023
2023
2023
2023
15%
36%
101.83 tCO
2
e
16%
77.6p
+72
82.2p
14%
33%
171.44 tCO
2
e
16%
66.1p
+71
no change
CCFS
2024
2023
+62
+62
75.0p
2024
2023
Common Equity Tier 1 (CET1) ratio
+20bps
16.3%
16.1%
33.6p
32.0p
Highlights continued
Financial KPIs continued Non-financial KPIs
The Group’s external auditor performed an independent reasonable
assurance review of certain KPIs as marked with the symbol 
–seethe Appendix for the auditor’s assurance report.
1. Employees at grades A (Executive Director)
tograde E (including function heads with senior
direct reports or employees in specialist roles
ofasenior nature).
2. Direct emissions are Scope 1 and Scope 2 using
market-based methodology.
OSB GROUP PLC | Annual Report and Accounts 2024 03
Strategic Report
Governance Financial StatementsOverview Appendices
04
Our culture
Together we prosper
At OSB Group we are working hard to create a positive, collaborative and supportive environment.
Our Purpose
To help our customers, colleagues and communities prosper.
By that we mean more than just helping them to be more financially well off. We want them to flourish,
thrive and succeed in their personal and professional goals.
Our Vision
To be recognised as the UK’s
number one choice of specialist bank,
through our commitment to exceptional
service, strong relationships and
competitive propositions.
By working Stronger together, Taking ownership,
Aiming high and Respecting others, we will more
powerfully achieve our own goals, as well as those
ofourstakeholders.
But we are not just focused on lending and savings
(though that is what we do and what we are great
at); we are a business that cares about leaving things
better than we found them. We are passionate about
Stewardship, which encourages us to give back to our
communities, supporting those who are vulnerable or
less fortunate, embracing diversity and finding new
ways to protect our environment.
It does not matter where we are working from: a
branch, on the road, in the office or from home. It does
not even matter that we are not all in the same country.
We are clear about what we want to achieve, we know
how we want to achieve it and we are absolutely
determined to build upon the foundations we have
created so our customers, shareholders, communities
and colleagues can prosper.
Our Values
Our Values are the principles
that support our Purpose.
Stronger together
We collaborate to create a culture in which we all share
goals and values. We aim to build trust, respect and
openness across the Group.
Aim high
We set the bar high for ourselves and our customers.
They are the ones who know when we are going above
and beyond and remember the promises we keep.
Stewardship
We act with conscience and take social,
environmental and ethical factors into consideration
when making decisions.
Take ownership
We take ownership of what needs to be done as
well as our personal and professional development,
helping to achieve the collective goals of the business.
Respect others
We treat others fairly and communicate in a way
that respects an inclusive and diverse culture,
listening to all voices and ensuring opinions are
offered and heard.
We will achieve our goals by
working Stronger together,
Taking ownership, Aiming high
and Respecting others...
Strategic Report Governance Financial StatementsOverview Appendices
OSB Group plc | Annual Report and Accounts 2024
Why invest?
Underlying net
loan book
£25.1bn
2023: £25.7bn
Ordinary dividend
per share
33.6p
2023: 32.0p
Underlying return
on equity
16%
2023: 16%
OSB Group is a leading specialist mortgage lender; what makes
us different is ourunique business model andour consistent returns.
For more information
seepages27-36
For more information
seepage 16
For more information
seepages118-121
For more information
seepages72-99
Leader in specialist
sub-segments
OSB Group is a leading
mortgage lender in
professional Buy-to-Let and
specialist Residential market
sub-segments.
The Private Rented Sector
has experienced an
expansion in the last 20
years boosted by a lack of
affordable housing in the
UK; the Group’s share of new
Buy-to-Let business was
c.6% in 2024. As a result of
the £1.25bn securitisation
executed in December 2024,
the Group’s net loan book
decreased by 2% in2024.
Our competitive
advantage
The Group focuses on
market sub-segments where
its specialist approach to
underwriting offers a key
source of differentiation.
The Group offers a unique
breadth of complementary
yet differentiated lending
propositions to its
customers, ranging from
speedy decisions for ‘off
the peg’ solutions from its
Precise brand, through to
structuring unique ‘bespoke’
solutions through its
InterBaybrand.
Consistent returns
Since its IPO, the Group has
consistently generated an
attractive return on equity
(RoE), driven by strong
growth in its specialist
market sub-segments and
sound riskmanagement.
In 2024, the underlying and
statutory RoEs were 16% and
15%, respectively.
Highly capital-
generative
The Group is strongly
capitalised with a proven
track record of capital
generation through
profitability. This allows it to
support growth as well as
distributions toshareholders.
The Board has recommended
a final dividend of 22.9
pence per share and a
£100m share repurchase
programme over the next
twelve months.
Experienced
leadership team
The Group is managed by
an experienced and well-
respected leadership team
and governed by a Board
with a broad range of skills
and expertise. The leadership
team has a long track record
in operational management
and in delivery of sustainable
returns forshareholders.
Focus on
sustainability
The Group progressed its
commitment to net zero
1
and
the Net Zero Banking Alliance
by publishing interim
science-based targets for
2030. In 2024, wereduced
our direct emissions by
41% compared to previous
year through targeted
investment and proactive
estatemanagement.
We strive to make the Group
a more diverse and inclusive
organisation and, in the
year, the proportion of
female colleagues in senior
roles increased to 36%,
towards our target of 40%
by the end of 2026.
1. Net zero is defined as a reduction
in Scope 1, 2, and 3 emissions to
zero or to a residual level that is
consistent with reaching net zero
emissions at the global or sector
level in 1.5°C aligned pathways.
Strategic Report
Governance Financial StatementsOverview Appendices
OSB Group plc | Annual Report and Accounts 2024 05
06
Investor update
Group’s
medium-term
aspirations
Along with the 2024 preliminary results,
the Group updated the market on its
medium-term aspirations.
The Group’s medium-term aspirations for 2027-29 are the outcome of the Board and
management teams’ key strategic decisions. The Group will focus on the goal of being the
number one UK specialist lender for the future. It will be human led and technology underpinned
targeting optimal lending growth that prioritises returns and loan book diversification. Central
tothis is our transformation programme that will deliver long term competitive advantage for
theGroup.
Transition period
2025 Guidance 2026 Direction 2027–2029 Aspiration
Loan book growth
Low single
digit
Modestly
higher than
2025
Mid single digit if returns
meet our requirements
NIM
c.2.25%
Similar
levels to
2025
Loan book
diversification
Buy-to-Let to comprise ≤ 60%
of the net loan book
Administrative
expenses
c.£270m
Modestly
higher than
2025
Gradual improvement to low
30s% cost to income ratio
and positive jaws
RoTE
Low teens
Mid teens
Distributions
5% dividend per share growth
per year and commitment to
return excess capital
Progressive dividend per
share and commitment to
return excess capital
Near term guidance and medium-term aspirations
Strategic Report
Governance Financial StatementsOverview Appendices
OSB Group plc | Annual Report and Accounts 2024
Buy-to-Let
to comprise
≤60% of the
net loan book
2027-2029
Mid-teens RoTE
The Group’s strategy to deliver higher returns
is supported by its key strengths:
• Intermediary strategy - trusted leadership
with intermediaries, offering a single point
entry to access the Group’s diversified
product range, through its 100+sales
relationship managers with deep
productexpertise
• Deep experience and credit expertise
in a range of higher yielding specialist
segments - with increasing diversification
and ability to grow, delivering strong risk
adjusted returns
• Structurally lower cost base – focus on
delivering cost efficiency and an increasing
proportion of colleagues based in our fully
integrated subsidiary OSB India
• Building our bank for the future -
entering the third year of a five-year
transformation programme optimising
operations for a digital future, which will
transform the experience of intermediaries,
brokers and colleagues
• Improving the broker and customer
experience – Combining our successful
intermediary lending strategy with our
transformation programme to deliver our
optimised lending growth plan with a
higher yielding, diversified loan book
This will maintain the Group’s leading
position in specialist lending, delivering
margin expansion, positive cost jaws,
improved returns and enhanced
distributionsto shareholders.
2025 and 2026 will be transition years
duringwhich the Group will continue to
invest, while lower margin mortgages
will continue roll-off. From 2027, with the
transformation largely complete, the Group
will be set on a trajectory of attractive growth
with a higher yielding mix, improved returns
and commitment to returning excess capital
to shareholders.
Group’s gross loans as at 31 December
Buy-to-Let Residential Commercial Asset & development finance Bridging & other
Investor update continued
Transformation programme
The Group completed two years
of its five-year transformation
programme with c.£60m spend
to-date, of which 68% was
capitalised. The Group expects to
spend a further c.£130m until the
programme completes in 2027, of
which 33% will be capitalised.
70%
21%
5%
2% 2%
20292024
OSB GROUP PLC | Annual Report and Accounts 2024 07
Strategic Report
Governance Financial StatementsOverview Appendices
Strategic
Report
09 Chair of the Board’s statement
11 Market review
14 Our business model
20 Chief Executive Officer’s statement
24 Strategic framework
26 Strategy in action -
Transformationprogramme
27 Segments review
37 Key performance indicators
40 Financial review
46 Risk review
54 Principal risks and uncertainties
70 Viability statement
72 Sustainability report
100 Task Force on Climate-related
FinancialDisclosures
116 Non-financial and sustainability
information statement
OSB GROUP PLC | Annual Report and Accounts 202408
Strategic Report
Governance Financial StatementsOverview Appendices
Chair of the Board’s statement
Total ordinary dividend,
pence per share
33.6
2023: 32.0
Share repurchase
£100m
2023: £100m
I met with a number of shareholders during
the year. Two messages were consistent in
those meetings:
• to reduce potential volatility from effective
interest rate (EIR)
• to share a longer-term view of the
Group’s strategic direction and the likely
shareholder returns.
We listened carefully.
On EIR, management completed a forensic
analysis of our past policies and executed
a range of actions. The result is that the
remaining potential impact from customer
behaviour on profitability and net interest
margin fell to a business-as-usual range.
Many of you will have attended our Investor
update where the senior management team lay
out our future plans for the Group, including:
• guidance and medium-term aspirations;
• clarity on dividend and return of surplus
capital; and
• an update on investment and future
benefits as we continue with our
technology and business transformation.
The Group published its inaugural Climate
Transition Plan in April as it continued
to progress on the path to achieving the
long-term goal of net zero greenhouse gas
emissions by 2050.
Sarah Hedger, a long-serving Non-Executive
Director has advised the Board that she will
not be seeking re-election and will retire at
the Group Annual General Meeting on 8 May
2025. The Board of OSB Group and I would
like to thank her for her contribution over the
years. I am delighted that Victoria Hyde was
confirmed as the Chief Financial Officer and
Executive Director, and with the influence she
is already having on the business.
The Group remains well-capitalised and has
met its interim MREL requirement of 22.5%
of risk-weighted assets, including regulatory
buffers, following a further £400m issuance
ofsenior debt in January.
The Board is committed to returning
excess capital to shareholders and I am
pleased to announce that following the
successful completion of the two £50m
share repurchases during 2024, a further
£100m share repurchase programme over
the next twelve months will commence on
14 March 2025. In addition, the Board has
recommended a final dividend of 22.9 pence
per share for 2024, which together with the
interim dividend of 10.7 pence per share,
represents a progressive, total ordinary
dividend for the year of 33.6 pence per
share(2023: 32.0 pence), an increase of 5%.
2024 proved to be more stable from a macroeconomic
viewpoint compared to 2023. House prices were relatively
stable, affordability improved and we were able to offer
savers good returns. Nonetheless, demand across the
mortgage market remained subdued. The Group focused
on pricing discipline to maintain overall returns.
09
OSB GROUP PLC | Annual Report and Accounts 2024
Strategic Report
Governance Financial StatementsOverview Appendices
Chair of the Board’s statement continued
We are continuing to invest in our
transformation and have successfully
deliveredthe first two years of the programme,
vital to ensuring the long-term sustainability
of the business, with more customer-facing
launches to come.
The Board is confident that our focused
strategy and plans will deliver our medium-
term aspirations, with capital generation
supporting further capital returns to our
owners, and a progressive dividend per share.
The Directors are bound by their
duties under section 172(1)(a) to (f)
of the Companies Act 2006 and the
manner in which these have been
discharged; in particular their duty
to act in the way they consider, in
good faith, promotes the success of
the Company for the benefit of its
shareholders as a whole.
Pages 133-135 in the Corporate
Governance Report demonstrate
how the Board has engaged with the
Group’s key stakeholders (customers,
intermediaries, colleagues,
shareholders, suppliers, regulators
and the local communities in which
we are located). Examples of strategic
decisions which have impacted the
Group’s key stakeholders are set out
on page 127.
The Group met its interim MREL
requirement, including regulatory buffers,
in January 2024 following a further
£400m issuance of senior debt…
Along with our Board, our Executives
and most importantly the nearly 2,500
colleaguesin our teams, I am looking
forwardto the future with renewed
confidence and enthusiasm.
David Weymouth
Chair of the Board
12 March 2025
COMPANIES ACT 
SECTION  COMPLIANCE
STATEMENT
OSB GROUP PLC | Annual Report and Accounts 202410
Strategic Report Governance Financial StatementsOverview Appendices
2024
2024
2023
2023
2022
2022
UK Buy-to-Let gross advances
+14%
UK average house price inflation
4.6%
£34bn
4.6%
Market review
The UK housing and
mortgagemarket
Higher interest rates, the rising cost of
living and a return to house price growth all
contributed to ongoing affordability pressures
which constrained growth in the year.
There was heightened economic and political
uncertainty in the lead-up to the UK General
Election which took place in July; this influenced
potential purchase and refinancing decisions in
the first half of the year.
Property transactions reached 1.1m in the
year (2023: 1.0m)
1
, representing a year-
on-year increase of 8%, while mortgage
approvals grew by 28% to £263bn (2023:
£205bn)
2
and total UK gross mortgage
lending increased by 7% to £242bn in 2024
(2023: £226bn).
2
However, this is measured
relative to 2023 which saw the lowest level of
activity for nearly a decade following a steep
rise in inflation and interest rates.
Inflationary pressures continued to subside
during the year, with the Consumer Price
Index falling into line with the Bank of
England’s 2% target in May 2024, for the
first time since July 2021, before rising
again in the fourth quarter.
3
The reduction
followed the Bank of England’s actions to
curb inflation and in 2024 two base rate cuts
were implemented, reducing the base rate
from 5.25% at the start of the year to 4.75%
in November.
Activity in the housing and mortgage markets improved
modestly in 2024, however it remained subdued relative
to historical averages.
Source: UK Finance, Feb 2025
Source: ONS, Feb 2025
These measures contributed to an easing
of mortgage interest rates in the second
half of the year, however rates remained
significantly higher than those available for
much of the last decade. According to the
Bank of England, the average quoted interest
rate on a two-year fixed rate residential
mortgage at 75% loan to value was 4.60% in
December 2024, down from a peak of 6.22%
in July 2023, however this is still more than
double the average quoted rate in March
2022 of 2.14%.
4
With interest rates trending downwards,
market sentiment improved towards the
end of the year. The December 2024 RICS
Residential Market Survey noted modestly
positive responses on metrics relating to new
buyer enquires and agreed sales, signalling
astrengthening of buyer demand.
5
£30bn
-1.4%
+7. 7%
£57bn
11OSB GROUP PLC | Annual Report and Accounts 2024
Strategic Report
Governance Financial StatementsOverview Appendices
Market review continued
This strength in demand was supported by
growth in household incomes and spending
power, with real wages remaining in positive
territory for 18 consecutive months as of
October 2024, when the annual growth rate
reached 2.5%.
6
Nominal wage growth outpaced
house price growth for 22 consecutive
months from January 2023, thereby easing
affordability pressures for prospective buyers.
Increasing demand also exerted upward
pressure on house prices, which returned to
growth in April 2024 following eight months
of contraction. According to the ONS, house
prices grew by 4.6% in the twelve months
to December, with the average house price
reaching £268,600 in September 2024,
higher than the previous peak of £265,700
inSeptember 2022.
7
The UK savings market
Savings balances in the UK increased by
5% in 2024, to close the year at £2,286bn,
compared to a 1% contraction a year earlier,
with the household savings ratio increasing
during the year indicative of an easing in cost
of living pressures.
8,9,10
Maintaining cash on hand was a key theme
for 2024 with non-interest bearing current
account balances increasing by 18% during the
year, while tax efficient ISA products continued
to attract deposits, with a 15% increase
inbalances.
10,11
It also demonstrated that these multi-property
landlords are more likely to finance their
portfolio through a Buy-to-Let mortgage than
those with fewer properties. Nearly two-thirds
of landlords with a Buy-to-Let mortgage
owned more than one property compared
with 46% of landlords with no borrowing. It is
these experienced, professional landlords that
form the Group’s core customer base.
Landlords have contended with a changing
economic and regulatory landscape in recent
years. This trend continued in 2024 as rising
costs continued to put pressure on net yields
and uncertainty increased ahead ofthe
General Election in July.
The Renters’ Rights Bill is a key piece of
legislation that will define how landlords
operate in the future PRS.
Pricing of one year fixed rate bonds decreased
significantly during the year, with average
rates falling by 89bps for these products
and by 99bps for one year fixed rate ISAs. In
contrast, average pricing on instant access
accounts fell by only 22bps during the year,
11
indicating that deposit-taking institutions did
not fully pass on the Bank of England’s 50bps
of base rate cuts during the year.
At the end of December 2024, 2,117 savings
products were promoted in the market, a
significant increase from the 1,918 accounts
advertised a year earlier, and the total number
of savings providers increased from 140 to 148
during 2024.
12
The Group’s lending segments
Buy-to-Let
The Private Rented Sector (PRS) comprised
4.7m households in 2023-24, according to
the UK Government’s English Housing Survey,
having grown by 52% since 2008-09, and
represented 19% of all households.
13
The English Private Landlord Survey,
commissioned by the UK Government,
was published in December 2024 and
demonstrated the important role that
professional, multi-property landlords play
within the sector. The survey showed that
17% of landlords owned five or more rental
properties and represented 49% of all
tenancies in England.
14
The Bill was introduced by the incoming
Labour Government in September 2024 and
revived many of the measures proposed in the
original Renters’ (Reform) Bill introduced by
the Conservative Government in May 2023.
These included a wide-ranging set of measures
to improve standards in the PRS, such as the
abolishment of Section 21 evictions and the
application of a decent home standard. It also
features some changes that were not contained
in the original Bill, including the application of
Awaab’s Law to the PRS which would require
landlords to investigate and remediate reported
health hazards within a specified timeframe.
Data from the ONS showed that rental
growth remained strong throughout the
year, reaching a peak annual growth rate
of 9.2% in March and remaining at 9.0%
in the twelvemonths to December.
15
The Renters’ Rights Bill is a
key piece of legislation that
will define how landlords
operate in the future PRS.
OSB GROUP PLC | Annual Report and Accounts 202412
Strategic Report Governance Financial StatementsOverview Appendices
Market review continued
The RICS Residential Market Survey
suggested that rental rise was primarily
driven by a continued imbalance between the
demand and the supply of rental properties
which has persisted over several years. The
latest RICS survey reported weakening but
positive demand throughout most of 2024,
while the supply indicator relating to new
landlord instructions remained firmly in
negative territory.
5
The English Private Landlord Survey asked
landlords which factors influenced their
decision to increase rents for their most
recent new letting and found that 79% of
landlords had set rents in line with those
in the local area, while 29% mentioned
mortgage costs as a reason for putting up
rents and 18% mentioned tax changes.
The Group’s own Landlord Leaders research
found that 53% of landlords experienced
an increase in the cost of maintenance or
repairs in the last twelve months, while 50%
also experienced higher costs of insurance
and mortgage servicing. Overall, 98% of
respondents saw their costs increase, and
49% of those who reported increasing
costs said that they had managed this by
increasing rents.
Landlords were also impacted by the
changes to Stamp Duty Land Tax (SDLT) that
were announced by the Chancellor in the
Autumn Budget. Effective from 31 October
2024, the surcharge on additional property
purchases was raised from 3% to 5%.
16
The concerns regarding rising costs and tax
burdens, increasing legislation and the impact
on returns led a limited number of landlords
to exit the market. Research conducted by
Pegasus Insight on behalf of the Group showed
that landlords with fewer than four Buy-to-Let
mortgages were the least likely to return a profit
and the least likely to acquire new properties
in the next 12 months.
17
Likewise, the Group’s
Landlord Leaders research found that 33% of
non-professional landlords were considering
their position in the sector compared to 25%
ofprofessional landlords.
UK Finance reported that Buy-to-Let mortgage
balances outstanding increased by 1% to
£299bn during the year (2023: £296bn).
18
The gross advances in the Buy-to-Let market
reached £34.4bn in the twelve months to
December 2024, an increase of 14% compared
with £30.0bn in 2023. There was a 19% increase
in purchases to £10.1bn (2023: £8.5bn) while
remortgage completions increased by 12% to
£23.1bn (2023: £20.6bn). Product transfers
also remained a popular option for landlords
reaching the end of their initial term, however
volumes fell by 1% to £46.0bn (2023: £46.6bn)
and they represented 67% of all Buy-to-Let
refinancing activity (2023: 70%).
Residential
Residential gross mortgage advances to
homeowners reached £206bn in the 12 months
to December 2024 according to UK Finance,
an 11% increase compared to £186bn in 2023.
Within this total, purchase activity increased by
21% to £146bn (2023: £121bn), while remortgage
volumes fell by 8% to £60bn (2023: £65bn).
19
Remortgage volumes in the year were likely
dampened by the continued popularity of
product transfers within an existing lender
which are not included in gross lending totals.
Product transfers totalled £218bn in the twelve
months to December 2024, a9%year-on-year
decrease (2023: £240bn), and represented
78% of all regulated refinancing activity
during the year (2023:79%).
20
Commercial
CBRE data for ‘all property’ showed that on
average, commercial property capital values
increased by 2% in 2024. This represented
average capital growth of 4% in 2024 for
the retail sector, 5% average growth for the
industrial sector, while average capital values
of offices declined by 3% in the year.
21
According to CoStar Research, annual
investment in new office space of just £7.8bn
in 2024 was close to a historical low, with
activity picking up in the third quarter of
the year. Average office yields stabilised
at around 8.5% in 2024, their highest level
in 27years, having peaked at c.9% at the
beginning of the year.
22
CoStar Research also reported that retail
demand remained subdued amid rising
business costs and faltering retail sales that
deterred many retailers from expanding, while
some struggling retailers entered administration.
Nonetheless, according to CoStar, retail
investment surged towards the end of
2024 with £7.6bn of retail property traded
nationally in 2024, well above the value
transacted a year ago.
23
The industrial property sector continued
to benefit from structural factors such as
e-commerce, supply chain reconfiguration and
the push towards net-zero carbon emissions.
In 2024, net absorption was negative, however
the national vacancy rate remains low at
around 5% according to CoStar. Tenant
appetite was stronger for the highest
energy-efficiency rated buildings, offering
support to rental growth. However, sector-wide
rent gains have decelerated to 4.3% year-on-
year as vacancies began to rise.
24
Residential development
A lower level of activity in the residential
development sector reflected the subdued
wider housing market as developers reduced
the number and scale of projects in response to
the higher cost of financing and lower demand
from homebuyers. New build completions
were 4% lower in the first nine months of 2024
compared to the first nine months of 2023,
whilst new build starts were down 34%.
25
1. HM Revenue and Customs: Monthly Property
Transactions, Jan 2025.
2. Bank of England, Jan 2025.
3. Office for National Statistics; Consumer Price Inflation,
Jan 2025.
4. Bank of England, Quoted household interest rates,
Jan2025.
5. RICS Residential Market Survey, Dec 2024.
6. Office for National Statistics; Average Weekly Earnings,
Jan 2025.
7. Office for National Statistics, House Price Index, Feb2025.
8. BoE, Sterling retail deposits (VRJX), Jan 2025.
9. Bank of England, Sterling Household Deposits
(LPMB5S9, LPMZ3TT, LPMZ3TZ, LPMB8S4), Feb2025.
10. ONS, Household Saving Ratio, Dec 2025.
11. Building Societies Association, Savings interest Rates,
Feb 2025.
12. Moneyfacts, Treasury Reports on UK Savings Trends,
Dec 2023 to Dec 2024.
13. UK Government: English Housing Survey 2023 to 2024.
14. UK Government: English Private Landlord Survey 2024.
15. ONS: Price Index of Private Rents, Jan 2025.
16. UK Government, Autumn Budget 2024.
17. Pegasus Insight Landlord Trends Q4 2024.
18. UK Finance, BTL mortgages outstanding, Feb 2025.
19. UK Finance, new mortgages and affordability, Feb2025.
20. UK Finance, refinancing and releveraging mortgages,
Feb 2025.
21. CBRE, UK Monthly Index Snapshot, Jan 2025.
22. CoStar Research, Office national report, Jan 2025.
23. CoStar Research, Retail national report, Jan 2025.
24. CoStar Research, Industrial national report, Jan 2025.
25. ONS, UK House building: permanent dwellings started
and completed, Jan2025.
13OSB GROUP PLC | Annual Report and Accounts 2024
Strategic Report
Governance Financial StatementsOverview Appendices
Our business model
We are a leading specialist mortgage lender, supported by diversified and stable
funding platforms and operating through a unique and cost-efficient operating model.
Sophisticated funding platforms
Our lending is predominantly funded by retail deposits sourced through our Kent
Reliance (KR) and Charter Savings Bank (CSB) franchises. The Group’s issuance of
high-quality residential mortgage-backed securities, access to the Bank of England’s
funding schemes and issuance of MREL qualifying debt provide funding diversification.
Unique operating model
The Group operates customer service functions in multiple
locations, including our wholly-owned subsidiary OSB India.
The Group also has expertise in credit assessment, case
management, in-house real estate expertise and collections.
Specialist mortgage lending
The Group’s complementary underwriting platforms support OSB’s bespoke
and experience-based manual approach and CCFS’s automated approach
to loan assessment, offering attractive solutions for each of our borrowers.
Gross loans
Retail 86%
Bank of England 5%
Wholesale 4%
Debt 4%
ILTR
1
1%
Group’s funding channels as at
31 December 2024
Competitive advantages
Brands and heritage
Both KR and CSB are award-winning
franchises. KR has over 160 years of
heritage and nine branches.
Capital markets expertise
Our strategy is to be dynamic and
nimble with issuance plans providing
cost-efficient term funding.
Competitive advantages
Relationships with intermediaries
We invest time to develop strong
relationships with mortgage brokers who
distribute our products to customers.
Breath of propositions
Our diverse brands allow us to tailor
our lending proposition to better meet
the needs of our borrowers.
Statutory retail deposits
£23.8bn
2023: £22.1bn
26
securitisations since
2013 worth
£13.5bn
2023: 23 securitisations
worth £11.4bn
Statutory loans
to customers
£25.1bn
2023: £25.8bn
Gross new lending
£4.0bn
2023: £4.7bn
Statutory cost
to income ratio
39%
OSB savings
customer NPS
+72
CSB savings
customer NPS
+62
Value we
create
Read more onpage 16 Read more onpages 17-18
Read more onpage 19
1. Indexed Long-Term Repo.
Competitive advantages
Outstanding customer service
OSB India puts customer service
at the heart of everything it does,
demonstrated by our excellent
customer Net Promoter Scores (NPS).
Deep credit expertise
Our deep credit expertise and
strong data analytical capabilities
offer valuable insights and
learning from the performance
ofmortgageproducts.
21%
Residential
70%
Buy-to-Let
5% Commercial
4% Other
Residential
development 1%
OSB
OSB
Second charge 1%
CCFS
CCFS
Bridging 1%
Asset finance 1%
12%
9%
45%
25%
OSB GROUP PLC | Annual Report and Accounts 202414
Strategic Report Governance Financial StatementsOverview Appendices
Our business model continued
For shareholders
Our proven business strategy and capital
generation capability support consistent
capital returns including a progressive
dividend per share.
For savers
We offer fair and transparent products that
meet our customers’ needs and recognise
loyalty with special rates for existing savers.
Our commitment to excellent customer
service is reflected in our strong NPS scores.
For intermediaries
Our Sales teams have strong relationships with
intermediaries, helping them to understand our
products. We structure bespoke solutions for
our borrowers, delivering clear, accurate and
efficient decisions that are recognised for their
quality, fairness and consistency.
For employees
We strive to create a positive,
collaborative and inclusive environment
for all colleagues. We invest in training,
development and employee engagement
activities and offer competitive
remuneration and attractive benefits.
For the environment
We are committed to environmental
stewardship, reducing our impact on the
environment, supporting the transition to
alow-carbon economy and achieving net
zero across our value chain.
For our communities
We support our national and local
community partnerships through
a variety of volunteering initiatives,
fundraising events and sponsorships.
Statutory
basic EPS
7 7.6p
2023: 66.1p
Reduction in
direct emissions
4
41%
Electricity purchased
in the UK from
renewable tariffs
100%
2023: 99%
Group
sponsorships
anddonations
over
£394k
2023: over £288k
Ordinary dividend
pershare
33.6p
2023: 32.0p
OSB customer
retention
1
90%
2023: 91%
CCFS customer
retention
1
85%
2023: 85%
OSB broker
NPS
2
+57
2023: +57
CCFS broker
NPS
2
+52
2023: +57
Women in senior
management roles
3
36%
2023: 33%
1. Retention is defined as average maturing fixed contractual retail deposits that remain with the Group on their maturity date.
2. OSB broker NPS relates to Kent Reliance brokers and CCFS broker NPS relates to Precise brokers.
3. Employees at grades A (Executive Director) to grade E (including function heads with senior direct reports or employees in specialist roles of a senior nature).
4. Direct emissions are Scope 1 and Scope 2 using market-based methodology.
Number of Group
employees promoted
in 2024
327
2023: 183
Value we create
15OSB GROUP PLC | Annual Report and Accounts 2024
Strategic Report
Governance Financial StatementsOverview Appendices
Our business model explained
Specialist mortgage lending
The complementary strengths and enhanced customer propositions
from the Group’s diverse brands make us a leading specialist lender
in the UK. The Group reports its lending business under two segments:
OneSavings Bank and Charter Court Financial Services.
OneSavings Bank
segment
Through our brands we tailor our lending
proposition to the specific needs of our
borrowers. Under our Kent Reliance and
InterBay brands all of our loans are
underwritten by experienced and skilled
underwriters, supported by technology
to reduce the administrative burden on
underwriters and mortgage intermediaries.
We refer to scorecards and bureau data
to support our skilled underwriter loan
assessments. We consider each loan on its
own merits, responding quickly and flexibly
to offer an attractive solution for each of
our customers. No case is too complex
for us, and for those borrowers with more
tailored or larger borrowing requirements,
our Transactional Credit Committee meets
three times each week, demonstrating our
responsiveness to customer needs.
Charter Court Financial
Services segment
Our Precise brand uses an automated
underwriting platform to manage mortgage
applications and to deliver a rapid decision-
in-principle, based on rigorous lending
policy rules and credit scores. The platform
is underpinned by extensive underwriting
expertise, enabling identification of new
niches and determining appropriate
lendingparameters.
It allows for consistent underwriting within
the Group’s risk appetite. Quick response
times help the Group to compete for the
‘first look’ at credit opportunities, while a
robust manual verification process further
strengthens the disciplined approach to
credit risk.
Unique to each customer, we structure the
deal to the specifics of an application
Commercial
Semi-commercial
Complex Buy-to-Let
Asset finance
Residential developmental
finance
Experience-based manual underwriting
allows us to assess more complex and
larger mortgage requirements
Buy-to-Let
Residential
If the case fits the policy then we will
issue a speedy agreement-in-principle
Buy-to-Let
Residential
Bridging
‘Off the peg’
‘Tailored’
‘Bespoke’
Complementary brand propositions
OSB GROUP PLC | Annual Report and Accounts 202416
Strategic Report Governance Financial StatementsOverview Appendices
Our business model explained continued
Sophisticated funding platforms
The Group’s lending business is supported by diversified and
stable funding platforms. This enables cost of funds optimisation,
while prudently managing funding and liquidity risks.
Retail savings
The Group is predominantly funded by
retail savings deposits sourced through two
brands: Kent Reliance and Charter Savings
Bank (CSB).
Kent Reliance is an award-winning retail
savings franchise with over 160 years of
heritage and nine branches in the South East
of England. It takes deposits online, while
CSB, a multi- award-winning retail savings
bank, offers its products online.
Both Banks have a wide range of savings
products, including easy access, fixed term
bonds, cash ISAs and business savings
accounts. CSB and Kent Reliance have
diversified their retail funding sources through
pooled funding platforms with a range of
products offered, including easy access,
longer-term bonds and non-retail deposits.
In 2024, our savings products received
industry recognition: Charter Savings Bank
won Best Overall Savings Provider for the
seventh year running from Personal Finance
Awards, Best Fixed Term Savings Provider
from YourMoney.com awards and Cash ISA
Provider of the Year from Moneynet Personal
Finance Awards. YourMoney.com Personal
Finance Awards named Kent Reliance as Best
Cash ISA Provider.
Kent Reliance’s proposition for savers is
simple: to offer consistently good-value
savings products that meet customer needs
for cash savings with loyalty rates for
existingcustomers.
CSB’s philosophy is to maintain and develop
its award-winning business, offering
competitively priced savings products.
Operating with an agile, nimble approach,
CSB can respond quickly to the funding
requirements of the business.
Securitisation platforms
The Group accesses the securitisation
market to provide attractive long-term
wholesale funding to complement its retail
deposit franchise and to optimise its funding
mix. Securitisations also provide efficient
access to commercial and central bank
repofacilities.
The Group’s strategy is to be fleet-of-foot
and dynamic rather than deterministic with
its securitisation issuance plans. This enables
it to maximise opportunities with repeat
issuances during periods of buoyant market
activity and to use other funding when the
market is less favourable.
Statutory retail deposits
£23.8bn
2023: £22.1bn
Securitisations
26
securitisations since 2013,
acrossOSB and CCFS, worth
£13.5bn
2023: 23 securitisations
worth £11.4bn
The Group is a programmatic issuer of high-
quality prime residential mortgage-backed
securities through the Precise Mortgage
Funding (PMF), Charter Mortgage Funding
(CMF) and Canterbury Finance securitisation
programmes. OSB has also issued three deals
of owner-occupied and Buy-to-Let acquired
mortgages via Rochester Financing since 2013.
The Group was an active participant in the
securitisation market in 2024, with three
transactions totalling £2.1bn, commencing
with PMF 2024-1, a £509m securitisation
of Buy-to-Let mortgages. The Group
issued another Simple, Transparent and
Standardised (STS) securitisation, CMF
2024-1, in May 2024 of £330m of owner-
occupied mortgages.
In December 2024, the Group issued PMF
2024-2, a £1.25bn securitisation of Buy-to-
Let mortgages. The Group sold its economic
interest in this transaction, resulting in the
derecognition of the underlying mortgages
from the Group’s balance sheet. PMF 2024-
2 was also notable for being the Group’s
first STS Buy-to-Let securitisation. These
transactions demonstrated the Group’s
ability to utilise its wholesale funding
programmes to deliver cost-efficient AAA-
rated funding.
The Group’s securitisations were well received by
investors in 2024 with further diversification in
the investor base.
In total, the Group has completed 26 securitisations
worth more than £13.5bn since 2013.
The Group has access to a secured warehouse
facility which provides access to funding on
a contingent basis secured on a portfolio of
residential mortgages. This facility was undrawn
at the yearend.
17OSB GROUP PLC | Annual Report and Accounts 2024
Strategic Report
Governance Financial StatementsOverview Appendices
The Group significantly expanded
its debt investor base.
Jens Bech, Group Commercial Director
Our business model explained continued
Other funding
Bank of England Schemes
The Group takes advantage of the Bank of
England’s funding schemes. Drawings under
the Term Funding Scheme for SMEs (TFSME)
reduced to £1.4bn as at 31 December 2024
from £3.3bn at the end of 2023, as the
Group repaid £1.9bn during the year. TFSME
borrowings provide four-year funding at
the BoE’s base rate of interest and are due
for repayment by October 2025. Drawings
under Index Long-Term Repo were £380.3m
as at 31 December 2024 (31December
2023:£10.1m).
Debt issuance
The Group was active in unsecured debt
issuance markets in January 2024, issuing
a further £400m of HoldCo senior MREL
qualifying debt securities. The trade was well
received by the primary issuance market and
the Group significantly expanded its debt
investor base as a result.
The Group’s bonds are actively traded in
secondary markets.
OSB GROUP PLC | Annual Report and Accounts 202418
Strategic Report Governance Financial StatementsOverview Appendices
Our business model explained continued
OSB India colleagues at the end of 2024
949
2023: restated 982
OSBI regretted attrition rate
3
12%
2023: 12%
Group colleagues at the end of 2024
2,498
2023: restated 2,506
Women in senior management roles
4
36%
2023: 33%
Reduction in direct emissions
5
41%
2024: 101.83 tCO
2
e
2023: 171.44 tCO
2
e
Electricity purchased in the UK
from renewable tariffs
100%
2023: 99%
Unique operating model
The lending and savings businesses operate through the
Group’s unique and cost-efficient operating model.
Customer service
The Group operates customer service
functions in multiple locations across the
UK including Chatham, Wolverhampton,
Fareham, London and Fleet. These, together
with our wholly-owned subsidiary OSB
India, help us deliver on our aim of putting
customers first.
The Group has proven collection capabilities
and expertise in case management and
supporting customers in financial difficulty.
This offers valuable insights into, as well
as the opportunity to learn from, the
performance of mortgage loan products.
We have deep credit expertise through strong
data analytical capabilities.
We deliver cost efficiencies through excellent
process design and management. We have
strong IT security and continue to invest in
enhancing our digital offering as customer
demand changes.
OSB India
OSB India (OSBI) is a wholly-owned
subsidiary based in Bangalore and
Hyderabad, India.
OSBI puts customer service at the heart
of everything it does and we reward
our colleagues based on the quality of
service they provide to customers, which
isdemonstrated by our excellent customer
Net Promoter Scores.
At OSBI, we employ highly talented and
motivated colleagues at a competitive
cost. We benchmark our processes against
industry best practice, challenging what
we do and eliminating customer pain points
as they arise. We continue to invest in
developing skills that enable highly efficient
service management, matching those to
business needs both in India and the UK.
Various functions are also supported
byOSBI, including Support Services,
Operations, IT, Finance and Human
Resources. We have a one team approach
between the UK and India. The employee
turnover in India remained stable with the
regretted attrition rate of 12%
1
for 2024
demonstrating strong culture and the
Group’s compelling employee proposition.
OSBI operates a fully paperless office –
all data and processing are in the UK.
ESG
We operate in a sustainable way, with key
Environmental, Social and Governance
considerations guiding our actions
anddecisions.
As a specialist lender, we have been long aware
of our responsibilities and the positive impact
we can make in society through our activities.
In April we published our Climate Transition
Plan, where we laid the foundations for
progressing towards our target of net zero
1
bythe end of 2050.
The Group strives to create a more diverse
and inclusive workplace and, with 36%
women in senior management roles in the
UK, we are on track to meet our 40% target
by the end of 2026. During the year we
introduced a range of new maternity and
family benefits in the UK to support our
employees who are parents and carers.
We also donated over £394k to charitable
causes in the year.
1. Net zero is defined as a reduction in Scope 1, 2, and 3
emissions to zero or to a residual level that is consistent
with reaching net zero emissions at the global or sector
level in 1.5°C aligned pathways.
2. Restated due to change in calculation methodology.
3. Employees electing to leave the Group by way of
resignation, excluding those retiring or resigning due
toformal performance or absence process.
4. Employees at grades A (Executive Director) to grade E
(including function heads with senior direct reports or
employees in specialist roles of a senior nature).
5. Direct emissions are Scope 1 and Scope 2 using market-
based methodology.
19OSB GROUP PLC | Annual Report and Accounts 2024
Strategic Report
Governance Financial StatementsOverview Appendices
OSB GROUP PLC | Annual Report and Accounts 202420
Strategic Report Governance Financial StatementsOverview Appendices
The housing market continued to display
subdued levels of activity in 2024, with
affordability pressures and lack of buyer
confidence caused primarily by political and
economic uncertainty. Against this backdrop,
the Group continued to assist property
investors and other borrowers with their
financing needs and to provide savers with
attractive options to deposit their savings.
I am proud that for 2023, we were ranked
the fourth largest Buy-to-Let lender in the UK
in terms of gross new lending.
1
The Group’s
share of new Buy-to-Let mortgages was c.6%
at the end of December 2024.
2
Financial performance
The Group delivered an underlying pre-
tax profit of £442.9m in 2024, up 4% from
£426.0m in 2023, with underlying basic
earnings per share of 82.2 pence (2023: 75.0
pence). On a statutory basis, profit before
tax increased to £418.1m and basic earnings
per share was 77.6 pence (2023: £374.3m and
66.1 pence, respectively).
The underlying and statutory net interest
margins reduced to 230bps and 221bps
(2023: 251bps and 231bps, respectively),
inclusive of a further EIR adjustment of
£15.9m, due to lower prevailing spreads to
SONIA from mortgages and deposits as
products written in prior years reached
maturity in addition to the cost of MREL
issuance as the Group serviced the £950m
of MREL qualifying debt raised since April
2023. These were partially offset by the non-
recurrence of the adverse EIR adjustment
recorded in 2023.
The Group focused on reducing EIR sensitivity
and the potential for future EIR adjustments
from changes in customer behaviour when
Precise Buy-to-Let customers reach product
maturity. In December, we completed a
securitisation of £1.25bn of Precise Buy-to-
Let mortgages which were derecognised from
the Group’s balance sheet, and in the second
half of the year we reviewed recent customer
behaviour and made the decision to reduce
the expected time that Precise borrowers
would spend on the reversion rate from five
to four months. Both of these actions, along
with the continued seasoning of the Precise
Buy-to-Let book, reduced the EIR sensitivity
and the potential for future EIR adjustments
bringing them to the business-as-usual level
seen before 2023.
We demonstrated again our strong cost
discipline and efficiency with core operating
expenditure across the UK and India
increasing by just 3%. Including investment
inthe Group’s transformation programme,
cost of redundancy and the new Bank of
England levy, the underlying administrative
expenses increased by 11% to £257.4m,
from£232.9m in 2023.
The results delivered by OSB Group in 2024
demonstrate the strong fundamentals which
underpin our business, and also the focused
and disciplined strategic choices made in the
year by the Board and management that will
shape the Group’s future.
Chief Executive Officer’s statement
...the Board has recommended a final
dividend per share of 22.9 pence to deliver
a progressive full year dividend per share of
33.6 pence, representing a payout ratio of
40% of underlying earnings and a £100m share
repurchase programme...
21OSB GROUP PLC | Annual Report and Accounts 2024
Strategic Report
Governance Financial StatementsOverview Appendices
In the fourth quarter, the Group implemented
a redundancy programme which affected
139 roles in the UK and India and resulted in a
£4.5m one-off expense.
We have completed two years of our
transformation programme, delivering
tangible results. We now have a scalable,
secure and high-performing infrastructure
with agile customer-focused architecture
in place ready to use in the future. This will
enable us to deliver the customer delivery
phase which will allow us to grow efficiently
in the long term. We launched a broker
app in July and a savings platform for new
Kent Reliance customers in October and in
2024 we expensed a total of £15m for the
transformation programme.
The management expense ratio increased
to 85bps, both on an underlying and
statutory basis (2023: 81bps and 82bps,
respectively), primarily due to higher non-
core administrative expenses. The cost to
income ratios also increased to 37% and 39%
on an underlying and statutory basis (2023:
33% and 36%, respectively).
The Group delivered an underlying return on
equity of 16% for 2024 (2023: 16%) and 15%
on a statutory basis (2023: 14%).
Our lending franchises
The UK mortgage market remained subdued
in 2024 although there was some increase in
gross mortgage lending, as reductions in the
Bank of England base rate and lower SONIA
swap rates were reflected in mortgage pricing.
UK Finance reported growth of 14% in gross
Buy-to-Let advances in the year compared
to the historically low levels of 2023. The
balance of outstanding Buy-to-Let mortgages
increased by 1% in the year, reflecting ongoing
affordability pressures faced by some
amateurlandlords.
2
The Group’s underlying and statutory net loan
book reduced by 2% to £25.1bn (31 December
2023: £25.7bn and £25.8bn, respectively),
as a result of the derecognition from the
balance sheet of £1.25bn of Precise Buy-to-Let
mortgages following the completion of the
securitisation in December. The underlying net
loan book would have increased by 2.5% since
31 December 2023 excluding this transaction,
supported by originations of £4.0bn in
the year (2023: £4.7bn). The planned
reduction in originations was the result of our
disciplined approach to pricing new business
and prioritising returns. We chose not to
follow as some lenders reduced their new
business spreads in certain sub-segments,
which led to an improved and attractive
blended front book margin for theyear.
Our focus on returns was supported
by a planned increase in diversification
with originations in our well-established,
higher yielding commercial and residential
development finance sub-segments up by
c.10% in the year to £446.8m and £189.1m
respectively, and bridging originations were
up by 5%. We continued to provide finance
to professional, multi-property landlords
investing and extending their portfolios
despite the subdued market activity.
Refinancing was robust in the year with 62%
of Buy-to-Let completions in Kent Reliance
represented by remortgages, unchanged
from 2023. For Precise, refinancing
decreased to 46% of completions from 48%
in the prior year, reflecting the Group’s
disciplined approach to mortgage pricing.
Chief Executive Officer’s statement continued
£443m
Underlying profit before tax
2023: £426m
1. UK Finance, Value of BTL gross lending, July 2024.
2. UK Finance, BTL mortgages outstanding and gross lending, February 2025.
8%
Underlying and statutory retail
deposits growth
2023: 12%
We chose not to follow as some lenders
reduced their new business spreads in certain
sub-segments which led to an attractive
blended front book margin for the year...
OSB GROUP PLC | Annual Report and Accounts 202422
Strategic Report Governance Financial StatementsOverview Appendices
Chief Executive Officer’s statement continued
Under Kent Reliance’s well-established
product transfer programme, Choices,
70% of borrowers refinanced with the
Group within three months of their fixed
rate product ending (2023: 78%).
The proportion of Precise borrowers who
chose another product with the Group
reduced to 51% from 66% in 2023, as
we continued to be selective in offering
retentionproducts.
The Group’s mortgage propositions
continued to win industry awards in 2024,
including Best Lender for Partnership with
Mortgage Club from L&G Mortgage Club
and Best Specialist Lender from Mortgage
Strategy Awards. Our relationships with
brokers were reflected in strong Net Promoter
Scores (NPS) of +57 for OSB and +52 for
CCFS (2023: +57 OSB and CCFS).
Credit and risk management
The Group has a high-quality loan book
with balances over three months in arrears
at 1.7% of the loan book at 31 December
2024 (31 December 2023: 1.4%). The
increase in arrears was largely due to the
impact of borrowers with maturing fixed
rate mortgages facing significantly higher
prevailing rates. We continued to work
closely with those needing assistance. As
anticipated, the Group’s arrears stabilised in
the fourth quarter of the year as affordability
for remortgaging customers improved.
The Group recorded an impairment credit of
£12.8m on an underlying basis representing
an underlying loan loss ratio of (5)bps for
the year (2023: £48.5m charge and 20bps,
respectively). The impairment credit resulted
largely from updated macroeconomic
scenarios, particularly an improvement
in house prices. The statutory impairment
credit was £11.7m, equivalent to a loan loss
ratio of (4)bps (2023: £48.8m charge and
20bps,respectively).
The weighted average loan to value (LTV) of
the Group’s loan book remained strong at
64% as at 31 December 2024, unchanged
from the end of 2023 and the weighted
average LTV of new business written by the
Group remained stable at 68%. Interest
coverage ratios remained strong at 186% for
OSB and 160% for CCFS, despite mortgage
rates remaining elevated, reflecting the
long-term income improvement enjoyed
by professional landlords (2023: 176% and
154%,respectively).
Multi-channel funding model
Retail deposits were the primary source of
funding for the Group and grew by 8% to
£23.8bn by the end of 2024 (31 December
2023: £22.1bn). The growth was due to our
consistently fair and attractively priced
products, as well as the continued repayment
of the TFSME drawings which were largely
replaced with retail funding.
We opened more than 237k new savings
accounts in the year, and retention rates
remained very high: 90% for customers
with maturing fixed rate bonds and ISAs at
Kent Reliance and 85% for Charter Savings
Bank (2023: 91% and 85%, respectively).
We maintained a strong focus on customer
service, which was reflected in Net Promoter
Scores for the year of +72 for Kent Reliance
and +62 for Charter Savings Bank (2023: +71
and +62, respectively).
We complemented funding from retail
deposits with our expertise in the wholesale
markets and, in 2024, the Group completed
three transactions: a £509m securitisation of
Buy-to-Let mortgages in February, a £330m
securitisation of owner-occupied mortgages
in May and a £1.25bn securitisation of
Buy-to-Let mortgages in December. All
securitisations saw strong demand from our
growing investor base which allowed us to
achieve attractive pricing. I am particularly
pleased with the December securitisation
which supported our proactive approach to
reducing the earnings volatility from revenue
recognition under the EIR methodology.
We will continue to access the wholesale
markets when conditions are favourable, to
benefit from diversification of funding and to
support a smooth transition as we continue
to repay TFSME drawings with a mix of
retail savings and wholesale funds. In 2024,
we repaid £1.9bn of TFSME funding with
the remainder due by October 2025. Asat
31 December 2024, the Group’s drawings
under this Bank of England facility reduced
to £1.4bn (31 December 2023: £3.3bn).
Capital management
The Group’s capital position, which reflects
the £100m of share repurchase programmes
announced in 2024, remained strong with a
CET1 ratio of 16.3% as at 31 December 2024
(31 December 2023: 16.1%).
We completed a review of the latest Basel 3.1
rules and we now estimate the impact on the
Group’s CET1 ratio as at 31 December 2024
to reduce to just over 1% when the rules are
introduced in January 2027. We continue
to target a CET1 ratio of 14%, post the
implementation of Basel 3.1.
The Group has met the interim MREL
requirement, plus regulatory buffers, of 22.5%
of risk-weighted assets, under the current
standardised rules and is now carrying a total
of £950m of MREL qualifying debt securities.
The Group has a deadline of 1 July 2026 to
meet the end-state MREL requirement. The
new implementation date for Basel 3.1 rules
has delayed the potential need for further
MREL debt issuance beyond2025.
23OSB GROUP PLC | Annual Report and Accounts 2024
Strategic Report
Governance Financial StatementsOverview Appendices
Chief Executive Officer’s statement continued
The Board has recommended a final dividend
per share of 22.9 pence (2023: 21.8 pence),
which together with the interim dividend
per share of 10.7 pence (2023: 10.2 pence),
results in a total ordinary dividend per share
for the year of 33.6 pence, an increase of 5%
(2023: 32.0 pence), in line with our stated
desire to deliver a progressive dividend
per share. When combined with the share
repurchase programmes announced in
2024, this represented a total return to
shareholders of £226m for the year.
The Board remains committed to returning
excess capital to shareholders and has today
announced a new £100m share repurchase
programme over the next twelve months to
commence on 14 March.
Investing in our future
2024 marked the second year of our
transformation programme building the
number one UK specialist lender of the
future. Good progress was made, delivering
tangible results with strong, scalable and agile
systems architecture in place that will form
the foundation for all new lending and savings
products that will be launched in 2025 and
beyond. Our first customer and broker facing
digital tools were launched and material
progress was made to deliver an enhanced
experience for our customers, partners and
colleagues as we introduce the next phases.
The Group is recognised for its efficiency
and excellent customer service and, in 2024,
we launched our pioneering, first-of-a-kind,
mobile app for intermediaries demonstrating
our commitment to mortgage brokers as
wellas a savings platform with self-serve
account management tools for new Kent
Reliance savers.
Our success is dependent on our nearly
2,500 employees across the UK and India
and it was with great regret that I announced
the redundancy programme in November
which affected 139 roles in the UK and India.
Throughout the year, we continued to
make progress against our sustainability
commitments, including the publication of
our inaugural Climate Transition Plan in April.
Direct emissions were 41% lower in 2024
compared to a year earlier, benefitting from
targeted investment and proactive estate
management. We also took steps to enhance
our data quality associated with the more
complex area of reducing financed emissions.
Our efforts to become a more diverse and
inclusive organisation were demonstrated in
36% of women in senior management roles
in the UK (2023: 33%), on track to meet our
target of 40% by the end of 2026.
Looking forward
The Group’s focus on writing a blend of
new business in segments where returns
are strong and sustainable was reflected in
the quality and mix of originations written
during 2024. In line with our optimised
lending growth plan and medium-term
aspirations, we have increased new lending
in diversified specialist segments where we
have deep credit expertise whilst maintaining
our leading position in the professional
Buy-to-Let segment. These segments,
which deliver strong risk-adjusted returns,
include commercial lending, asset finance,
development finance and bridging. Thiswill
have a positive impact on the Group’s
overall risk-adjusted returns as the back
book matures and is replaced with an
optimisedmix of new business.
We continued to leverage the strengths
inintermediary relationships and breadth
of individual customer needs that position
the Group as the UK’s number one
specialistlender.
Our transformation programme will position
us to scale in all our lending segments
and grow efficiently in the medium term.
It will also allow us to further enhance the
experience of dealing with OSB Group for
our lending and savings customers and
intermediary partners in 2025 and beyond.
Given our focus on returns, we anticipate
low single digit loan book growth in 2025
with similar dynamics to those seen in 2024.
NIM in 2025 is expected to be c.225bps,
as both lending spreads to SONIA and net
funding impacts on NIM began to stabilise
in the second half of 2024. We anticipate
c.£270m of administrative expenses in 2025,
as we continue to invest in our transformation
programme, with core costs increasing below
the rate of inflation. We anticipate a low
teens RoTE ratio in 2025 and we will continue
to prioritise returns to shareholders with
dividend increasing by 5%.
In 2026, we expect broadly similar dynamics
and we have today announced our medium-
term aspirations to provide further guidance
on the Group’s performance up to 2029, see
page 07.
The Group remains well-capitalised, with
strong liquidity and a high-quality secured
loan book. We remain focused on delivering
good outcomes for our stakeholders and
strong returns for our shareholders.
Andy Golding
Chief Executive Officer
12 March 2025
OSB GROUP PLC | Annual Report and Accounts 202424
Strategic Report Governance Financial StatementsOverview Appendices
Specialist mortgage lending
Be a leading specialist lender in our
chosen market sub-segments
Our goals
• Be the go-to specialist lender for intermediaries meeting
thebreadth of individual needs for their customers
• Achieve a diversified portfolio by targeting market
segments which offer attractive returns and higher yields
on a risk-adjusted basis
• Innovate to secure sustainable segment leadership
2024
• Originations were £4.0bn (2023: £4.7bn) in a subdued
market, with a c.10% increase in new business across our
well-established commercial and residential development
finance sub-segments
• Proportion of Buy-to-Let refinance completions remained
high at 62% under Kent Reliance and 46% under Precise
demonstrating a relative increase in new purchases
Looking forward
• Deploy scale and resources on new lending opportunities –
our optimal growth plan
• Deliver a broader, more agile product set
• Optimised and rapid pricing changes
Key risks
• Political and economic uncertainty affecting demand for
specialist mortgages and the appetite from professional
landlords to grow their portfolios
• Potential regulatory changes, including legislative focus on
Buy-to-Let and environmental regulation
• New specialist lenders entering the market
Focus on automated and experience-based
manual underwriting
Our goals
• High-quality decisions protecting the business
• Use deep credit expertise to deliver high-quality
lendingdecisions
• Provide a differentiated underwriting approach based on
the needs and characteristics of our customers; offering
both an automated approach and a skilled experience-
based manual underwriting capability and in-house real
estate expertise
• Deliver clear, accurate and efficient decisions recognised
by intermediaries for their quality and fairness
2024
• The Transactional Credit Committee met three times a
week to assist with more complex and larger new mortgage
applications and larger portfolio relationships
Looking forward
• Increase underwriting efficiency to better serve borrower
needs across complementary brands with a human-led
approach underpinned by technology
• Higher new business conversion
• Simplified, automated and digitised internal processes
Key risks
• Changing regulations for underwriting
• More complex underwriting requirements
• Difficulty in recruiting experienced underwriters
• Increasing intermediary demands
KPIs
Originations
£4.0bn
2023: £4.7bn
KPIs
Loan loss ratio
(4)bps
2023: 20bps
Our Vision is to be
recognised as the UK’s
number one choice of
specialist bank, through
our commitment to
exceptional service,
strong relationships and
competitive propositions.
Strategic framework
25OSB GROUP PLC | Annual Report and Accounts 2024
Strategic Report
Governance Financial StatementsOverview Appendices
Specialist mortgage lending continued Sophisticated funding platforms Unique operating model
Further deepen relationships and reputation
for delivery with intermediaries
Our goals
• Increase partner engagement in response to demand
• Be the go-to for intermediaries
• Offer lending brands complementary propositions
• Deliver bespoke solutions to meet intermediary and
customer needs
2024
• Single online broker registration enabled
• Launched a Precise broker mobile app
• Enhanced tools rolled out to Precise front end
Looking forward
• Simplified, automated and digitised customer-facing
process
• Enhanced speed to market from more agile product set
• Embedded technology and use of data
Key risks
• More complex underwriting requirements slowing
the process
• Speed of investment in technology solutions to ensure
thatthe Group can keep pace with market demands
• Competitive pressures and changing macroeconomic
conditions leading to peaks and troughs, affecting
service levels
Maintain stable, high-quality, diversified
fundingplatforms
Our goals
• Expertise in funding options
• Maintain resilient and diversified funding platforms to
support future growth, ensure that liquidity requirements
are met through the economic cycle and cost of funds
isoptimised
• Be primarily funded through attracting and retaining loyal
retail savings customers, whilst maintaining a sophisticated
securitisation funding programme and balance sheet
management capability
2024
• Opened over 237k new savings accounts across both
savings brands in 2024 (2023: 210k)
• Launched the savings platform for new KR customers
• Completed three securitisation transactions totalling
£2.1bn, including a £1.25bn trade under the PMF
programme that resulted in the derecognition of the
underlying Buy-to-Let mortgages
Looking forward
• Increase investment to further enhance customer
experience and servicing capabilities
• Benefit from the ability to execute structured balance sheet
management transactions
Key risks
• Competition in wholesale and retail markets as banks
repay their TFSME drawings
• Increased expectation for technology-based accounts
• Volatility of capital markets on demand and price
Leverage our unique and cost-efficient
operating model
Our goals
• Best-in-class customer service
• Have customer service at the heart of everything we do
• Maintain centres of excellence across existing locations
inChatham, Wolverhampton and in India
• Resilient technology with data science uplift
• Deliver cost efficiencies through excellent process design
and management
2024
• Maintained strong savings customer NPS of +72 for Kent
Reliance and +62 for Charter Savings Bank due to our
focus on customer service and transparent and fair
savings products
• Delivered one core banking system to host all products
and brands, with a resilient cloud platform
• Integrated with a number of fintech solutions
Looking forward
• Technology resilience to be enhanced and achieve
estatestandardisation
• Increasingly volume agnostic
• Deliver cost efficiencies and operational enhancements
by leveraging OSBI’s lending, savings and support
operations and capabilities
Key risks
• Need to achieve continuous service improvement as the
Group grows
• Increasing complexity from compliance with
changingregulation
• Maintaining operational resilience as the Group grows
KPIs
Savings accounts opened
over 237,000
2023: over 210,000
KPIs
Cost to income ratio
39%
2023: 36%
KPIs
OSB broker NPS
+57
2023: +57
CCFS broker NPS
+52
2023: +57
Strategic framework continued
OSB Group plc | Annual Report and Accounts 202426
Strategic Report Governance Financial StatementsOverview Appendices
The Group is recognised for its efficiency and
excellent customer service and in 2024 we
continued to invest to remain agile andnimble…
Investing in our future –
the Group’s transformation
programme
Strategy in action
Customers and brokers will see the benefits in
terms of ease of doing business with us day
to day, whether they are a savings customer,
broker or mortgage holder. Our new savings
customer will have the ability to open
and fund an account within minutes with
automated application decisioning and the
balance visible online. Brokers and borrowers
will benefit from a greater level of automated
verification, enabling more underwriter
specialism as the straightforward elements of
the process will be completed for them. The
scalable, secure high-performing platform
built on the cloud and improvements to data
will improve resilience, security and analytics.
We have established our core banking
system, which gives us a long-term resilient
architecture that can be adapted more easily
to future change. This will be leveraged as
the front end products are built.
Our investment philosophy is to develop
the technology underpinning the Group to
enable us to grow in an environment that has
higher digital expectations whilst not losing
the human touch.
It will deliver long-term competitive
advantage in customer, colleague and cost
metrics and will future-proof our technology.
2024 marked the second year of the Group’s
transformation programme and we continued
to deliver against the objectives that we set
at the start:
• to enhance the customer and
brokerexperience
• to improve the colleagues’ experience
andengagement
• to deliver scalability and agility.
We manage the programme under three
main pillars: lending, savings and cloud,
engineering and data.
Early in the year, we delivered an online broker registration
capability that enables the intermediaries to register for
business just once across a range of our brands.
In August, we launched our pioneering, first-of-a-kind, mobile
app for intermediaries for our Precise brand. The app has
many useful functionalities including affordability calculators,
real-time updates and most of all, allows brokers to work with
us on the move.
In October, the Group launched the first product on its new
savings platform to Kent Reliance customers. The platform
offers self-serve account management tools and allows
customers to sign up online in minutes.
2024 achievements
The #1 specialist lender
Originations
Gross loans
21%
Residential
70%
Buy-to-Let
OSB BTL
OSB Resi
CCFS BTL
CCFS Resi
27OSB GROUP PLC | Annual Report and Accounts 2024
Strategic Report Governance Financial StatementsOverview Appendices
The Group reports its lending business under two
segments: OneSavings Bank (OSB) and Charter
Court Financial Services (CCFS), a consolidated
view by product type is presented here.
Portfolio overview
2024
£m
2023
£m
Growth
%
Buy-to-Let 17,568.5 18,463.3 (5)
Residential 5,186.9 5,225.1 (1)
Commercial 1,356.0 1,095.7 24
Bridging 364.5 333.1 9
Asset finance . 222.7 42
Residential development 262.0 280.8 (7)
Second charge 165.8 218.1 (24)
Other 32.6 47.7 (32)
Gross loans 25,253.2 25,886.5 (2)
1. Restated to exclude asset finance.
Loans and advances to customers
5% Commercial
4% Other
Residential
development 1%
Second charge 1%
Bridging 1%
Asset finance 1%
Asset finance
19%
Residential
48%
Buy-to-Let
11% Commercial
22% Other
Residential
development
OSB Resi
OSB BTL
CCFS Resi
CCFS BTL
Bridging
13%
35%
6%
12%
5%
5%
12%
9%
45%
25%
13%
OSB GROUP PLC | Annual Report and Accounts 2024
Strategic Report
Governance Financial StatementsOverview Appendices
28
Proportion of professional,
multi-property landlords
Kent Reliance
91%
Weighted average
book LTV
73%
Average loan size
£440k
Loan book
£262.0m
Committed
£168.2m
Representing
2,162
residential units
+
Five-year fixed rate mortgages
KR
Precise
Completions represented
by refinance
KR
Precise
Weighted average
completion LTV
KR
Precise
Weighted average
interest cover ratio
KR
Precise
Borrowing via a limited
company
KR
79%
Precise
69%
Average loan size
Kent reliance
£255k
Precise
£190k
Weighted average completion LTV
2
KR
Precise
72%
63%
70%
73%
186%
160%
62%
46%
66%
63%
BUYTOLET RESIDENTIAL COMMERCIAL
BRIDGING
RESIDENTIAL DEVELOPMENT
Lending under the InterBay brand, reported
under OSB segment, it includes asset finance
Lending under the Precise brand,
reported under CCFS segment
Originations
£460m
Lending under the Heritable brand,
reported under OSB segment
Lending under Kent Reliance (KR) and Precise brands,
reported under OSB and CCFS segments, respectively
Completions in 2024
Customer retention
1
KR
Precise
Weighted average book LTV
KR
Precise
Net loan book
Lending under KR and Precise brands,
reported under OSB and CCFS
segments, respectively
Completions in 2024
Weighted average book LTV
2
KR
Precise
Net loan book
2. KR Residential sub-segment weighted average
LTVs include first and second charge lending.
1. Customers refinancing with the
Group within three months of their
fixed rate product ending.
67%
67%
48%
59%
70%
51%
Portfolio overview continued
Strategic Report
Governance Financial StatementsOverview Appendices
OSB GROUP PLC | Annual Report and Accounts 2024 29
Segments review
The following tables present OSB’s contribution to profit and loans and advances to customers
on a statutory basis:
Contribution to profit
For year ended 31 December 2024
BTL/SME
£m
Residential
£m
Total
£m
Net interest income 333.1 55.9 389.0
Other expense (2.9) (0.6) (3.5)
Total income 330.2 55.3 385.5
Impairment of financial assets 8.6 (5.7) 2.9
Contribution to profit 338.8 49.6 388.4
For year ended 31 December 2023
BTL/SME
£m
Residential
£m
Total
£m
Net interest income 394.4 79.4 473.8
Other expense (2.5) (0.6) (3.1)
Total income 391.9 78.8 470.7
Impairment of financial assets (36.9) (4.7) (41.6)
Contribution to profit 355.0 74.1 429.1
Loans and advances to customers
As at 31 December 2024
BTL/SME
£m
Residential
£m
Total
£m
Gross loans and advances to customers 13,155.8 2,283.2 15,439.0
Expected credit losses (90.5) (10.6) (101.1)
Net loans and advances to customers 13,065.3 2,272.6 15,337.9
Risk-weighted assets 6,592.6 1,040.3 7,632 .9
As at 31 December 2023
BTL/SME
£m
Residential
£m
Total
£m
Gross loans and advances to customers 12,175.1 2,334.2 14,509.3
Expected credit losses (102.4) (8.7) (111.1)
Net loans and advances to customers 12,072.7 2,325.5 14,398.2
Risk-weighted assets 6,117.9 1,068.4 7,18 6.3
The Group reports its lending
business under two segments:
OneSavings Bank andCharter
Court Financial Services.
OneSavings Bank
(OSB) segment
The OSB segment comprises two sub-segments:
BTL/SME
Buy-to-Let mortgages secured on residential property held for investment
purposes by experienced and professional landlords, commercial
mortgages secured on commercial and semi-commercial properties
held for investment purposes or for owner occupation, asset finance and
residential development finance to small and medium-sized developers.
Residential
First charge mortgages to owner-occupiers, secured against a
residentialhome and under shared ownershipschemes.
OSB GROUP PLC | Annual Report and Accounts 202430
Strategic Report Governance Financial StatementsOverview Appendices
Loans and advances to customers
31-Dec-2024
£m
31-Dec-2023
£m
Buy-to-Let 11,201.2 10,541.8
Commercial
1,356.0 1,095.7
Asset finance
316.9 222.7
Residential development
262.0 280.8
Funding lines
19.7 34.1
Gross loans and advances to customers
13,155.8 12,175.1
Expected credit losses
(90.5) (102.4)
Net loans and advances to customers
13,065.3 12,072.7
1. Restated to exclude asset finance.
Buy-to-Let/SME sub-segment
Gross loan book
£13,156m
2023: £12,175m
+8%
Net interest income
£333m
2023: £394m
-16%
Contribution to profit
£339m
2023: £355m
-5%
The Buy-to-Let/SME net loan book increased
by 8% to £13,065.3m, supported by
originations of £2,206.4m, up by 2% from
£2,163.7m in 2023 as the Group focused on
new lending in more specialist and higher
yielding sub-segments.
Net interest income in this sub-segment
decreased by 16% to £333.1m (2023:
£394.4m), due to mortgages redeeming
or switching faster onto lower prevailing
spreads as well as the continued recycling
of the fixed rate deposit book onto tighter
spreads. A favourable effective interest rate
(EIR) adjustment of £0.3m was recognised
fortheyear (2023: £0.1m adverse).
Other expenses were £2.9m and related to
losses from the Group’s hedging activities
(2023: £2.5m). The impairment credit of
£8.6m (2023: £36.9m charge) reflected
updated forward-looking macroeconomic
scenarios, in particular improved house
price outlook and the release of post-model
adjustments. Overall, the Buy-to-Let/SME
sub-segment made a contribution to profit
of£338.8m, a decrease of 5% compared with
£355.0m in 2023.
The Group remained highly focused on
the risk assessment of new lending, as
demonstrated by the average loan to value
(LTV) for Buy-to-Let/SME originations of
70%, which remained unchanged from
the prior year. The average book LTV in
this sub-segment
1
increased marginally
to 68%, with 4.5% of loans exceeding
90% LTV (31 December 2023: 67% and
4.0%,respectively).
Buy-to-Let
The Buy-to-Let gross loan book increased
by 6% to £11,201.2m at the end of December
2024 (31 December 2023: restated £10,541.8m)
benefitting from an increase in new purchase
activity. Originations reduced by 5% in the
year to £1,372.3m (2023: restated £1,444.9m).
The proportion of Kent Reliance Buy-to-
Let completions represented by refinance
remained unchanged from 2023 at 62%.
Product transfers remained popular, with
70% of existing borrowers choosing a new
product, under the Choices retention
programme, within three months of their
initial rate mortgage coming to an end,
however the Group was selective in offering
retention products (2023: 78%).
The Group’s new borrowers continued to
favour five-year fixed rate mortgages, which
represented 72% of Buy-to-Let completions
in 2024 (2023: 74%), while the majority of
existing customers transferring to a new
product at maturity preferred the flexibility
ofa shorter-term.
Landlords continued to optimise their
businesses from a tax perspective, with
92% of Kent Reliance mortgage purchase
applications coming from landlords
borrowing via a limited company (2023:
87%), and overall, professional, multi-
property landlords represented 91% of
completions by value for the Kent Reliance
brand in 2024, inline with the prior year.
The weighted average LTV of the Buy-to-Let
book as at 31 December 2024 was 67% with
an average loan size of £260k (31 December
2023: 66% and £255k). The weighted
average interest coverage ratio for Buy-to-
Let originations remained high during 2024
at 186% (2023: 176%) supported by reducing
mortgage interest rates and opportunities to
increase rents.
1. Buy-to-Let/SME sub-segment average weighted LTVs
include Kent Reliance and InterBay Buy-to-Let, semi-
commercial and commercial lending.
2. Restated to exclude asset finance.
Segments review continued
OSB segment continued
31OSB GROUP PLC | Annual Report and Accounts 2024
Strategic Report
Governance Financial StatementsOverview Appendices
Segments review continued
OSB segment continued
Commercial
Through its InterBay brand, the Group lends
to borrowers investing in commercial and
semi-commercial property, reported in the
Commercial total, and more complex Buy-to-
Let properties and portfolios, reported in the
Buy-to-Let total.
The gross loan book grew by 24% to £1,356.0m
in 2024 (31 December 2023: £1,095.7m)
supported by originations of £446.8m which
increased 10% from £405.6m in the prior
year. The Group focused on high-quality
commercial and semi-commercial business in
the year, launching a new, simplified semi-
commercial product range in January.
The weighted average LTV of the commercial
book was stable at 73%, and the average
loan size was £440k in 2024 (2023: 73%
and£410k).
InterBay Asset Finance, which predominantly
targets UK SMEs and small corporates,
financing business-critical assets, continued
to grow in 2024, adding to its high-quality
portfolio. The gross carrying amount under
finance leases increased by 42% to £316.9m
as at 31 December 2024 (31 December
2023:£222.7m).
Residential development
Our Heritable residential development
business provides development finance to
small and medium-sized residential property
developers. The preference is to fund house
builders which operate outside central
London and provide relatively affordable
family housing, as opposed to complex city
centre schemes where affordability and
control of construction costs can be more
challenging. New applications predominantly
represent repeat business from the team’s
extensive existing relationships. Heritable take
an exacting approach to approving funding
for new customers.
The residential development finance
gross loan book at the end of 2024 was
£262.0m, with a further £168.2m committed
(31 December 2023: £280.8m and £120.9m,
respectively). Total approved limits were
£623.3m, exceeding drawn and committed
funds due to the revolving nature of the
facilities, where construction is phased and
loans are redrawn as sales on the initially
developed properties occur (31 December
2023: £566.8m).
At the end of 2024, Heritable had
commitments to finance the development of
2,162 residential units, the majority of which
are houses located outside central London
orother major cities in England.
Funding lines
During the year, the Group maintained
a cautious risk approach focusing on
servicing existing customers. Total credit
approved limits as at the end of 2024 were
£44.4m with total gross loans outstanding
of £19.7m(31 December 2023: £197.1m and
£34.1m, respectively).
Buy-to-Let/SME sub-segment continued
OSB GROUP PLC | Annual Report and Accounts 2024
Strategic Report Governance Financial StatementsOverview Appendices
32
Segments review continued
OSB segment continued
Loans and advances to customers
31-Dec-2024
£m
31-Dec-2023
£m
First charge 2,181.2 2,199.1
Second charge 102.0 135.1
Gross loans and advances to customers 2,283.2 2,334.2
Expected credit losses (10.6) (8.7)
Net loans and advances to customers 2,272.6 2,325.5
1. Second charge mortgage book is in run-off.
Residential sub-segment
Other expenses of £0.6m (2023: £0.6m)
related to losses from the Group’s hedging
activities and the impairment charge of
£5.7m (2023: £4.7m) was largely due to
modelled IFRS 9 stage migration and an
increase in accounts with arrears. Overall,
contribution to profit from this sub-segment
reduced by 33% to £49.6m for the year
compared with £74.1m in 2023.
The average book LTV remained unchanged
from prior year at 48%, with only 1.5% of
loans with LTVs exceeding 90% (31 December
2023: 2.2%). The average LTV of new
residential originations increased to 66%
(2023: 62%) as a result of more mortgages
completing at LTVs of 80% and above in
theyear.
First charge
First charge originations under the Kent
Reliance brand reduced to £255.9m in the
year (2023: £342.2m) as the Group chose not
to offer mortgages at lower returns due to
heightened competition in the year. The gross
loan book was £2,181.2m as at 31 December
2024, broadly flat compared with £2,199.1m
in the prior year.
Net interest income in the Residential
sub-segment decreased by 30% to £55.9m
(2023:£79.4m) due to mortgages redeeming
or switching faster onto lower prevailing
spreads as well as the continued recycling
of the fixed rate deposit book onto tighter
spreads. Net interest income also included an
adverse EIR adjustment of £3.3m as a result
of cash underperformance compared to
expectations (2023: £1.0m favourable).
2. Residential sub-segment average weighted LTVs include first and second charge lending.
Gross loan book
£2,283m
2023: £2,334m
-2%
Net interest income
£56m
2023: £79m
-30%
Contribution to profit
£50m
2023: £74m
-33%
Strategic Report
Governance Financial StatementsOverview Appendices
OSB GROUP PLC | Annual Report and Accounts 2024 33
Segments review continued
Charter Court
Financial Services
(CCFS) segment
The CCFS segment comprises four sub-segments:
Buy-to-Let mortgages secured on residential property held for
investment purposes by both non-professional and professional
landlords, residential mortgages to owner-occupiers secured
against residential properties including those unsupported by the
highstreet banks and short-term bridging secured against residential
propertyin both the regulated and unregulated sectors.
The following tables present CCFS’ contribution to profit and loans and advances to
customers on an underlying basis, excluding acquisition-related items and a reconciliation
tothestatutory results.
Contribution to profit
For year ended
31 December 2024
Buy-
to-Let
£m
Residential
£m
Bridging
£m
Second
charge
£m
Other
£m
Total
underlying
£m
Acquisition-
related
items
£m
Total
statutory
£m
Net interest
income 189.5 92.6 13.9 3.1 2.5 301.6 (24.2) 277.4
Loss on sale
of financial
instruments – – – – (2.1) (2.1) – (2.1)
Other income – – – – 5.2 5.2 1.2 6.4
Total income 189.5 92.6 13.9 3.1 5.6 304.7 (23.0) 281.7
Impairment
of financial
assets 7.8 1.3 0.9 (0.1) – 9.9 (1.1) 8.8
Contribution
to profit 197.3 93.9 14.8 3.0 5.6 314.6 (24.1) 290.5
For year ended
31 December 2023
Buy-
to-Let
£m
Residential
£m
Bridging
£m
Second
charge
£m
Other
£m
Total
underlying
£m
Acquisition-
related
items
£m
Total
statutory
£m
Net interest
income 127.4 75.2 8.8 4.8 24.7 240.9 (56.1) 184.8
Other
(expense)/
income – – – – (3.8) (3.8) 6.4 (2.6)
Total income 127.4 75.2 8.8 4.8 20.9 237.1 (49.7 ) 187.4
Impairment
of financial
assets (5.0) (1.2) (0.7) – – (6.9) (0.3) ( 7.2)
Contribution
to profit 122.4 74.0 8.1 4.8 20.9 230.2 (50.0) 180.2
1. Other relates to net interest income from acquired loan portfolios as well as a loss on structured asset sales, feeincome
from third-party mortgage servicing and gains or losses on the Group’s hedging activities.
2. For more details on acquisition-related items, see Reconciliation of statutory to underlying results in the Financialreview.
OSB GROUP PLC | Annual Report and Accounts 202434
Strategic Report Governance Financial StatementsOverview Appendices
Segments review continued
CCFS segment continued
Loans and advances to customers
As at 31 December 2024
Buy-
to-Let
£m
Residential
£m
Bridging
£m
Second
charge
£m
Other
1
£m
Total
underlying
£m
Acquisition-
related
items
2
£m
Total
statutory
£m
Gross loans and
advances to customers 6,367. 3 3,005.7 364.5 63.8 12.9 9,814.2 – 9,814.2
Expected credit losses (20.5) (4.6) (0.4) (0.3) – (25.8) – (25.8)
Net loans and advances
to customers 6,346.8 3,001.1 364.1 63.5 12.9 9,788.4 – 9,788.4
Risk-weighted assets 2 ,687.8 1,355.8 205.7 28.7 4.8 4,282.8 – 4,282.8
As at 31 December 2023
Buy-
to-Let
£m
Residential
£m
Bridging
£m
Second
charge
£m
Other
1
£m
Total
underlying
£m
Acquisition-
related
items
2
£m
Total
statutory
£m
Gross loans and
advances to customers 7,92 1.5 3,026.0 333.1 83.0 13.6 11,377. 2 24.3 11,401.5
Expected credit losses (29.0) (5.4) (1.2) (0.2) – (35.8) 1.1 (34.7)
Net loans and advances
to customers 7,892.5 3,020.6 331.9 82.8 13.6 11,341.4 25.4 11,366.8
Risk-weighted assets 3,138.9 1,263.0 167.5 35.8 5.4 4,610.6 48.7 4,659.3
1. Other relates to acquired loan portfolio.
2. For more details on acquisition-related items, see Reconciliation of statutory to underlying results in the Financial review.
35
Strategic Report
Governance Financial StatementsOverview Appendices
OSB GROUP PLC  Annual Report and Accounts 2024
Segments review continued
CCFS segment continued
The proportion of remortgages decreased
to 46% of completions under the Precise
brand, demonstrating the relative strength
of purchase activity (2023: 48%). The Group
was selective in offering retention products,
leading to 51% of existing borrowers choosing
to switch to a new product within three
months of their initial rate mortgage coming
to an end (2023:66%).
Five-year fixed rate products continued
to be popular and accounted for 63% of
Precise completions, down from 67% in 2023,
as an increasing proportion of customers
elected to take shorter-term mortgages
in anticipation of falling interest rates.
Borrowing via a limited company made
up 69% of Buy-to-Let completions in 2024
(2023: 68%). The proportion of loans for
specialist property types, including houses of
multiple occupation and multi-unit properties
represented 24% of completions in this sub-
segment (2023: 21%).
Underlying loans and advances to customers
31-Dec-2024
£m
31-Dec-2023
£m
Buy-to-Let 6,367.3 7,921.5
Residential 3,005.7 3,026.0
Bridging 364.5 333.1
Second charge 63.8 83.0
Other
2
12.9 13.6
Gross loans and advances to customers 9,814.2 11,37 7.2
Expected credit losses (25.8) (35.8)
Net loans and advances to customers 9,788.4 11,341.4
1. Second charge mortgage book is in run-off.
2. Other relates to acquired loan portfolio.
Research conducted by Pegasus Insight in
the fourth quarter of 2024, found that 77%
of landlords reported strong rental demand
from prospective tenants in the regions where
they currently let property and that rental
yields exceeded 6% in the third quarter of
2024, the highest level recorded in ten years.
The weighted average LTV of the loan book
in this segment decreased marginally
to 67% (2023: 68%) largely due to the
December securitisation and deconsolidation
transaction. The new lending average LTV
was 73% with an average loan size of £190k
(2023: 71% and £190k, respectively).
The weighted average interest coverage ratio
for Buy-to-Let originations increased to 160%
in 2024 (2023: 154%).
Underlying net interest income in this sub-
segment increased to £189.5m compared
with £127.4m in the prior year, primarily as
aresult of the non-recurrence of the adverse
EIR adjustment recognised in 2023. It was
partially offset by mortgages redeeming or
switching faster onto lower prevailing spreads
as well as the continued recycling of the
fixed rate deposit book onto tighter spreads.
TheGroup recognised an adverse EIR
adjustment of £8.2m relating to a reduction
in the average expected time that Precise
borrowers would spend on the reversion rate
from five to four months before refinancing,
based on observed customer trends. In
2023, a 12-month reduction in the average
expected time borrowers would spend on
the reversion rate led to an adverse EIR
adjustment of £139.5m.
This sub-segment recognised an impairment
credit of £7.8m (2023: £5.0m charge)
reflecting updated forward-looking
macroeconomic scenarios, in particular
improved house price outlook and the release
of post-model adjustments. On an underlying
basis, Buy-to-Let made a contribution to
profit of £197.3m, compared with £122.4m in
the prior year, with the increase largely due
to the non-recurrence of the adverse EIR
adjustment. On a statutory basis, the Buy-
to-Let sub-segment made a contribution to
profit of £179.2m (2023: £82.1m).
Gross loan book
£9,814m
2023: £11,377m
3
-14%
Net interest income
3
£302m
2023: £241m
+25%
Contribution to profit
3
£315m
2023: £230m
+37%
3. Underlying.
CCFS underlying net loan book reduced
by 14% to £9,788.4m at the end of 2024
(31 December 2023: £11,341.4m) largely
reflecting the £1,249.9m securitisation and
deconsolidation transaction in December.
Originations in the CCFS reduced by 32% to
£1,491.4m, from £2,186.8m in the prior year,
reflecting the Group’s disciplined approach
to lending.
CCFS Buy-to-Let sub-segment
Originations in the Buy-to-Let sub-segment
through the Precise brand decreased in
2024 to £516.7m (2023: £1,006.0m) as
the Group chose not to offer mortgages
at lower returns due to heightened
competition. The underlying gross Buy-
to-Let loan book decreased by 20% in
the year to £6,367.3m from £7,921.5m at
the end of 2023 largely as a result of the
£1,249.9m December securitisation and
deconsolidationtransaction.
OSB GROUP PLC | Annual Report and Accounts 202436
Strategic Report Governance Financial StatementsOverview Appendices
Segments review continued
CCFS segment continued
CCFS Residential sub-segment
The gross loan book in the CCFS’ Residential
sub-segment remained broadly flat
at £3,005.7m as at 31 December 2024
(31 December 2023: £3,026.0m). Originations
reduced to £514.6m (2023: £743.6m) as
the Group chose not to offer mortgages at
lower returns due to heightened competition
in the year. The Group continued to focus
on individuals underserved by high street
lenders and broadened its offering in May
with the addition of one-year fixed rate and
lifetime tracker products.
The average loan size in this sub-segment
was £160k (31 December 2023: £160k) with
an average LTV for new lending of 63%
and the book LTV of 59%, both unchanged
compared to 2023.
Underlying net interest income increased
to £92.6m compared with £75.2m in 2023,
primarily as a result of the non-recurrence
of the adverse EIR adjustment recognised
in the prior year. It was partially offset by
maturing mortgages redeeming or switching
faster onto lower prevailing spreads as well
as the continued recycling of the fixed rate
deposit book onto tighter spreads. The Group
recognised an adverse EIR adjustment of
£4.6m relating to a reduction in the average
expected time that Precise borrowers would
spend on the reversion rate from five to
four months before refinancing, based on
observed customer trends. In 2023, the
adverse EIR adjustment of £43.0m related
to a 12-month reduction in the average
expected time borrowers would spend on
thereversion rate.
The Residential sub-segment recorded an
impairment credit of £1.3m (2023: £1.2m
charge) due to updated forward-looking
macroeconomic scenarios, in particular
improved house price outlook. Overall, the
Residential sub-segment made a contribution
to profit of £93.9m on an underlying basis
and £87.4m on a statutory basis (2023:
£74.0m and £59.5m, respectively).
CCFS Bridging sub-segment
Short-term bridging originations grew by 5%
to £460.1m (2023: £437.2m) as the Group
focused on building a pipeline of high-
quality, high-return business. Thegross
loan book in this sub-segment grew by
9% to £364.5m as at 31 December 2024
(31 December 2023:£333.1m).
Underlying net interest income increased
by 58% to £13.9m (2023: £8.8m) and
an impairment credit of £0.9m was
recognised for the year (2023: £0.7m
charge). Thebridging sub-segment made
acontribution to profit of £14.8m in 2024
onan underlying basis compared with
£8.1min 2023 and £14.3m on a statutory
basis (2023:£6.9m).
Key:
2024
2023
Underlying
2024
Underlying
2023
2024
2023
£4.0bn
£4.7bn
-10bps
-21bps
2024
2024
2023
2023
221bps
230bps
231bps
251bps
Net interest margin (NIM)
Definition
NIM is defined as net interest income as a
percentage of a 13-point average of interest
earning assets (cash, investment securities,
loans and advances to customers and credit
institutions). It represents the margin earned
on loans and advances and liquid assets after
swap expense/income and cost of funds.
2024 performance
Statutory and underlying NIM reduced, as the
benefit of the non-recurrence of the adverse
EIR adjustment recognised in 2023 was
more than offset by lower prevailing spreads
to SONIA from mortgages and deposits,
as products written in prior years reached
maturity and additional MREL issuance.
+3ppt
+4ppt
2024
2024
2023
2023
39%
37%
36%
33%
Cost to income ratio
Definition
Cost to income ratio is defined as
administrative expenses as a percentage
oftotal income. It is a measure of
operationalefficiency.
2024 performance
Statutory and underlying cost to income ratios
increased as a result of higher administrative
expenses as the Group’s continued investment
in the transformation programme, as well
as redundancy costs and the new Bank of
England levy.
Key performance indicators
Throughout the Strategic report, theresults and the
Key performance indicators (KPIs) are presented on
a statutory and an underlying basis.
Management believes that the underlying
results and KPIs provide a more consistent
basis for comparing the Group’s
performance between financial periods.
Underlying results and KPIs for 2024 and
2023 exclude acquisition-related items.
In 2024, the acquisition-related items were
fully amortised and therefore, from 2025
the Group’s results will be presented on a
statutory basis only.
For a reconciliation of statutory results to
underlying results, see page 45.
The Group’s external auditor performed an
independent reasonable assurance review
of certain KPIs as marked with the symbol
– see the Appendix for the auditor’s
assurance report.
Definition
Gross new lending is defined as gross new
lending before redemptions.
2024 performance
Gross new lending decreased in the year
reflecting the subdued mortgage market and
theGroup’s disciplined approach to writing
new business.
-16%
Gross new lending
37OSB GROUP PLC | Annual Report and Accounts 2024
Strategic Report
Governance Financial StatementsOverview Appendices
+5%+3bps
+4bps
2024
2024
2023
2023
85bps
85bps
82bps
81bps
2024
2023
33.6p
32.0p
Ordinary dividend per share
(pence per share)
Management expense ratio
+25bps
2024
2024
2023
2023
(4)bps
(5)bps
20bps
20bps
+24bps
Loan loss ratio
+17%
+10%
2024
2024
2023
2023
77.6p
82.2p
66.1p
75.0p
Basic EPS
(pence per share)
Key performance indicators continued
Definition
Dividend per share is defined as the sum of
the recommended final dividend per share
and any interim dividend per share for
theyear.
2024 performance
The Board has recommended a final dividend
of 22.9 pence per share, which together
with the 2024 interim dividend of 10.7 pence
represents a total ordinary dividend of 33.6
pence per share.
For calculation of the final dividend,
seetheAppendix.
Definition
Management expense ratio is defined as
administrative expenses as a percentage
of a 13-point average of total assets. It is a
measure of operational efficiency.
2024 performance
Statutory and underlying management
expense ratios increased in the year as a
result of higher administrative expenses
reflecting the Group’s continued investment
in the transformation programme, as well
as redundancy costs and the new Bank of
England levy.
Definition
Loan loss ratio is defined as expected credit
losses as a percentage of a 13-point average
of gross loans and advances. It is a measure
of the credit performance of the loan book.
2024 performance
Statutory and underlying loan loss ratios
were favourable in the year, largely due to
improved macroeconomic scenarios and
a reduction in post-model adjustments,
partially offset by an increase in provisions
for accounts in arrears, changes in borrowers’
profiles as they transitioned through
impairment stages and loan book growth.
Definition
Basic EPS is defined as profit attributable
to ordinary shareholders, which is profit
after tax and after deducting coupons
on AT1 securities, gross of tax, divided by
the weighted average number of ordinary
sharesin issue.
2024 performance
Statutory and underlying basic EPS
increased due to higher profit after tax
and a lower number of shares in issue, post
the £100m share repurchase programme
completed in the year.
OSB GROUP PLC | Annual Report and Accounts 202438
Strategic Report Governance Financial StatementsOverview Appendices
+1ppt +20bps
No change
+1
No change
OSBCCFS
2024
2024
2024
2023
2023
2023
16.3%
+72
16.1%
+71
2024
2024
2023
2023
15%
16%
14%
16%
Savings customer satisfaction
– Net Promoter Score
CRD IV Common Equity
–Tier1 capital ratio
Return on equity
+62
+62
Definition
The NPS measures customers’ satisfaction
with services and products. It is based
on customer responses to the question of
whether they would recommend us to a
friend. The response scale is 0 for absolutely
not to 10 for definitely yes. Based on the
score, a customer is a detractor between
0 and 6, a passive between 7 and 8 and a
promoter between 9 and 10. Subtracting the
percentage of detractors from promoters
gives an NPS of between -100 and +100.
2024 performance
Savings customer NPS remained strong due
to our fair savings products offering and
excellent customer service.
Definition
It is defined as Common Equity Tier 1 (CET1)
capital as a percentage of risk-weighted
assets (calculated on a standardised basis
for credit risk and operational risk) and is a
measure of the capital strength of the Group
(for more information, see note 50 to the
Consolidated Financial Statements).
2024 performance
The CET1 ratio improved, supported by the
release of capital following the securitisation
and derecognition transaction in December
2024 and a slower rate of loan book growth
in the year.
Definition
Return on equity is defined as profit
attributable to ordinary shareholders,
which is profit after tax and after deducting
coupons on AT1 securities, gross of tax,
as a percentage of a 13-point average of
shareholders’ equity (excluding £150m of
AT1securities).
2024 performance
The statutory and underlying return
on equity was broadly stable as higher
profitability was offset by an increase in
average equity balance.
Key performance indicators continued
39OSB GROUP PLC | Annual Report and Accounts 2024
Strategic Report
Governance Financial StatementsOverview Appendices
Alternative performance measures
The Group presents alternative performance measures (APMs) in this Strategic report as
Management believes they provide a more consistent basis for comparing the Group’s
performance between financial periods.
Underlying results and KPIs for 2024 and 2023 exclude acquisition-related items. In 2024,
theacquisition-related items were fully amortised and therefore, from 2025 the Group’s
results will be presented on a statutory basis only.
APMs reflect an important aspect of the way in which operating targets are defined and
performance is monitored by the Board. However, any APMs in this document are not a
substitute for IFRS measures and readers should consider the IFRS measures as well.
For more information on APMs and the reconciliation between APMs and the statutoryequivalents,
see the Appendix.
Financial review
Summary Profit or Loss FY 2024 FY 2023
Net interest income 666.4 658.6
Net fair value loss on financial instruments (1.5) (4.4)
Loss on sale of financial instruments (2.4) –
Other operating income 4.7 3.9
Administrative expenses (258.1) (234.6)
Provisions (2.7) (0.4)
Impairment of financial assets 11.7 (48.8)
Profit before tax 418.1 374.3
Profit after tax 308.1 282.6
Key ratios
1
Net interest margin 221bps 231bps
Cost to income ratio 39% 36%
Management expense ratio 85bps 82bps
Loan loss ratio (4)bps 20bps
Return on equity 15% 14%
Basic earnings per share, pence 77.6 66.1
Ordinary dividend per share, pence 33.6 32.0
Extracts from the Statement of Financial Position
31-Dec-24
£m
31-Dec-23
£m
Loans and advances to customers 25,126.3 25,765.0
Retail deposits 23,820.3 22,126.6
Total assets 30,243.6 29,589.8
Key ratios
Common Equity Tier 1 ratio 16.3% 16.1%
Total capital ratio 19.7% 19.5%
Leverage ratio 7.7% 7.5%
Summary underlying Profit or Loss FY 2024 FY 2023
Net interest income 690.6 714.7
Net fair value loss on financial instruments (2.7) (10.8)
Loss on sale of financial instruments (2.4) –
Other operating income 4.7 3.9
Administrative expenses (2 57.4) (232.9)
Provisions (2.7) (0.4)
Impairment of financial assets 12.8 (48.5)
Profit before tax 442.9 426.0
Profit after tax 326.0 319.7
Key underlying ratios
1
Net interest margin 230bps 251bps
Cost to income ratio 37% 33%
Management expense ratio 85bps 81bps
Loan loss ratio (5)bps 20bps
Return on equity 16% 16%
Basic earnings per share, pence 82.2 75.0
Extracts from the underlying Statement of Financial Position
31-Dec-24 31-Dec-23
Loans and advances to customers 25,126.3 25,739.6
Retail deposits 23,820.3 22,126.6
Total assets 30,243.6 29,565.6
1. For more detail on the calculation of key ratios, see the Appendix.
OSB GROUP PLC | Annual Report and Accounts 202440
Strategic Report Governance Financial StatementsOverview Appendices
Financial review continued
Profit before tax
FY 2024 FY 2023 Change
Profit before tax £418.1m £374.3m 12%
Acquisition-related items
1
£24.8m £51.7m (52)%
Underlying profit before tax £442.9m £426.0m 4%
Earnings per share 77.6p 66.1p 17%
Underlying earnings per share 82.2p 75.0p 10%
Return on equity 15% 14% 1ppt
Underlying return on equity 16% 16% –
1. See the reconciliation of statutory to underlying results on page 45.
Profit before tax increased largely due the non-recurrence of the adverse effective interest
rate (EIR) adjustment recognised in 2023, loan book growth before the £1,249.9m securitisation
and deconsolidation transaction in December 2024 and an impairment credit compared to
a charge in the prior year. These drivers were partially offset by mortgages redeeming or
switching faster onto lower prevailing spreads, continued recycling of the fixed rate deposit
book onto tighter spreads, additional MREL issuance and higher administrative expenses.
The Group’s statutory effective tax rate increased to 26.1%, compared with 24.6% in 2023,
predominantly due to the increase in the standard rate of corporation tax, see note 11 to the
Consolidated Financial Statements.
Return on equity was broadly stable compared to prior year, and basic earnings per share
increased, reflecting higher profit after tax and a lower number of shares post the £100m share
repurchase programme completed in the year.
Net interest income and net interestmargin
FY 2024 FY 2023 Change
Net interest income £666.4m £658.6m 1%
Underlying net interest income £690.6m £714.7m (3)%
Net interest margin 221bps 231bps (10)bps
Underlying net interest margin 230bps 251bps (21)bps
Other operating income and underlying other
operating income
£4.7m £3.9m 21%
Net interest income benefitted from the non-recurrence of the adverse EIR adjustment
recognised in 2023 and loan book growth before the £1,249.9m securitisation and
deconsolidation transaction in December 2024. These were offset by mortgages redeeming
or switching faster onto lower prevailing spreads, continued recycling of the fixed rate deposit
book onto tighter spreads and additional MREL issuance.
Net interest income benefitted from the reduction of acquisition-related items as the fair value
uplift to CCFS mortgages on acquisition was fully amortised.
Net interest margin decreased in 2024 compared with the prior year as the benefit of the
non-recurrence of the adverse EIR adjustment recognised in 2023 was more than offset by
mortgages redeeming or switching faster onto lower prevailing spreads, continued recycling
ofthe fixed rate deposit book onto tighter spreads and additional MREL issuance.
The Group recognised an adverse EIR adjustment of £15.9m on a statutory and underlying
basis. The adverse EIR adjustment largely related to a reduction in the average expected
time that Precise borrowers would spend on the reversion rate from five to four months before
refinancing, based on observed customer trends. In 2023, a 12-month reduction in the average
expected time borrowers would spend on the reversion rate led to an adverse EIR adjustment
of £210.7m on a statutory and £181.6m on an underlying basis. The adverse EIR adjustment
accounted for 5bps of net interest margin and underlying net interest margin in the year
(2023:72bps and 63bps, respectively).
41OSB GROUP PLC | Annual Report and Accounts 2024
Strategic Report
Governance Financial StatementsOverview Appendices
Financial review continued
In the year, the Group implemented an equity structural hedge, comprising a series of
receive fixed rate swaps, to reduce earnings volatility due to interest rate changes arising
from the portion of the balance sheet funded by equity. The Group continued to hedge its
fixed rate mortgage portfolio in full with pay fixed rate swaps. The equity structural hedge
was not designated as a hedge under IFRS 9 and, to minimise fair value volatility through the
income statement, an equivalent portion of the existing mortgage hedge was de-designated.
Theequity structural hedge had a weighted average life of 2.5 years and the notional amount
was £1,409.9m as at 31 December 2024.
Other operating income mainly comprised CCFS’ commissions and servicing fees, including
those relating to securitised loans, which have been derecognised from the Group’s
balancesheet.
Net fair value loss on financial instruments
FY 2024 FY 2023 Change
Net fair value loss on financial instruments £1.5m £4.4m (66)%
Underlying net fair value loss on
financialinstruments
£2.7m £10.8m (75)%
Net fair value loss on financial instruments included a loss of £19.8m (2023: £2.0m gain)
from hedge ineffectiveness and a gain on unmatched swaps of £21.2m (2023: £11.1m loss).
The Group also recorded a £5.5m loss from the amortisation of hedge accounting inception
adjustments (2023: £4.3m loss), a £2.3m gain (2023: £6.4m gain) from the amortisation of
acquisition-related inception adjustments, and a statutory gain of £0.3m from other items
(2023: £2.6m gain), see note 5 to the Consolidated Financial Statements. On an underlying
basis, other items amounted to a loss of £0.8m (2023: £3.8m loss).
The loss in respect of the ineffective portion of hedges arose from recent swap volatility and will
unwind over the remaining life of the hedged fixed term mortgages and retail savings bonds.
The net gain on unmatched swaps related primarily to fair value movements on mortgage
pipeline swaps, prior to them being matched against completed mortgages, and was caused
by an increase in interest rate outlook on the SONIA yield curve. The Group economically
hedges its committed pipeline of mortgages and this unrealised gain unwinds over the life
ofthe swaps through hedge accounting inception adjustments.
Loss on sale of financial instruments
FY 2024 FY 2023 Change
Loss on sale of financial instruments £2.4m – n/m
Underlying loss on sale of financial instruments £2.4m – n/m
In December 2024, the Group completed the PMF 2024-2 transaction which securitised
£1,249.9m of Charter Court Financial Services Buy-to-Let mortgages. The Group recognised
a loss on sale of £2.4m from this transaction due to the difference between proceeds received
and the carrying value of the items derecognised from the Group’s balance sheet.
Administrative expenses
FY 2024 FY 2023 Change
Administrative expenses £258.1m £234.6m 10%
Underlying administrative expenses £257.4m £232.9m 11%
Cost to income ratio 39% 36% 3ppt
Underlying cost to income ratio 37% 33% 4ppt
Management expense ratio 85bps 82bps 3bps
Underlying management expense ratio 85bps 81bps 4bps
Administrative expenses increased largely due to further investment in the Group’s
transformation programme, redundancy costs and the new Bank of England levy.
The Group’s cost to income and management expense ratios increased primarily as a result
ofthe higher administrative expenses.
OSB GROUP PLC | Annual Report and Accounts 202442
Strategic Report Governance Financial StatementsOverview Appendices
Impairment of financial assets
FY2024 FY2023 Change
Impairment (credit)/charge £(11.7)m £48.8m n/m
Underlying impairment (credit)/charge £(12.8)m
£48.5m n/m
Loan loss ratio (4)bps
20bps (24)bps
Underlying loan loss ratio (5)bps
20bps (25)bps
The Group recorded an impairment credit and a favourable loan loss ratio largely due to an
improved macroeconomic outlook, particularly in relation to house price performance.
The Group updated the forward-looking macroeconomic scenarios used in its IFRS 9 models
resulting in a release of £36.2m, largely due to an improved house price outlook, and a
further £7.9m release was due to a reduction in post-model adjustments. These were partially
offset by a £10.8m charge relating to an increase in provision for accounts with arrears of
three months or more, a £8.4m charge for changes in borrowers’ profiles as they transitioned
through modelled IFRS 9 stages and a £3.3m charge for Stage 1 provisions in respect of loan
book growth. The individually assessed provisions and other movements amounted to a charge
of £9.9m and £8.8m on a statutory and underlying basis, respectively. See Risk Review for
furtherdetails.
In 2023, the impairment charge was largely due to changes in the credit profile of borrowers
asthey transitioned through modelled IFRS 9 impairment stages, increases in provisions
relating to accounts in arrears, higher individually assessed provisions and write-offs.
Dividend
The Board has recommended a final dividend of 22.9 pence per share for 2024 which, together
with the interim dividend of 10.7 pence per share, represents a total ordinary dividend of
33.6pence per share. See the Appendix for the calculation of the 2024 final dividend.
The recommended final dividend is subject to approval at the AGM on 8 May 2025. The final
dividend will be paid on 13 May 2025, with an ex-dividend date of 27 March 2025 and a record
date of 28 March 2025.
Financial review continued
Balance sheet growth
31-Dec-2024 31-Dec-2023 Change
Net loans and advances to customers £25,126.3m £25,765.0m (2)%
Underlying net loans and advances to customers £25,126.3m £25,739.6m (2)%
Total assets £30,243.6m £29,589.8m 2%
Underlying total assets £30,243.6m £29,565.6m 2%
Retail deposits and underlying retail deposits £23,820.3m £22,126.6m 8%
Net loans and advances to customers reduced in the year due to the December £1,249.9m
securitisation transaction which resulted in the derecognition of the mortgages. Excluding
thistransaction, net loans and advances to customers and underlying net loans and advances
to customers would have increased by 2%, supported by mortgage originations of £4.0bn
intheyear.
Total assets increased in the year, largely due to higher liquid assets as the Bank of England’s
Term Funding Scheme for SMEs (TFSME) was replaced by retail deposits with a shorter contractual
maturity, and as the Group held a higher amount of residential mortgage backed securities
(RMBS), partially offset by a reduction in net loans and advances to customers.
Retail deposits increased as the Group continued to repay its drawings under TFSME and
replace them with retail deposits. In 2024, the Group repaid £1.9bn of TFSME funding and
had£1.4bn of drawings outstanding as at 31 December 2024.
Statutory profit before tax
£418.1m
2023: £374.3m
Common Equity Tier 1 ratio
16.3%
2023: 16.1%
43OSB GROUP PLC | Annual Report and Accounts 2024
Strategic Report
Governance Financial StatementsOverview Appendices
Financial review continued
Summary cash flow statement
31-Dec-2024
£m
31-Dec-2023
£m
Profit before tax 418.1 374.3
Net cash generated/(used in):
Operating activities
2,235.7 425.2
Investing activities (29.3) (301.2)
Financing activities (1,489.0) (654.1)
Net increase/(decrease) in cash and cash equivalents 717.4 (530.1)
Cash and cash equivalents at the beginning of the year 2,514.0 3,044.1
Cash and cash equivalents at the end of the year 3,231.4 2,514.0
Cash flow statement
The Group’s cash and cash equivalents increased by £717.4m during the year to £3,231.4m as
at 31 December 2024.
In 2024, loans and advances to customers increased by £135.0m, primarily funded by
£1,693.7m of deposits from retail customers. The Group repaid £52.8m of cash collateral
received on derivative exposures and received £64.4m of initial margin, reflecting a reduction
in swap pricing over the year. Cash used in financing activities of £1,489.0m included financing
repaid: TFSME scheme repayments of £1,957.1m, repayment of £548.4m towards securitisation
funding and repayment of PSBs of £15.0m. It also included interest on financing of £273.3m as
well as £126.4m of dividends paid and £90.6m used under the share repurchase programme.
These were partially offset by funding through securitisations and senior note issuances which
raised £1,142.1m and £370.2m of financing drawn from the ILTR scheme. Cash used in investing
activities was £29.3m.
In 2023, loans and advances to customers increased by £2,200.5m, primarily funded by
£2,370.8m of deposits from retail customers. The Group repaid £336.9m of cash collateral
received on derivative exposures and received £38.8m of initial margin, reflecting a reduction
in swap pricing in the fourth quarter. Cash used in financing activities of £654.1m included
financing repaid: TFSME scheme repayments of £900m and repayments of the ILTR scheme
of £290.8m. It also included interest on financing of £205.4m, dividends of £185.0m and share
repurchase of £152.4m, which were partially offset by funding through securitisations, senior
notes and subordinated liability issuances raising £1,138.7m. Cash used in investing activities
was £301.2m.
Liquidity
31-Dec-2024 31-Dec-2023 Change
High-quality liquid assets – OSB £1,393.2m £1,155.7m 21%
High-quality liquid assets – CCFS £2,240.7m £1,514.0m 48%
Liquidity coverage ratio – Group 217% 168% 49pps
Liquidity coverage ratio – OSB 183% 208% (25)pps
Liquidity coverage ratio – CCFS
231% 139% 92pps
OSB and CCFS operate under the Prudential Regulation Authority’s liquidity regime and are
managed separately for liquidity risk. Each Bank holds its own significant liquidity buffer of
liquidity coverage ratio (LCR) eligible high-quality liquid assets (HQLA).
Each Bank operates within a target liquidity runway in excess of the minimum LCR regulatory
requirement, which is based on internal stress testing. Each Bank has a range of contingent
liquidity and funding options available for possible stress periods.
The Group also held portfolios of unencumbered pre-positioned Bank of England level B and C
eligible collateral in the Bank of England Single Collateral Pool.
As at 31 December 2024, liquidity coverage ratios were all significantly in excess of the
regulatory minimum of 100% plus Individual Liquidity Guidance.
Capital
31-Dec-2024 31-Dec-2023 Change
CET1 ratio 16.3% 16.1% 20bps
Total capital ratio 19.7% 19.5% 20bps
Risk-weighted assets £11,915.7m £11,845.6m 1%
Leverage ratio 7.7% 7.5% 20bps
The Group’s capital position remained strong, with the CET1 and total capital ratios of
16.3% and 19.7% (31 December 2023: 16.1% and 19.5%, respectively). Profit generated in the
year increased the CET1 ratio by 2.7%, the securitisation and derecognition transaction in
December increased it by 0.5%, 2024 dividends reduced it by 1.1% and the £100m share
repurchase programme completed in 2024 further reduced it by 0.9%.
The combined Group had a Pillar 2a requirement of 1.35% of risk-weighted assets (excluding a
static add-on of £17.4m for transformation risk) as at 31 December 2024, broadly unchanged
from the requirement as at 31 December 2023.
OSB GROUP PLC | Annual Report and Accounts 202444
Strategic Report Governance Financial StatementsOverview Appendices
Financial review continued
Reconciliation of statutory to underlying results
FY 2024 FY 2023
Statutory
results
£m
Acquisition-
related items
£m
Underlying
results
£m
Statutory
results
£m
Acquisition-
related items
£m
Underlying
results
£m
Net interest income 666.4 24.2 690.6 658.6 56.1 714.7
Fair value loss on financial instruments (1.5) (1.2)
2
(2.7) (4.4) (6.4) (10.8)
Loss on sale of financial instruments (2.4) – (2.4) – – –
Other operating income 4.7 – 4.7 3.9 – 3.9
Total income 667. 2 23.0 690.2 658.1 49.7 707.8
Administrative expenses (258.1) 0.7
3
(257.4) (234.6) 1.7 (232.9)
Provisions (2.7) – (2.7) (0.4) – (0.4)
Impairment of financial assets 11.7 1.1
4
12.8 (48.8) 0.3 (48.5)
Profit before tax 418.1 24.8 442.9 374.3 51.7 426.0
Profit after tax 308.1 17.9 326.0 282.6 37.1 319.7
Summary Balance Sheet
Loans and advances to customers
25,126.3 – 25,126.3 25,765.0 (25.4) 25,739.6
Other financial assets 4,975.1 – 4,975.1 3,722.8 1.3 3,724.1
Other non-financial assets 142.2 – 142.2 102.0 (0.1) 101.9
Total assets 30,243.6 – 30,243.6 29,589.8 (24.2) 29,565.6
Amounts owed to retail depositors 23,820.3 – 23,820.3 22,126.6 – 22,126.6
Other financial liabilities 4,125.8 – 4,125.8 5,272.0 – 5,272.0
Other non-financial liabilities 74.1 – 74.1 46.7 (6.3) 40.4
Total liabilities 28,020.2 – 28,020.2 27,445.3 (6.3) 2 7,439.0
Net assets 2,223.4 – 2,223.4 2,144.5 (17.9) 2,126.6
Notes to the reconciliation of statutory to underlying
resultstable:
1. Amortisation of the net fair value uplift to CCFS’
mortgage loans and retail deposits on Combination.
2. Inception adjustment on CCFS’ derivative assets and
liabilities on Combination.
3. Amortisation of intangible assets recognised
onCombination.
4. Adjustment to expected credit losses on CCFS loans
onCombination.
45OSB GROUP PLC | Annual Report and Accounts 2024
Strategic Report
Governance Financial StatementsOverview Appendices
Risk review
The Group continued to leverage its risk
management framework and supporting
capabilities to manage its risk profile in
the context of continued market and
economic uncertainty, delivering strong
financial performance within the confines
of the Board approved risk appetite.
Executive summary
During 2024 the Group performed well
in delivering key risk objectives, whilst
managing the Group’s operating and
financial performance.
The macro-economic outlook for the United
Kingdom (UK) stabilised against a backdrop
of heightened uncertainty during 2024
with inflationary pressures easing and base
rates starting to decline feeding through
into modest levels of economic growth.
Unemployment levels remained low with
house prices, wages and rental payment
levels increasing, whilst mortgage product
rates decreased which helped to moderate
the risks posed by the elevated costs of
living and borrowing. Uncertainty remains
relating to the economic impact of the new
Government’s fiscal policies, the longer-term
trajectory of interest rates and the impact of
US government trade policies.
The ongoing impact of the conflict in Ukraine
and the volatile situation in the Middle East,
also pose risks to the UK economic outlook
with the possibility of future supply-side
shocks feeding through into inflation and
reduced economic growth.
The Group continued to be alert to the
evolving nature of its non-financial risk
profile, actively identifying, assessing and
responding to the risks resulting from the
changing operating environment, evolving
customer expectations and regulatory and
legalobligations.
The Group’s fully secured loan portfolios
exhibited resilient performance during 2024,
as a result of the robust credit risk and
affordability assessments undertaken at
the point of underwriting, and the levels of
supporting security in place. The elevated
cost of borrowing continued to result in loan
affordability challenges as some customers
transitioned onto higher rate mortgage
products, in conjunction with the impact of
the elevated costs of living. However, strong
adherence to underwriting disciplines and
the stabilising economic outlook have helped
to maintain and more recently stabilise
the arrears trend for residential and Buy-
to-Let portfolio segments. In assessing the
underlying dynamics of the arrears trends
it was noted that the acquired and closed
books continue to contribute to the Group
and OSB solo entity arrears performance;
a suite of initiatives are underway to
maintain and improve arrears levels. The
Group’s commercial, development finance
and asset finance lending has exhibited
strong performance despite the economic
challenges impacting them.
Ensuring that the Group continued to
maintain appropriate levels of provision
remained an important discipline with
extensive oversight provided by the Board.
The Group undertook detailed analysis to
assess portfolio risk dynamics and drivers,
ensuring that credit provision models
remained appropriately calibrated and
where required, supported by post-model
adjustments. Benchmarking analysis has
been regularly provided to the Board and
management, enabling review and challenge
of provision coverage levels and the ongoing
appropriateness of macroeconomic scenarios
utilised within IFRS9 calculations. As a result
of the improving economic outlook and
positive borrower performance, the Group
adjusted downwards its provision levels from
the peak of the pandemic and the cost of
living and borrowing challenges.
The Group utilised its analytical capabilities
to undertake stress testing and scenario
analysis to understand the potential impacts
across the Group’s credit risk profile, capital
and liquidity positions, whilst also considering
the impact of future Basel 3.1 capital rules.
This activity supported the strategic and
financial planning activity undertaken
throughout the year. The Group continued
to generate capital and funded growth
through retail and wholesale channels, with
funding primarily being driven by retail
deposits. The Group continued to operate
with material capital and liquidity surpluses
to its regulatory and internal stress-based
requirements. A number of reverse stress
tests were performed to identify the severity
of macroeconomic scenarios that would
be required for the Group and its entities
to breach minimum regulatory capital
requirements. These assessments were
utilised in the going concern assessment,
which demonstrated the Group’s inherent
resilience to extreme stress scenarios.
The Group further enhanced capabilities
to ensure compliance with the Bank
of England’s Resolvability Assessment
Framework (RAF) requirements and
conducted a detailed fire drill of its
capabilities. In January 2024, the Group
successfully issued a further £400m of MREL
qualifying senior notes and as a result met its
interim MREL requirements ahead of the July
2024 compliance date and is well positioned
to meet its end-state requirements.
The Group continued to successfully manage
its funding and liquidity risk profile, raising
retail deposits within a competitive and
volatile market. During the year, the Group
successfully delivered against its wholesale
OSB GROUP PLC | Annual Report and Accounts 202446
Strategic Report Governance Financial StatementsOverview Appendices
Risk review continued
issuance plans, with securitisation activity
facilitating planned repayment of the Bank
of England’s Term Funding Scheme for SMEs
(TFSME). In December 2024 the Group
successfully securitised c.£1.25bn of Buy-to-
Let mortgages, selling the junior economic
interest in the transaction which improved the
Group’s CET1 ratio as the mortgages were
de-recognised from the balance sheet. The
transaction also reduced the potential impact
of changes in customer behaviour in the
reversion period, and supported repayment
of drawings underTFSME. The transaction
funded the repayment of borrowing from the
Bank of England and in doing so improved
the Group’s contingency funding profile by
reducing assets encumbered with the Bank of
England. During January 2025 the Prudential
Regulation Authority approved a Core UK
Group waiver which allows excess funding at
one bank entity to be used by the other bank
entity as required.
The Group continued to make progress
against its programme of activity to further
digitise the bank in a careful and considered
way. During the year the Group observed
a low level of operational incidents and
resultant losses, whilst conducting a full
risk and control self-assessment across all
business areas to ensure risks continued to
be re-assessed, controls documented and
operated as designed. The Board received
regular risk reports providing an overview of
the operational risk profile and effectiveness
of key controls. To ensure that change
risk is managed effectively, dedicated
resources have been onboarded, a change
risk framework has been implemented and
defined change riskmetrics, risk appetite
andlimits have been established.
Continuing to manage change risk effectively
remains particularly important, considering
the level of change being made across the
Group as a result of ongoing Transformation
programme activity.
Progress continues to be made to ensure the
Group complies with proposed updates to
the UK Corporate Governance Code from the
1 January 2026.
Throughout the year the Group continued
to further embed its capabilities to ensure
ongoing compliance with consumer duty
expectations. The Board reviewed and
approved the Group’s first Consumer duty
board report, which confirmed that products
and services were delivering expected
outcomes in line with the duty. The report
also detailed planned areas of further
enhancement which will be a focus from 2025.
The Group continued to enhance its
approach to compliance with Internal
Ratings-Based (IRB) disciplines underpinned
by ongoing self-assessment reviews against
regulatory standards, emerging guidelines,
and the PRA’s feedback to the industry.
The Group continued to engage with
the regulator ahead of commencing the
formal application process. Underlying IRB
capabilities and disciplines have become
progressively integrated into the Group’s
business planning, risk, capital, IT and data
management disciplines.
During 2024 additional dedicated expertise
was recruited to further embed and improve
the monitoring and management of climate
risk, enhanced analysis was conducted, and
progress was made across planned initiatives
to ensure the Group’s stated ESG ambitions
are met. See the Task Force on Climate
Related Financial Disclosures section for
further information.
Priority areas for 2025
A heightened level of uncertainty remains around the UK economic outlook and the
operating environment for 2025 and beyond. The Group’s Enterprise Risk Management
Framework continues to underpin the Group’s management of existing and emerging risks,
whilst delivering strategic and financial objectives. Key areas of focus for 2025 include:
• Oversight and support across planned credit profile enhancement initiatives, leveraging
analytical capabilities to drive improvements in the Group’s arrears profile and risk-
based pricing, considering the market outlook and the impact of Basel 3.1 rules.
• Continue to support the optimisation of the Group’s balance sheet to enhance future
financial performance and resilience under potential periods of future stress.
• Further embed the Group’s operational risk management framework, with a focus on
the careful management of change and vendor risk as IT transformation and further
initiatives to digitise the bank progress.
• Deliver ongoing enhancements to the Group’s stress testing procedures to ensure the
robustness of capital and liquidity positions including the embedding of the latest iteration
of IRB models within stress testing models, considering industry and PRA feedback.
Conduct further stress testing analysis assessing the impact of Basel 3.1 rule changes.
• Provide second line oversight of further initiatives to ensure the Group’s risk culture
continues to drive good outcomes for customers, facilitating the continued compliance
with consumer duty expectations.
• Continuous embedding of capabilities which ensure the ongoing operational
resilience of the Group, including oversight of all actions identified within the Group’s
annual self-assessment to ensure refinements are delivered to critical processes and
tolerances, as the Group implements planned IT transformation activities and further
digitises core processes.
• Continue to enhance and embed RAF capabilities, to ensure regulatory expectations
continue to be met, whilst identifying operational risk and resilience enhancements
which can be delivered via the utilisation of existing RAF capabilities.
• Continue to provide second line oversight of the funding strategy and drive
enhancements to sensitivity analysis around key liquidity drivers.
• Provide second line oversight and support delivery of planned climate risk management
enhancement initiatives, to ensure the Group meets its stated ambitions.
47OSB GROUP PLC | Annual Report and Accounts 2024
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Governance Financial StatementsOverview Appendices
Loan loss ratio Liquidity coverage ratio 3+ months in arrears Capital ratios
CCFS
CCFS
OSB
OSB
StatutoryUnderlying
2024
2023
2024
2023
2024
2023
2024
2023
2024
2023
2024
2023
2024
2023
16.3%
183%
231% 1.5%
1.8%
16.1%
Total capital ratio
2024
2023
19.7%
19.5%
208%
139% 1.2%
1.6%
CET1 ratio
(4)bps
20bps
(5)bps
20bps
Risk review continued
Risk appetite is aligned to a select range of key performance indicators, which
are used to assess performance against strategic, business, operational and
regulatory objectives.
Actual performance against these indicators is continually assessed and reported.
Key risk performance indicators
2024 performance
Liquidity ratios remained well above
internal and regulatory requirements.
The reduction at OSB was driven by
managed reductions of Bank of England
funding during the year. The increase at
CCFS was due to successful issuance of
RMBS driving an increase in High Quality
Liquid Assets.
2024 performance
The Group’s ratio of balances which are
greater than three months in arrears
increased to 1.7% (2023: 1.4%) largely
driven by the elevated cost of borrowing.
Across the OSB bank entity, arrears
increased to 1.8% from 1.6% at the end of
2023 while for CCFS arrears increased to
1.5% from 1.2% at the end of 2023.
2024 performance
The Group’s capital position remained
strong with a CET1 ratio of 16.3% and a
total capital ratio of 19.7% as at the end
of 2024 (31 December 2023: 16.1% and
19.5%, respectively). The capital ratios
improved during the year driven by
ongoing profitability, the impact of the
securitisation of Buy-to-Let exposures
which were de-recognised from the
balance sheet reducing risk weighted
asset balances, partially offset by
shareholder distributions within the year.
2024 performance
Impairment credit representing -5bps
underlying loan loss ratio due to updated
macroeconomic scenarios, particularly driven
by house price improvement.
OSB GROUP PLC | Annual Report and Accounts 202448
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Governance Financial StatementsOverview Appendices
Risk review continued
The Enterprise Risk Management Framework
(ERMF) sets out the principles and approach
with respect to the management of the
Group’s risk profile in order to successfully
fulfil its business strategy and objectives,
including compliance with all conduct and
prudential regulatory objectives.
The ERMF is the overarching framework that
enables the Board and senior management
to actively manage and optimise the risk
profile within the constraints of its risk
appetite. The ERMF also facilitates informed
risk-based decisions to be taken in a timely
manner, ensuring that the interests and
expectations of key stakeholders can be met.
The ERMF provides a structured mechanism
to align critical components of an effective
approach to risk management, linking
overarching risk principles to day-to-day
risk identification, assessment, mitigation,
andmonitoring activities.
The modular construct of the ERMF provides
an agile approach keeping pace with
the evolving nature of the risk profile and
underlying drivers. The ERMF and its core
modular components are subject to periodic
review and approval by the Board and its
relevant Committees. The key components
ofthe ERMF structure are as follows:
1Risk principles and culture
The Group established a set of risk
management and oversight principles
that inform and guide all underlying risk
management and assessment activities.
These principles are informed by the
Group’sPurpose, Vision and Values.
Enterprise Risk Management Framework
Principal risks
Financial risks
Credit risk
Liquidity and
funding risk
Market risk
Solvency risk
Non-financial risks
Strategic and
business risk
Reputational risk
Operational risk
Conduct risk
Financial
Crime risk
Compliance/
regulatory risk
Risk regulatory submissions
ICAAP ILAAP Recovery plan/Z-templates
Capabilities
Risk framework
and policies
Risk data
and IT
Risk
analytics
Risk management
information
Key elements
Risk principles
and culture
Risk strategy
and appetite
Risk governance and
function organisation
Risk definitions
andcategorisation
Enterprise Risk Management Framework (ERMF)
2Risk strategy and appetite
The Group established a clear business
vision and strategy which is supported by
an articulated risk vision and underlying
principles. The Board is accountable for
ensuring that the Group’s ERMF is structured
against the strategic vision and is delivered
within agreed risk appetite thresholds.
3Risk assessment and control
The Group is committed to building a safe
and secure banking operation through an
integrated and effective ERMF.
4Risk analytics
The Group uses quantitative analysis and
statistical modelling to help improve its
business decisions.
5 Stress testing and
scenariodevelopment
Stress testing is an important risk
management tool, which is used to evaluate
the potential effects of a specific event
and/or movement in a set of variables to
understand the impact on the Group’s
financial and operating performance.
The Group has a stress testing framework
which sets out the Group’s approach.
6 Risk data and
informationtechnology
The maintenance of high-quality risk
information, along with the Group’s data
enrichment and aggregation capabilities,
are central to the Risk function’s objectives
beingachieved.
7 Risk Management Framework’s
policies and procedures
Risk frameworks, policies and supporting
documentation outline the process by which
risk is effectively managed and governed
within the Group.
8 Risk management information
and reporting
The Group established a comprehensive suite
of risk Management Information (MI) and
reports covering all principal risk types.
9 Risk governance and
functionorganisation
Risk governance refers to the processes and
structures established by the Board to ensure
that risks are assumed and managed within
the Board-approved risk appetite, with clear
delineation between risk-taking, oversight
and assurance responsibilities. The Group’s
risk governance framework is structured to
adhere to the ‘three lines of defence’ model.
10Use and embedding
Dissemination of key framework components
across the Group to ensure that business
activities and decision-making are undertaken
in line with the Board expectations.
49OSB GROUP PLC | Annual Report and Accounts 2024
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Governance Financial StatementsOverview Appendices
Risk review continued
The risk appetite is calibrated to reflect
the Group’s strategic objectives, business
operating plans, as well as external
economic, business and regulatory
constraints. In particular, the risk appetite
is calibrated to ensure that the Group
continues to deliver against its strategic
objectives and operates with sufficient
financial buffers, even when subjected to
extreme but plausible stress scenarios.
The objective of the Board’s risk appetite
is to ensure that the strategy and business
operating model is sufficiently resilient.
The Group’s risk appetite is calibrated using
statistical analysis and stress testing to
inform the process for setting management
triggers and limits against key risk indicators.
The calibration process is designed to
ensure that timely and appropriate actions
are taken to maintain the risk profile within
approved thresholds. The Board and senior
management actively monitor actual
performance against approved management
triggers and limits. Currently, there are two
regulated banking entities within the Group.
Risk appetite metrics and thresholds are set
at both individual entity and Group levels.
The Group’s risk appetite is subject to a
full refresh annually across all principal
risk types, and a mid-year review where
any metrics can be assessed and updated
asappropriate.
Group organisational structure
The Board has ultimate responsibility for the
oversight of the Group’s risk profile and risk
management framework and, where it deems
it appropriate, it delegates its authority to
relevant Committees. The Board and its
Committees are provided with appropriate
and timely information relating to the nature
and level of the risks to which the Group is
exposed and the adequacy of risk controls
and mitigants.
The Internal Audit function provides
independent assurance to the Board and
its Committees as to the effectiveness of
the systems and controls and the level of
adherence to internal policies and regulatory
requirements. The Board also commissions
third-party subject matter expert reviews
and reports in relation to issues and areas
requiring deeper technical assessment
andguidance.
Risk appetite
As outlined within the Group’s Risk Appetite
Framework, the Group aligns its strategic
and business objectives with its risk appetite,
which defines the level of risk that the Group
is willing to accept, enabling the Board
and senior management to monitor the risk
profile relative to its strategic and business
performance objectives. Risk appetite is
a critical mechanism through which the
Board and senior management are able
to identify adverse trends and respond to
unexpected developments in a timely and
consideredmanner.
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Governance Financial StatementsOverview Appendices
Interest Rate Risk
in the Banking
Book Working
Group
Heritable
Transactional
Credit Committee
(HTCC)
Transactional
Credit Committee
(TCC)
Conduct Risk
Management
Committee
Operational Risk
Management
Committee
Liquidity
Working
Group
Solvency
Working
Group
Risk review continued
Structure of the Group
Board of Directors
Group Executive Committee
Board
Committees
Group Remuneration and
People Committee
Board Capital and
Funding Committee
Group Nomination
and Governance
Committee
Group Audit
Committee
CCFSL
Board
Group Risk
Committee
Group Models and
Ratings Committee
Operations
Committee
Group Credit
Committee
Models and Ratings
Management
Committee
Regulatory
Governance
Committee
Group Assets and
Liabilities Committee
Group Executive
Disclosure Committee
ESG Committee
Management
Committees
Group Executive
RiskCommittee
Business and
Control Functions
Executives
Group Chief Financial
Officer
Group Commercial
Director
Group Chief
Operating Officer
Group Managing Director,
Mortgages and Savings
Group Chief
Information Officer
Group General Counsel
&Company Secretary
Ensures that risks are identified, measured, monitored
and reported in line with policy in an effective manner.
Key Brands Commercial
Finance and HR Sales and Marketing
Operations Legal and Regulation
IT and Change
Provides an independent review and challenge
tothebusiness and control functions to ensure
that allaspects of the risk profile are managed
inadherence to risk appetite and risk policies.
Risk and Compliance
Provides independent assurance on the effectiveness
of the ERMF, compliance with regulations, adherence
to policies and effectiveness of controls.
Internal Audit
Group Chief Risk Officer
Group Chief Credit Officer and MLRO
Group Chief Internal Auditor
Chief Executive Officer
Credit Strategy
Third Line of DefenceSecond Line of DefenceFirst Line of Defence
The Group Executive Risk Committee has a small number of other risk forums which report into it, however to simplify the above schematic only the Operational and Conduct Risk Management Committees have been included.
51OSB GROUP PLC | Annual Report and Accounts 2024
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Governance Financial StatementsOverview Appendices
Risk review continued
The Group is exposed to the following climate
related risks:
• Physical risk – relates to climate
or weather-related events such as
heatwaves, droughts, floods, storms, rising
sea levels, coastal erosion and subsidence.
These risks could result in financial losses
with respect to the Group’s own real
estate and customer loan portfolios.
• Transition risk – arising from the effect
of adjusting to a low-carbon economy
and changes to appetite, strategy, policy
or technology. These changes could
result in a reassessment of property
prices and increased credit exposures for
banks and other lenders as the costs and
opportunities arising from climate change
become apparent. Reputational risk arises
from a failure to meet changing and
more demanding societal, investor and
regulatory expectations.
Approach to analysing climate risk
on the loan book
As part of the Internal Capital Adequacy
Assessment Process (ICAAP), the Risk
function engaged with a third party
to provide detailed climate change
assessments at a collateral level for the
Group’s loan portfolios. The data was in turn
utilised to conduct profiling and financial
riskassessments.
a) Climate scenarios considered
The standard metric for assessing climate
change risk is the global greenhouse gas
concentration as measured by Representative
Concentration Pathway (RCP) levels. The
four levels adopted by the Intergovernmental
Panel for Climate Change for its fifth
assessment report (AR5) in 2014 are:
Emissions scenario
Scenario
Change in temperature
(°C) by 2100
RCP 2.6 1.6 (0.9–2.3)
RCP 4.5 2.4 (1.7–3.2)
RCP 6.0 2.8 (2.0–3.7)
RCP 8.5 4.3 (3.2–5.4)
Note: figures within the brackets above detail the range in
temperatures. Single figures outside the brackets indicate
the averages.
b) Climate risk perils considered
The following three physical perils of climate
change were assessed:
• Flood – wetter winters and more
concentrated rainfall events will
increaseflooding.
• Subsidence – drier summers will increase
subsidence through the shrink or swell
ofclay.
• Coastal erosion – increased storm surge
and rising sea levels will increase the rate
of erosion.
For each of the physical perils and climate
scenarios detailed above, a decade-by-
decade prediction, from the current year to
2100, on the likelihood of each was provided.
For flood and subsidence, the likelihood
took the form of a probability that a flood or
subsidence event would occur over the next
10 years. For coastal erosion the distance of
the property to the coastline is provided by
scenario and decade.
Properties are located at a one-metre
accuracy for the purpose of physical peril
impact considerations. This resolution is
essential because flood and subsidence
risk factors can vary considerably between
neighbouring properties.
In addition to the physical perils, the current
Energy Performance Certificate (EPC) of
each property was considered to allow for
an assessment of transitional risk due to
policy change. EPC ratings are based on a
Standard Assessment Procedure calculation
which uses a government methodology
to determine the energy performance of
properties by considering factors such as
construction materials, heating systems,
insulation and air leakage.
Both the OSB and CCFS portfolios were
profiled against each of the perils detailed
under the least severe (RCP 2.6) and most
severe (RCP 8.5) climate scenarios.
• Flood risk
By the 2030s, at the Group level, the
percentage of properties predicted to
experience a flood is expected to increase
from 0.50% in the least severe scenario to
0.54% in the most severe scenario. Both
scenarios represent a low proportion of
the Group’s loan portfolios.
• Subsidence
In the 2030s, at the Group level, the
percentage of properties predicted to
experience subsidence is expected to
increase from 0.41% in the least severe
scenario to 0.46% in the most severe
scenario. The outcome of both scenarios
represents a low proportion of the Group’s
loan portfolios.
• Coastal erosion
There are two elements to coastal erosion
risk. The first relates to the proximity of
the property to the coast. The second
depends on whether the area in which the
property is located is likely to experience
coastal erosion in the future.
Both Banks have over 92% of their
portfolios more than 1,000 metres from
the coastline, indicating a low coastal
erosion risk across the Group.
At a Group level there are 55 properties
(OSB 32, CCFS 23) which are located
within 100m of a coastline likely
toexperience erosion in the future.
Management of climate change risk
OSB GROUP PLC | Annual Report and Accounts 202452
Strategic Report
Governance Financial StatementsOverview Appendices
Risk review continued
c) Energy Performance Certificate profile
The EPC profile of both Bank entities follows
a similar trend to the national average. At
the Group level, 0.3% of properties have an
EPC of A, 14.6% have an EPC of B, 27.9% have
an EPC of C, 44.7% have an EPC of D, there
are 11.1% with an EPC of E and negligible
percentages in For Gratings. 93% of the
properties supporting the Group’s loan
portfolios have the potential to have at least
an EPC rating of C.
Value at Risk assessment
The Value at Risk to each Bank, measured
through change to Expected Credit Loss (ECL)
and Standardised and IRB Risk-Weighted
Assets (RWAs), is assessed through the
application of stress to collateral valuations
as per the methodology outlined. Impacts are
assessed against the latest yearend position.
Climate change scenarios
To get the full range of impacts, the most and
least severe climate change stress scenarios
were considered.
The most severe, RCP 8.5, assumes there
will be no concerted effort at a global level
to reduce greenhouse gas emissions. Under
this scenario, the predicted increase in global
temperature is 3.2–5.4°C by 2100.
The least severe scenario, RCP 2.6,
assumes early action is taken to limit future
greenhouse gas emissions. Under this
scenario, the predicted increase in global
temperature is 0.9–2.3°C by 2100.
Methodology – physical risks
For the physical risks, updated valuations
are produced to reflect the impact of a flood,
subsidence and coastal erosion risk.
Methodology – transitional risks
The Group’s expectation is that, under
the early action scenario (RCP 2.6), the
government will require all properties
to achieve a minimum EPC grade of C
wherepossible. We considered this risk
forBuy-to-Let accounts only.
d) Analysis outcome
The physical risks currently present an
immaterial ECL or capital risk to the Group.
The sensitivity to transitional risk is larger
than that of physical risk, although still
verysmall. See note 20 Expected credit
losses for more detail where a non material
post-model adjustment was held as at
31 December 2024 for climate change risk.
53OSB GROUP PLC | Annual Report and Accounts 2024
Strategic Report
Governance Financial StatementsOverview Appendices
Likelihood
Low High
Impact
Low High
10
98
7
5
4
3
2
1
6
Principal risks and uncertainties
The Board carried out an assessment of the principal risks and
uncertainties which may threaten the Group’s operating model,
strategic objectives, financial performance and regulatory
compliance commitments.
The outcome of that assessment is summarised in the heat map below,
withfurther details provided in each principal risk section.
1 Strategic and business risk
The risk to the Group’s earnings and profitability
arising from its strategic decisions, change in
businessconditions, improper implementation of
decisions or lack of responsiveness to industry
andregulatory changes.
Risk appetite statement
The Group does not intend to undertake strategic
actions which could put at risk the Group’s vision
of being a leading specialist lender in its chosen
markets, supported by a strong and dependable
savingsfranchise.
The Group aims to also maintain a resilient and
sustainable business operating model under normal
and stressed market conditions. In particular,
the business operating model should be able to
sustain an extreme but plausible stress of a 1 in
20 severity without breaching its key business
performanceindicators.
1.1 Performance against targets
Performance against strategic and business targets does not meet stakeholder expectations. This has the
potential to damage the Group’s franchise value and reputation.
Mitigation Direction
Regular monitoring by the Board and the Group
Executive Committee of business and financial
performance against the strategic agenda and risk
appetite. The financial plan is subject to regular
reforecasts and assessed in the context of its impact
on existing risk appetite. The Balanced Business
Scorecard is the primary mechanism to support how
the Board assesses management performance against
key targets. Use of stress testing to flex core business
planning assumptions to assess potential performance
under stressed operating conditions.
The ongoing macroeconomic uncertainty and its
potential impact on net interest income, affordability
levels, house prices and expected credit losses
continue to present risk to the Group’s performance
in 2025.
1.2 Economic environment
The economic environment in the UK is an important factor impacting the strategic and business risk profile.
A macroeconomic downturn may impact the credit quality of the Group’s existing loan portfolios and may
influence future business strategy as the Group’s new business proposition becomes less attractive due to
lower returns.
Mitigation Direction
The Group’s business model as a secured lender
helps limit potential credit risk losses and supports
performance through the economic cycle. The Group
continues to utilise and enhance its stress testing
capabilities to assess and minimise potential areas
ofmacroeconomic vulnerability.
Macroeconomic uncertainty will continue into 2025
with an ongoing risk to the Group’s credit risk profile,
including the possibility of rising unemployment rates
and acontinued period of elevated interest rates.
1
Strategic and business risk
2
Reputational risk
3
Credit risk
4
Market risk
5
Liquidity and funding risk
6
Solvency risk
7
Operational risk
8
Conduct risk
9
Regulatory risk
10
Financial crime risk
Current assessment of principal risks
Key:
Risk increased Risk decreased Risk broadly stable
Strategic Report
Governance Financial StatementsOverview Appendices
OSB GROUP PLC | Annual Report and Accounts 202454
Key:
Risk increased Risk decreased Risk broadly stable
Principal risks and uncertainties continued
1.3 Competition risk
Competition in the lending and savings markets intensifies leading to increased pressure on business margins
and volumes.
Mitigation Direction
The Group continues to review and develop its strategy,
products and services that meet the requirements of
the markets in which it operates. The Group has a
diversified suite of products and capabilities to utilise,
together with significant financial resources, to support
a response to changes in competition.
Continued intensity of competition within both the
retail deposit and lending sectors. Larger banks may
also look to move into the Group’s key specialist
lending sub-segments.
2 Reputational risk
The potential risk of the Group’s reputation being
affected due to factors such as unethical practices,
adverse regulatory actions, customer or broker
dissatisfaction and complaints or negative/adverse
publicity. Reputational risk can arise from a variety of
sources and is a second-order risk – the crystallisation
of any principal risk can lead to a reputational
riskimpact.
Risk appetite statement
The Group has a very low appetite for actively
assuming reputational risk in the course of conducting
its business activities and meeting the expectations
of its key stakeholders. The Group is fully cognisant
of the main drivers (trust, integrity, ethics, confidence
and relationships) of reputational risk and it being
a consequence of other risks materialising, some of
which are outside of its immediate control. The Group
strives to protect and enhance its reputation at all
times through appropriate governance and proactive
risk management.
2.1 Deterioration of reputation
Potential loss of trust and confidence that our stakeholders place in us as a responsible and fair provider
offinancial services.
Mitigation Direction
Culture and commitment to treating customers fairly
and being open and transparent in communication
with key stakeholders. Established processes in place
to proactively identify and manage potential sources
of reputational risk. Review of relevant Management
Information including investor confidence (share price),
credit rating agency outlook, regulatory engagement,
complaint volumes, third party supplier practice, Net
Promoter Scores, customer satisfaction results, press
reports, social media, Trustpilot feedback, Glassdoor
reviews, performance against ESG Group targets.
The Group has an embedded Reputational Risk
Management Framework which clearly defines roles
and responsibilities for reputational risk management
and oversight across the Group’s three lines of defence.
The challenging yet more favourable macroeconomic
environment in 2024 compared to 2023 continued
across both the UK’s lending and savings markets.
Consequently, the need remains for all banks to
become increasingly agile with products offered in
order to ensure that all core financial targets are
met. Operational efficiency challenges continue
to influence the Group’s reputational risk profile.
Ongoing delivery of the Group’s transformation
programme is expected to deliver targeted
operationalbenefits.
Conduct risks remain elevated due to the requirements
in continuing to meet Consumer Duty regulatory
requirements and the challenges brought about
bythe cost of living.
3 Credit risk
Potential for loss due to the failure of a counterparty
to meet its contractual obligation to repay a debt in
accordance with the agreed terms.
Risk appetite statement
The Group seeks to maintain a high-quality lending
portfolio that generates adequate returns, during
both benign and stressed operating environments.
3.1 Individual borrower risk
Borrowers may encounter idiosyncratic problems in repaying their loans, for example loss of a job or execution
problems with a development project. While in most cases of default the Group’s lending is secured, some
borrowers may fail to maintain the value of the security, which may result in a loss being incurred.
Mitigation Direction
Across both OSB and CCFS, a robust underwriting
assessment is undertaken to ensure that a customer
has the ability and propensity to repay, and sufficient
security is available to support the new loan requested.
At CCFS, an automated scorecard approach is taken,
whilst OSB utilises a bespoke manual underwriting
approach, supplemented by bespoke application
scorecards to inform the lending decision.
Should there be problems with a loan, the Financial
Support function works with customers who are unable to
meet their loan service obligations to reach a satisfactory
conclusion while adhering to the principle of treating
customers fairly.
Our strategic focus on lending to professional landlords
means that properties are likely to be well-managed,
with income from a diversified portfolio mitigating the
impact of rental voids or maintenance costs. Lending
to owner-occupiers is subject to a detailed affordability
assessment, including the borrower’s ability to continue
payments if interest rates increase. Lending on
commercial property is based more on security and
is scrutinised by the Group’s independent Real Estate
team as well as by external valuers.
Development finance lending is extended only after a
deep investigation of the borrower’s track record and
stress testing the economics of the specific project.
The drivers of borrower default risk began to shift in
2024 with inflation and interest rates on a downward
trajectory however affordability for accounts
continues to impact the risk of borrower default.
55OSB GROUP PLC | Annual Report and Accounts 2024
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Governance Financial StatementsOverview Appendices
Principal risks and uncertainties continued
3.2 Macroeconomic downturn
A broad deterioration in the UK economy would adversely impact both the ability of borrowers to repay loans
and the value of the Group’s security. Credit losses would impact the Group’s lending portfolios, even if
individual impacts were to be small, the aggregate impact on the Group could be significant.
Mitigation Direction
The Group works within portfolio limits on LTV,
affordability, name, sector, and geographic
concentration that are approved by the Group
Risk Committee and the Board. These are reviewed
on a semi-annual basis. In addition, stress
testing is performed to ensure that the Group
maintains sufficient capital to absorb losses in
an economic downturn and continues to meet
itsregulatoryrequirements.
The economic outlook and the ongoing geopolitical
risk continues to look uncertain although slightly more
stable and improved compared to the previous year.
Inflation and interest rates have fallen, driving lower
impairment levels, and increasing residential and
commercial collateral values.
3.3 Wholesale credit risk
The Group has wholesale exposures both through call accounts used for transactional and liquidity purposes
and through derivative exposures used for hedging.
Mitigation Direction
The Group transacts only with high-quality wholesale
counterparties. Derivative exposures include collateral
agreements to mitigate credit exposures.
The Group’s wholesale credit risk exposure remains
limited to high-quality counterparties, overnight
exposures to clearing banks and swap counterparties.
4 Market risk
Potential loss due to changes in market prices
orvalues.
Risk appetite statement
The Group actively manages market risk arising from
structural interest rate and foreign exchange rate
exposures. The Group does not take a significant
interest rate position or a directional view on rates
and limits its mismatched and basis risk exposures
by dynamic hedging. The Board requirement is to
maintain balance sheet and hedge positions sufficient
to survive a range of severe but plausible stress
scenarios for interest rate risk and basis risk. Historical
data is used to calibrate the severity of the stress
scenarios against the Group’s overall Risk Appetite.
4.1 Interest rate risk
The risk of loss from adverse movement in the overall level of interest rates. It arises from mismatches
in the timing of repricing of assets and liabilities, both on and off-balance sheet. It includes the risks
arising from imperfect hedging of exposures and the risk of customer behaviour driven by interest rates,
e.g.earlyredemption.
Mitigation Direction
The Group’s Treasury function actively hedges
to match the timing of cash flows from assets
andliabilities.
Interest rate risk in 2024 was influenced by the
downward interest rate environment, inverted yield curve
and the potential for changing customer behaviour.
Themacroeconomic outlook remains uncertain.
A continued area of focus relates to the risks arising
from downward movements in interest rates. Falling
interest rates may create a risk to net interest income
based on timing mismatches between issuance of
long-term mortgages versus shorter-term savings
products. In addition, this could result in early
repayment charge income not offsetting early swap
breakage costs. The Group has implemented a
Structural Hedge to reduce the volatility of NIM.
4.2 Basis risk
The risk of loss from an adverse divergence in interest rates. It arises where assets and liabilities reprice from
different variable rate indices. These indices may be market, administered, other discretionary variable rates,
or that received on call accounts with other banks.
Mitigation Direction
The Group did not require active management of basis
risk in 2024 due to its balance sheet structure.
The Group continues to carefully monitor and
manage basis risk. The Group’s exposures are broadly
SONIA-linked assets (post swap) funded by SONIA
linked term deposits (post swap) and administered
and Bank of England base rate linked liabilities.
Key:
Risk increased Risk decreased Risk broadly stable
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Principal risks and uncertainties continued
5 Liquidity and funding risk
The risk that the Group, although solvent, does not
have sufficient financial resources to enable it to meet
its obligations as they fall due.
Risk appetite statement
The Group will maintain sufficient liquidity to meet
its liabilities as they fall due under normal and
stressed business conditions; this will be achieved
by maintaining strong retail savings franchises,
supported by high-quality liquid asset portfolios
comprised of cash and readily monetisable assets,
and through access to pre-arranged secured funding
facilities. The Board requirement to maintain balance
sheet resources sufficient to survive a range of
severe but plausible stress scenarios is interpreted in
terms of the liquidity coverage ratio and the Internal
Liquidity Adequacy Assessment Process (ILAAP)
stressscenarios.
5.1 Retail funding stress
As the Group is primarily funded by retail deposits, a retail run could put it in a position where it could not
meet its financial obligations. Increased competition for retail savings driving up funding costs, adversely
impacting retention levels and profitability.
Mitigation Direction
The Group’s funding strategy is focused on a highly
stable retail deposit franchise. The Group’s large
number of depositors provides diversification, where a
high proportion of balances are covered by the FSCS
protection scheme, largely mitigating the risk of a
retailrun.
In addition, the Group performs in-depth liquidity
stress testing and maintains a liquid asset portfolio
sufficient to meet obligations under stress. The Group
holds prudential liquidity buffers to manage funding
requirements under normal and stressed conditions.
The Group has diversified its retail channels by the use
of deposit aggregators.
The Group proactively manages its savings proposition
through both the Liquidity Working Group and
theGroup Assets and Liabilities Committee. The Group
has pre-positioned mortgage collateral and securitised
notes with the Bank of England, which allows it to
consider alternative funding sources in addition to
funding via retail savings deposits. TheGroup also
has a mature Retail Mortgage-Backed Security
(RMBS)programme.
The Group’s funding levels and mix remained strong
throughout the year, however, retail deposit markets
may see increased competition as banks look to
repay outstanding TFSME, resulting in an increase in
the cost of future funding for the Group.
Markets have also seen a trend in savings customers
preferring easy access products over term products
due to the downward sloping yield curve meaning
headline rates for easy access are higher than term
products, this results in a higher proportion of the
book being withdrawable on demand. Liquidity
buffers are held to account for this increased risk.
5.2 Wholesale funding stress
A market-wide stress could close securitisation markets or make issuance costs unattractive for the Group.
Mitigation Direction
The Group continuously monitors wholesale funding
markets and is experienced in taking proactive
management actions where required.
The Group completed three securitisation deals and
a Hold-Co issuance in 2024 and has a range of
wholesale funding options, including Bank of England
facilities, for which collateral has been pre-positioned.
The Group continues to liaise with the Bank of
England and external ratings agencies as required
and maintained investment grade ratings during
2024. Demand for OSB issuances remains high, with
trades issued in 2024 performing well in primary and
secondary markets. The Group continues to monitor
access to debt markets and the cost for future MREL
issuance through ongoing contact with the debt
capital markets teams in several investment banks.
5.3 Refinancing of TFSME
Term Funding Scheme for Small and Medium-sized Enterprises (TFSME) borrowing by the Group reduced
to£1.4bn at the end of 2024 from £3.3bn in 2023. The Group has a refinancing concentration scheduled
forOctober 2025.
Mitigation Direction
The Group has other wholesale options available to
it, including securitisation programmes and repo or
sale of held notes, as well as retail funding through
its strong franchises, to replace the TFSME borrowing
gradually over the next six months ahead of the
maturity of this funding.
TFSME borrowing decreased during the year; however,
the current funding plan to refinance TFSME requires
increased savings inflows and intragroup transfer
offunding. The PRA have approved a Core UK
Group waiver in January 2025, which allows excess
funding at one entity to be used by the other entity
torepayTFSME.
Key:
Risk increased Risk decreased Risk broadly stable
57OSB GROUP PLC | Annual Report and Accounts 2024
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Principal risks and uncertainties continued
6 Solvency risk
The potential inability of the Group to ensure that
it maintains sufficient capital levels for its business
strategy and risk profile under both the base and stress
case financial forecasts.
Risk appetite statement
The Group seeks to ensure that it retains a sufficient
level and quality of capital to satisfy its minimum
regulatory requirements to cover its prudential risks
and support its growth objectives. The Group’s
solvency risk appetite is constrained within the
leverage ratio.
6.1 Deterioration of capital ratios
Key risks to solvency arise from balance sheet growth and unexpected losses which can result in the Group’s
capital requirements increasing, capital resources being depleted, or changes in regulatory standards such
that it no longer meets the capital requirements mandated by the PRA and Board risk appetite.
The Group has successfully met its interim MREL requirements which became binding in July 2024 and is on
track to meet its end-state requirements in July 2026. The Group considers its total loss-absorbing capacity
requirements in addition to its existing capital requirements.
The regulatory capital regime is subject to change and could lead to increases in the level and quality of
capital that the Group needs to hold to meet regulatory requirements. The near final Basel 3.1 standards
were published in September 2024 which is likely to result in an increase to the Group’s capital requirements
following the anticipated implementation date in January 2027.
Mitigation Direction
The Group operates from a strong capital position and
has a consistent record of profitability.
The Group actively monitors its capital and MREL
requirements and resources against financial forecasts
that account for the anticipated Basel 3.1 changes,
and undertakes stress testing analysis to subject its
solvency ratios to extreme but plausible scenarios.
The Group holds prudent levels of capital buffers
based on CRD IV requirements and expected balance
sheetgrowth.
The Group engages actively with regulators, industry
bodies and advisers to keep abreast of potential
changes and provides feedback through the
consultation process.
Ongoing profitability means that the Group’s capital
resources remain strong.
Risks remain around adverse credit profile
performance resulting from higher inflation and
higher interest rates.
7 Operational risk
The risk of loss or a negative impact on the Group
resulting from inadequate or failed internal processes,
people or systems, or from external events.
Risk appetite statement
The Group and its regulated entities define their
operational risk appetite in the context of the
operating model, external factors impacting the risk
profile and the underlying nature and characteristics
of operational risk in the pursuit of strategic objectives.
The Group and its regulated entities accept that
total elimination of operational risk is not possible or
cost effective in all cases, therefore a certain level
of tolerance for operational risk exists in the context
of the factors outlined above. However, the Group
and its regulated entities have limited tolerance for
operational risks and inadequacy of underlying
systems and controls which put at risk the wider
financial performance, reputation and the well-being
of its customers, employees, and anyone to whom the
organisation owns a duty of care at risk.
Operational risks must be managed so that residual
risk exposure remains acceptable* Where an
operational risk may pose a material residual risk of
medium-high or high to the business, an adequate
plan(s) or approved risk acceptance must be in place.
* Residual risk exposure is assessed as medium or low.
Direction
The Group and its regulated entities undertake regular assessment of the operational risk drivers and supporting
systems and controls, review realised risk events, key operational risks and emerging risks by performing
scenario analysis to quantify the operational risk loss profile. The Group and entity Boards have determined
that on an ongoing basis the Group and its regulated entities should not experience operational losses over a
12-month rolling period which exceed a 1 in 7 severity on the aggregated operational risk loss profile.
Key:
Risk increased Risk decreased Risk broadly stable
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Principal risks and uncertainties continued
7.1 IT security (including cyber risk)
The risks resulting from a failure to protect the Group’s systems and the data within them. This includes both
internal and external threats.
Risk appetite statement
The Group views its data and IT architecture as an
integral asset and enabler to achieving its purpose,
vision and strategic objectives. The Group is fully
aware of the dependencies between the security
of its data and IT platforms and its core values.
The Group is fully committed to protecting its core
data and IT assets and ensuring that our customers
and employee’s personal data is managed with
appropriate security, as well as providing safe
and secure platforms for the delivery of the Group
products and services. To that end the Group will
ensure that all cyber security risks are subject to
continuous monitoring and comprehensive and robust
controls. Given the evolving nature of cyber security
threats, the Group accepts that there may be periods
where its controls need to further strengthen to reflect
the changing nature of the cyber threats. However, the
gap between threats and controls will be minimised
through appropriate prioritisation and investment
(upgrading of controls), as well as being subject to
formal risk acceptance approval and reporting.
Mitigation Direction
The Group operates with a suite of preventative and
detective controls to ensure services between the business
and its customers operate securely with potential
threats identified and mitigated as part of its IT risk and
control assessment. This is underpinned by established
frameworks, policies and tested procedures intended to
ensure the effective response to a security breach.
The Group’s programme of IT and cyber risk
management improvements continued with the aim of
enhancing its protection against IT security threats,
deploying a series of tools designed to identify and
prevent network/system intrusions.
The Group has processes in place to allow it to operate
effectively when employees work from home and
manage the cyber risks related to working remotely.
Whilst IT security risks continue to evolve, work
continues to enhance the level of maturity of the
Group’s controls and defences, supported by
dedicated IT security experts.
The Group has an ongoing programme of penetration
testing in place to drive enhancements by identifying
potential areas of risk.
7.2 Data quality
The risk of inaccurate and/or incomplete data (including data processed by third-party suppliers) for
management information to support business decisions and/or meet OSB Group plc requirements, customer
requirements or regulatory requirements.
Risk appetite statement
The Group views its data as a critical corporate asset and
seeks to ensure that appropriate systems and controls are
established to ensure that data risk is minimised to a level
which does not result in the Group’s wider risk appetite
objectives being placed at unacceptable level of threat.
Where the Group becomes aware that its data-based
systems and controls are misaligned to the underlying
data risk threat, commensurate remedial actions should
be implemented and the unmitigated risk subject to formal
notification and acceptance.
Mitigation Direction
The Group operates within a suite of preventative
and detective controls to ensure data is accurate,
protected and readily available with potential
threats identified and mitigated as part of
its data risk and control assessment. This is
underpinned by established frameworks, policies
and procedures along with dedicated resources
to ensure the quality of data is maintained at an
appropriate standard.
Progress was made in 2024 to embed and further mature
Group-wide governance frameworks and policies with
further work planned for 2025 to move closer to the Group’s
target end state, including progressing towards establishing
an enterprise-wide data quality framework through
reducing the number of platforms, to be achieved as part of
the Group’s transformation programme.
7.3 Change management
The risk of ineffective design, execution or delivery of change or transformation initiatives (including
programmes and projects) and not realising intended benefits and outcomes.
Risk appetite statement
The Group will ensure that all strategic and portfolio change
Delivery is subject to the appropriate level of governance and
oversight to enable effective delivery against the identified
objectives and benefits as per plan and budget. The Group
acknowledges that its wider risk profile may be impacted
during certain phases of the strategic programmes such
as transition from programme to BAU; however any impact
will be minimised through the implementation of robust and
appropriate systems and controls throughout and following
the conclusion of the programme.
Mitigation Direction
The Group recognises that implementing change
introduces significant operational risk and
has therefore implemented a series of control
gateways designed to ensure that each stage
of the change management process has the
necessary level ofoversight.
The Group continued to adopt an ambitious change
agenda, which was monitored and managed well in2024.
The Group continued to make progress with its
transformation programme, which will enable it to meet the
future needs of customers, brokers and wider stakeholders,
whilst delivering further operationalefficiencies.
Key:
Risk increased Risk decreased Risk broadly stable
59OSB GROUP PLC | Annual Report and Accounts 2024
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Principal risks and uncertainties continued
7.4 IT failure
The risks resulting from a major IT application or infrastructure failure impacting access to the Group’s ITsystems.
Risk appetite statement
The Group views IT as a critical enabler to achieving
its purpose, vision, and strategic objectives. The
Group is fully committed to ensuring the adequacy,
performance and resilience of the IT services and
related assets that enable the delivery of the Group’s
core products, important business services and critical
internal functions. To that end, the Group will ensure
that all technology risks are appropriately managed
and maintained at acceptable levels as articulated
within the supporting sub-level statements.
Mitigation Direction
The Group continues to maintain existing IT
infrastructure, to ensure it remains fit for purpose and
supports the Group’s ongoing operating effectiveness.
Investment continues to be made to improve core
infrastructure, and simplify where possible, and has
improved the management of technical change to
strengthen resilience. The Group has identified its
prioritised business services and the infrastructure
that is required to support them. Tests are performed
regularly in line with established frameworks, policies
and procedures to validate the Group’s ability to
recover from anincident.
The Group has established a site in Hyderabad to
ensure that, in the event of an operational incident
inBangalore, services can be maintained.
Whilst progress was made in reducing both the
likelihood and impact of an IT failure, the risk remains,
as the Group continues to make progress across its
transformation programme.
8 Conduct risk
The risk that the Group’s culture, organisation,
behaviours and actions result in poor outcomes and
detriment for customers and/or damage to consumer
trust and integrity of the markets in which it operates.
Risk appetite statement
The Group has a very low appetite to assume risks
which may result in either poor or unfair customer
outcomes and/or cause disruptions in the market
segments in which it operates. The Group aims to
operate its businesses in such a way as to avoid
causing detriment or harm to its customers, and with
the highest standards of conduct. The Group will treat
its customers, third-party partners, investors and
regulators with respect, fairness and transparency.
The Group will proactively look to identify where its
products and services could lead to poor outcomes or
harm to its customers and will take appropriate action
to mitigate. Where customer harm occurs, the Group
will ensure effective solutions are implemented to
address the root cause and a fair outcome is achieved.
8.1 Conduct risk
The risk that the Group fails to meet its expectations with respect to conduct risk.
Mitigation Direction
The Group’s culture is clearly defined and monitored
through its Purpose, Vision and Values driven behaviours.
The Group has a strategic commitment to provide
simple, customer-centric products. In addition, a
Product Governance framework is established to
oversee that products are designed and maintained
to deliver good customer outcomes throughout the
product lifecycle.
The Group has an embedded Conduct Risk
Management Framework which clearly defines roles
and responsibilities for conduct risk management and
oversight across the Group’s three lines of defence.
During 2024, as a result of the cost of living and
cost of borrowing crisis and changing customer
and competitor behaviours, the Group’s operations
continued to experience high volumes of customer
contact, although less than in 2023.
Throughout 2024, the Group continued to review
and evolve its approach to supporting customers,
particularly those that are vulnerable and
experiencing financial difficulty, to ensure they
continue to receive the level of tailored support
needed to deliver good customer outcomes.
Conduct losses have remained low and stable during
the last12 months.
Key:
Risk increased Risk decreased Risk broadly stable
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Principal risks and uncertainties continued
9 Regulatory risk
The risk of regulatory sanctions, material financial
loss, or loss to reputation the Group may suffer, as
a result of its failure to comply with, regulations,
rules, codes of conduct or guidance applicable to its
operations, that are subject to authorisation and its
regulatorypermissions.
Risk appetite statement
The Group views ongoing conformance with regulatory
rules and standards across all the jurisdictions in which
it operates as a critical facet of its risk culture. The
Group has minimal appetite to assume regulatory
risk, which could result in poor customer outcomes,
customer detriment, regulatory sanctions, financial loss
or damage to its reputation. The Group will proactively
monitor for, and will not tolerate any systemic failure
to comply with applicable laws, regulations or codes of
conduct relevant to its business.
The Group acknowledges that regulatory rules and
standards are subject to interpretation and subsequent
translation into internal policies and procedures. The
Group interprets requirements to ensure adherence
with the intended purpose and spirit of the regulation
whilst being cognisant of commercial considerations
and good customer outcomes. To minimise regulatory
risk, the Group proactively engages with its regulators
in a transparent manner, participates in industry
forums and seeks external advice to validate its
interpretations where appropriate.
The Group is committed to maintaining high
levels of regulatory compliance across all aspects
of its business. The Group maintains robust risk
management systems and controls to enable
adherence to, and monitoring of, conformance to
regulatory requirements and industry standards. The
Group will respond in an appropriate manner to any
changes in the regulatory environment.
The Group is committed to embedding a robust
compliance culture throughout the organisation with
all staff having the responsibility of understanding and
upholding regulatory obligations.
9.1 Prudential regulatory changes
The Group continues to see a high volume of key compliance regulatory changes that impact its business
activities. These include incoming Basel 3.1 capital requirements and increased Resolvability Assessment
Framework requirements.
Mitigation Direction
The Group has an effective horizon scanning process to
identify regulatory change.
All significant regulatory initiatives are managed
by structured programmes overseen by the Project
Management team and sponsored at Executive level.
The Group has proactively sought external expert
opinions to support interpretation of the requirements
and validation of its response, where required.
The Group continued to have a high level of
interaction with the Bank of England and Prudential
Regulation Authority and continues to identify
and respond effectively to all regulatory changes
and engagements. Clarity on Basel 3.1 rules has
reduced a regulatory risk factor for the Group, and
has provided greater certainty of the Group’s go
forwardrequirements.
9.2 Conduct regulation
Regulatory changes focused on the conduct of business could force changes in the way the Group carries out
business and impose substantial compliance costs.
This includes the risk that product design, pricing, underwriting, arrears and forbearance and vulnerable
customer policies are misaligned to regulatory expectations which result in customer harm, particularly those
experiencing financial hardship or vulnerable customers, with the potential for reputational damage, redress
and other regulatory actions.
Mitigation Direction
The Group has a programme of regulatory horizon
scanning linking into a formal regulatory change
management programme. In addition, the focus
on simple products and customer-oriented culture
means that current practice may not have to change
significantly to meet any new conduct regulations.
All Group entities utilise underwriting, arrears and
forbearance and vulnerable customer policies, which
are designed to comply with regulatory principles, rules
and expectations. These policies articulate the Group’s
commitment to ensuring that all customers, including
those who are vulnerable or experiencing financial
hardship, are treated fairly, consistently and in a way
that considers their individual needs and circumstances.
The Group does not tolerate any systematic failure to
deliver fair customer outcomes. On an isolated basis,
incidents can result in customer harm due to human
and/or operational failures. Where such incidents
occur, they are thoroughly investigated, and the
appropriate remedial actions are taken to address
anycustomer harm and prevent recurrence.
The retail banking sector continues to be subject to
heightened levels of regulatory focus and change,
particularly in relation to conduct and customer
outcomes. The Group actively assesses its approach
and exposure to meeting current and emerging
regulatory frameworks and remains cognisant of the
potential risk of legacy decisions being subject to
future supervisory focus and attention.
The Group continues to proactively interact with
regulatory bodies to take part in thematic reviews and
information requests, as required.
Identifying, monitoring and supporting vulnerable
customers continues to be a key area of focus.
The Group continues to review its approach to
supporting customers experiencing financial difficulty
to ensure they continue to receive the level of tailored
support needed to deliver good customer outcomes.
Key:
Risk increased Risk decreased Risk broadly stable
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10.2 Fraud risk
The risk of financial loss resulting from fraudulent action by a person either internal or external.
Mitigation Direction
The Group continues to invest in a range of systems
and controls that are deployed across its product
range to detect and prevent exposure to fraud
throughout the customer lifecycle. At the point of
origination, all new applications are subject to a range
of controls to identify and mitigate the risk of fraud.
Customer behavioural and transactional activity is
closely monitored to identify potential suspicious
behaviours or trends that may be indicative of fraud.
All controls are supported by documented fraud
related policies and procedures that are managed
byexperienced employees in a dedicated Financial
Crime function.
The Group continually monitors its detection capability
with periodic reviews of the rules and parameters within
its systems and control framework to ensure that these
remain fit for purpose and aligned to mitigate any
emerging risks.
The risk of the Group experiencing future fraud
losses remains elevated as a result of external
market factors, such as the ongoing elevated costs
of borrowing and living, the geopolitical outlook and
the impact that UK government policies may have on
future UK macroeconomic performance. To date the
Group continues to observe a low level of actual fraud
losses, but remains cognisant of the external fraud
environment in which it operates and, in particular,
the rise in the number of customers falling victims
to elaborate scams. Whilst the Group’s product
functionality restricts the level of direct exposure to
these types of events, the Group continues to look
at options where it can educate and support its
customers and help prevent them from becoming
victims of this growing threat.
Emerging risks
The Group proactively scans for emerging risks which may have an impact on its ongoing
operations and strategy and considers its top emerging risks to be:
Political and macroeconomic uncertainty
Description Mitigation
The Group’s lending activity is predominantly
focused in the United Kingdom (with a legacy book of
mortgages in the Channel Islands) and, as such, will
be impacted by any risks emerging from changes in
the UK’s macroeconomic environment which itself is
influenced by geopolitical movements. High inflation
and changing interest rates pose risks to the Group’s
loan portfolio performance.
The Group has mature and robust monitoring
processes and through various stress testing activities
(i.e. ad hoc, risk appetite and ICAAP) understands how
the Group performs over a variety of macroeconomic
stress scenarios and has developed a suite of early
warning indicators, which are closely monitored to
identify changes in the economic environment. The
Board and management review detailed portfolio
reports to identify any changes in the Group’s
riskprofile.
10 Financial crime risk
The risk of financial or reputational loss resulting from
inadequate systems and controls to mitigate the risks
from financial crime.
Risk appetite statement
To minimise financial crime risk, the Group will design
and maintain robust systems and controls to identify,
assess, manage and report any activity (internal
or external in nature) which exposes the Group to
financial crime risk in the form of money laundering,
human trafficking, terrorist financing, sanctions
breaches, bribery, corruption and fraud. The Group
recognises the need to continuously review its systems
and controls to ensure that they are aligned to the
nature and scale of financial crime risk it is exposed
toon a current and forward-looking basis.
10.1 Financial crime risk
The risk of financial or reputational loss resulting from a failure to implement systems and controls to manage
the risk from money laundering, terrorist financing, sanctions, bribery, corruption and cyber-crime.
Mitigation Direction
The Group operates in a low-risk environment providing
relatively simple products to UK domiciled customers
serviced through UK registered bank accounts. The
Group has an established screening programme
that is deployed at the point of origination and on a
regular basis throughout the customer lifecycle. Where
applicable, enhanced due diligence is applied to ensure
that any increase in risk is appropriately managed and
any activity remains within risk appetite.
The Group has a horizon scanning programme that
identifies changes to money laundering regulations
and any other financial crime related legislation to
ensure that we comply with all regulatory obligations.
The Group screens its customers on a regular basis
against sanctions listings acting swiftly to react to any
updates released in relation to the financial sanctions
regime. Given the Group’s customer target market,
it has negligible exposure to any of the affected
jurisdictions and no exposure to any specific individual
or entity contained within revised sanctions listings.
The Group’s programme of cyber improvements
continued with the aim of enhancing its protection
against IT security threats, deploying a series of
toolsdesigned to identify and prevent network/
systemintrusions.
The Group continues to focus primarily on the
UK market with accounts serviced from UK
bankaccounts.
IT security risks continue to evolve and the level
of maturity of the Group’s controls and defences
continues to be enhanced whilst being supported
bydedicated IT security experts.
Principal risks and uncertainties continued
Key:
Risk increased Risk decreased Risk broadly stable
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Artificial Intelligence
Description Mitigation
Artificial Intelligence (AI), including generative
AI is rapidly advancing and since its creation is
being utilised more widely across the financial
services industry. OSB Group is in the early stages
of its journey in adopting the use of AI across the
organisation. TheGroup will continue to embrace
this new technology, but in a controlled manner
applying robust risk management arrangements
to ensure risks continue to be identified, monitored
and mitigated. Potential future risks including (i)
external threats including cyber criminals use of AI
technology, market competition dynamics changing
based on the varying levels of success firms have in
leveraging this technology to drive enhancements in
business performance. Potential use of AI by external
fraudsters (ii) internal risks relating to uncontrolled or
inappropriate use of AI capabilities across the Group.
OSB Group has established a responsible AI
policy, which controls the use and deployment of
AI technology across the Group. Internal subject
matter experts are in place and the Group will liaise
with external third-party advisers as required. Close
monitoring of developments in AI technology is
undertaken by the Group’s IT function, where a suite
of planned initiatives are underway to enable the
Group to benefit (where appropriate) from the use
ofAI technology, whilst mitigating any future risks
which may occur.
Climate change
Description Mitigation
Regulatory expectations and industry best practices
continue to evolve and further work is required to
enhance the Group’s approach to managing climate
risk. Climate change risks include:
• Physical risks which relate to specific weather events,
such as storms and flooding, or to longer-term shifts
in the climate, such as rising sea levels. These risks
could include adverse movements in the value of
certain properties that are in coastal and low-
lying areas or located in areas prone to increased
subsidence and heave.
• Transitional risks may arise from the adjustment
towards a low-carbon economy, such as tightening
energy efficiency standards for domestic and
commercial buildings. These risks could include a
potential adverse movement in the value of properties
requiring substantial updates to meet future energy
performance requirements.
• Reputational risk arising from a failure to meet
changing societal, investor or regulatory demands.
During 2024, the Group continued to closely monitor
its climate risk profile, whilst conducting scenario and
stress testing analysis to ensure climate risks remain
in line with appetite.
The Group’s Chief Risk Officer has designated senior
management responsibility for the management of
climate change risk.
Regulatory change
Description Mitigation
The Group remains subject to high levels of regulatory
oversight and an extensive and broad-ranging
regulatory change agenda, including meeting the
requirements of Basel 3.1 regulation. The Group
is therefore required to respond to prudential and
conduct-related regulatory changes, fulfilling
information requests and taking part in thematic
reviews, as required.
The Group has established horizon scanning
capabilities, coupled with dedicated prudential and
conduct regulatory experts in place to ensure the
Group manages future regulatory changes effectively.
The Group also has strong relationships with
regulatory bodies and, through membership
ofUK Finance, inputs into upcoming
regulatoryconsultations.
Principal risks and uncertainties continued
Key:
Risk increased Risk decreased Risk broadly stable
63OSB GROUP PLC | Annual Report and Accounts 2024
Strategic Report
Governance Financial StatementsOverview Appendices
Credit risk
During 2024 the Bank of England base
rate remained elevated, although some
modest reductions were observed in the
second half of the year. These elevated
borrowing costs resulted in subdued property
purchase activity and consequent loan
demand. Unemployment rates remained
low, whilst modest house price inflation
was observed. The Group’s prudent risk
appetite and disciplined approach to credit
risk management supported robust credit
profileperformance during the year.
The Group observed strong demand for
its loan products and delivered organic
originations of £4.0bn during the year
(2023:£4.7bn), despite subdued demand in
the wider mortgage market. Strong levels of
lending were observed across the Group’s
core Buy-to-Let and residential first charge
products, with the Group’s renewed focus on
bridging, semi commercial and commercial
mortgage lending resulting in higher
origination levels versus 2023.
The Group actively manages three key
credit risk pillars including i) the customer’s
propensity to repay and (ii) the customer or
tenant’s ability to maintain payments and (iii)
the underlying collateral or security provided
to support lending and its ability to absorb
adverse movements in values, providing
loss protection should a repayment default
eventoccur.
The credit score profile of new lending
remained broadly stable throughout the
year, indicating that onboarded customers
had strong ability and propensity to make
payments in the future.
Buy-to-Let interest coverage ratios for
new lending improved compared to 2023
and remained strong at 186% for OSB and
160% for CCFS (2023: 176% and 154%,
respectively), demonstrating a healthy
surplus in rental income versus the required
monthly repayment amount.
Strong origination and customer retention
performance resulted in the statutory net
loan book totalling £25.1bn (31 December
2023: £25.8bn), including the impact of the
derecognition from the balance sheet of
£1.25bn of performing Precise Buy-to-Let
mortgages. The underlying loan book would
have increased by 2.5% since 31 December
2023 excluding the impact of the transaction.
Credit scoring metrics for existing loan
balances remained robust, with modest
increases in future probability of default
and affordability scores observed as
more customers migrated into arrears and
customers’ credit profiles continued to be
impacted by the increased costs of living
andborrowing.
The Group remains a fully secured lender
with prudent lending policies and criteria
coupled with property value appreciation in
2024. Weighted average LTV levels increased
to 64% for OSB from 63% in 2023 and
reduced slightly for CCFS to 64% from 65%
in 2023. The weighted average LTV profile
remained prudent for the Group at 64%,
stable from 2023.
During 2024 the Group observed an increase
in arrears levels with balances over three
months in arrears increasing to 1.7% of
theloan book as at 31 December 2024
(31 December 2023: 1.4%), as customers
experienced loan affordability challenges
post reverting onto a higher prevailing
interest rates, or landlords experienced
challenges in receiving rental payments.
Across the OSB entity, arrears levels
increased to 1.8% from 1.6% at the end of
2023 whilst for CCFS arrears increased to
1.5% from 1.2% at the end of 2023.
The OSB entity includes a number of
legacy closed acquired first and second
charge mortgage portfolios, which have
a higher risk profile versus organically
originated lending and therefore are a
material contributor to the segment level
arrears profile. As at 31 December 2024 the
acquired portfolios equated to 1.6% of the
OSB entity level net loans and advances
to customers, whilst contributing 17.2% of
total segment level arrears. The arrears
ratio of the acquired segment increased to
19.5% as at 31 December 2024 versus 15.9%
as at 31 December 2023 as performing
balances rolled off and underlying arrears
levels increased, as a result of the challenging
macro economic backdrop and the ongoing
elevated cost of borrowing.
In December 2024, the Group completed
a £1.25bn securitisation and derecognition
transaction of CCFS Buy-to-Let mortgages
which impacted the segment level arrears
ratio; on an underlying basis arrears levels
would have been 1.3% as at 31 December
2024 (versus the post-transaction position
of1.5%) had the transaction not taken place.
Segment level arrears ratios
31 December
2024
31 December
2023
Group Sub segment 1.7% 1.4%
OSB Total 1.8% 1.6%
Organic 1.5% 1.3%
Acquired 19.5% 15.9%
CCFS Total (post-
securitisation) 1.5% 1.2%
Total (pre-
securitisation) 1.3% 1.2%
In line with modelled expectations the Group
has observed a stabilisation of arrears trends
within the last three months of 2024. A suite
of initiatives are progressing to drive further
improvements to arrears trends in the near
term, with oversight being provided by
theBoard.
The timelines for repossessing and selling
properties continued to be impacted by
ongoing delays in the court hearing process.
The Group actively monitors performance
against a set of internal risk appetite and
early warning indicators together with wider
benchmarked external data provided by third
parties, including UK Finance. During 2024
the Group’s arrears performance operated
inside of forecasted estimates, and prudent
IFRS 9 provision coverage levels continued to
be held to cover for forecasted future losses.
Risk profile performance overview
OSB GROUP PLC | Annual Report and Accounts 202464
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Governance Financial StatementsOverview Appendices
Risk profile performance overview continued
During 2024 the Group observed a marked
increase in the number of forbearance measures
requested by customers experiencing financial
difficulty, with 3,013 requests supported during
2024, versus 2,054 in the prior year, again
fuelled by macroeconomic headwinds. The
balance of these forbearance measures granted
as of 31 December 2024 totalled £348.2m versus
£261.1m as of 31 December 2023.
The most common solutions provided were
interest rate reduction, switch to interest only
and payment deferral. The largest provision
of forbearance was to residential first charge
mortgage holders.
Expected credit losses (ECL)
Balance sheet expected credit losses
decreased from £145.8m to £126.9m as at
31 December 2024. The full year statutory
impairment credit of £11.7m represented
a loan loss ratio of -5bps (2023: £48.8m
charge, 20bps loan loss ratio, respectively).
A summary of the key impairment charge
drivers for 2024 included:
a) Macroeconomic outlook – the Group
regularly updates the collateral values
of properties which act as security
against the loans extended to customers
and, in 2024, the Group observed an
improvement in property values that
outperformed forecast expectations
during 2024. The Group continued to
receive regular macroeconomic scenario
updates from its advisers, which were
reviewed and discussed by management
and the Board, along with the probability
weightings applied to each scenario. As a
result, the cumulative impact of updated
collateral values and revised scenarios
was a release of £36.2m.
b) Model and staging enhancements –
enhancements were made to the Group’s
models to ensure that estimates continued
to reflect actual credit performance. Prior
to each reporting period the Group’s
Significant Increase in Credit Risk (SICR)
logic which determines whether accounts
not in arrears should be moved to Stage
2 is reviewed. These model adjustments
made to reflect recent behaviour had a
cumulative release of £2.8m.
c) Post-model adjustments – the Group
continued to utilise post-model adjustments
(PMAs) to ensure risks not captured by
the Group’s models were assessed and
appropriate provisions continued to be held.
PMAs are primarily designed to capture
the risk arising from elongated sale times
observed within the possession process, as
well as the heightened cost of borrowing,
by moving some accounts into Stage 2
even when the account is performing. PMA
adjustments made within the reporting
period resulted in an impairment release
of £5.1m driven by the removal of the cost
of living PMA as wage growth aligned
with inflation levels, and updated cost of
borrowing impact analysis supported a
reduction in provision levels required.
d) Arrears flow – growth in Stage 3 balances
resulted in a charge of £10.8m with the
majority of the charge recognised at the
half year 2024 (£7.5m). The charge in part
was driven by (i) accounts waiting to clear
the 12-month probation period (ii) cross
contingent defaults, where a borrower has
multiple facilities and, once a minimum
proportion of exposure in default has been
exceeded, all accounts are brought into
default and (iii) late-stage arrears levels
continuing to be elevated due to ongoing
challenges with the process of repossessing
and selling properties.
e) Changes in risk profile – as the Group’s
loan book continued to grow, provisions
were raised against the incremental
Stage 1 balances resulting in a £3.3m
impairment charge. Other changes to
the Group’s credit profile, including new
accounts entering stage 2, resulted in a
further charge of £8.4m.
f) Individually assessed provisions –
theGroup’s specialist real estate
management and financial support
teams maintain watchlists of loans
where objective evidence of impairment
exists over a given exposure. For these
specific loans, a detailed assessment
ofthe collateral and circumstances
ofthearrears are assessed.
When required, an individual impairment
provision will be raised using this updated
information which replaces any modelled
provisions held. During 2024, the Group
raised a number of additional individual
provisions against a small number of
counterparties which in aggregate
resulted in an impairment charge
of£2.7m.
g) Write-offs and recoveries – as per the
Group’s policy, following the successful
sale of the security should there be a
shortfall. Write-offs did not form part
of the impairment charge for the year,
as they were expensed to the profit and
lossin the periods when the provisions
were raised.
Coverage ratios table
Impairment coverage levels reduced compared to 31 December 2023, driven by the improving
outlook of future property values and the stabilisation of arrears observed in the second half
of 2024. The Group’s Risk function conducted top-down analysis, assessing portfolio-specific
risks, which confirmed the appropriateness of provision levels.
As at 31 December 2024
Gross carrying
amount
£m
Expected
credit losses
£m
Coverage
ratio
%
Stage 1 19,877.1 13.7 0.07%
Stage 2 4,352.9 39.3 0.90%
Stage 3 (+ POCI) 1,010.3 73.9 7.31%
Total 25,240.3 126.9 0.50%
As at 31 December 2023
Gross carrying
amount
£m
Expected
credit losses
£m
Coverage
ratio
%
Stage 1 20,576.8 22.4 0.11%
Stage 2 4,5 37.9 54.3 1.20%
Stage 3 (+ POCI) 782.4 69.1 8.83%
Total 25,897.1 145.8 0.56%
65OSB GROUP PLC | Annual Report and Accounts 2024
Strategic Report
Governance Financial StatementsOverview Appendices
Forecast macroeconomic variables over a five-year period
Scenario %
Scenario
Probability
weighting
(%) Economic measure
Year end
2024
Year end
2025
Year end
2026
Year end
2027
Year end
2028
Base case 40
GDP 0.7 1.4 1.7 1.8 1.7
Unemployment 4.3 4.4 4.3 4.1 4.0
House price growth 1.2 1.1 1.7 2.8 4.2
CPI 2.6 2.9 2.2 2.1 2.1
Bank Base Rate 4.8 3.8 3.1 2.6 2.5
Upside 30
GDP 0.7 3.9 3.1 2.5 2.0
Unemployment 4.3 3.7 3.6 3.6 3.6
House price growth 1.2 3.2 4.4 5.9 4.5
CPI 2.6 4.2 3.0 2.5 2.1
Bank Base Rate 4.8 5.4 4.4 3.4 3.0
Downside 20
GDP 0.7 -2.3 0.4 1.4 1.7
Unemployment 4.3 5.5 6.3 6.9 6.6
House price growth 1.2 -7.4 -3.1 -1.9 5.1
CPI 2.6 1.3 1.1 1.9 1.9
Bank Base Rate 4.8 3.0 1.8 1.8 1.8
Severe
downside 10
GDP 0.7 -4.2 -0.5 1.0 1.6
Unemployment 4.3 5.8 6.8 7.3 7.0
House price growth 1.2 -11.3 -6.0 -5.1 5.3
CPI 2.6 0.5 0.6 1.6 1.9
Bank Base Rate 4.8 2.4 1.0 1.0 1.0
Note: GDP, CPI, and HPI are all measured on an annual change basis. Bank Base Rate and Unemployment metrics are end
of year forecasted positions.
Macroeconomic scenarios
The measurement of ECL under the IFRS 9
approach is complex and requires a high
level of judgement. The approach includes
the estimation of probability of default (PD),
loss-given default (LGD) and likely exposure
at default (EAD). An assessment of the
maximum contractual period over which the
Group is exposed to the credit risk of the
asset is also undertaken.
IFRS 9 requires firms to calculate ECL
provisions simulating the effect of a range
of possible economic outcomes, calculated
on a probability-weighted basis. This
requires firms to formulate forward-looking
macroeconomic forecasts and incorporate
them into their ECL calculations.
i. How macroeconomic variables
andscenarios are selected
As part of the IFRS 9 modelling process, the
relationship between macroeconomic drivers
and arrears, default rates and collateral
values is established. The Group adopted an
approach which utilises four macroeconomic
scenarios. These scenarios are provided by
an industry-leading economics advisory firm,
that advises management and the Board.
A base case forecast is provided, together
with a plausible upside scenario. Two
downside scenarios are also provided
(downside and a severe downside).
ii. How macroeconomic scenarios are
utilised within ECL calculations
Probability of default estimates are
either scaled up or down based on the
macroeconomic scenarios utilised.
Loss given default estimates are principally
impacted by property price forecasts, which
are utilised within loss estimates should an
account be possessed and sold.
Exposure at default estimates are not impacted
by the macroeconomic scenarios utilised.
Each of the above components are then directly
utilised within the ECL calculation process.
iii. Macroeconomic scenario governance
The Group has a robust governance process
to oversee macroeconomic scenarios and
probability weightings used within ECL
calculations.
On a periodic basis, the Group’s Risk function
and economic adviser provide the Group
Risk and Audit Committees with an overview
of recent economic performance, together
with updated base, upside and two downside
scenarios. The Risk function conducts a
review of the scenarios comparing them to
other economic forecasts, which results in
a proposed course of action which, once
approved, is implemented.
Risk profile performance overview continued
OSB GROUP PLC | Annual Report and Accounts 202466
Strategic Report
Governance Financial StatementsOverview Appendices
Risk profile performance overview continued
iv. Changes made during 2024
Throughout 2024, the scenario suite was
monitored and updated as UK political and
geopolitical developments occurred.
The Group’s Risk and Audit Committees
focused on assessing whether specific risks
had been captured within externally provided
forward-looking forecasts. Of particular
focus were the risks relating to the cost of
borrowing, unemployment, inflation and
interest rates and changes in house prices.
The Group undertook detailed analysis to
assess whether specific sub-cohort risks
were adequately accounted for by the
Group’s IFRS 9 models, which identified a
small number of areas requiring post model
adjustments (PMA) to be made. During the
year the cost of living PMA was removed, as
wage growth aligned with inflation rates, with
the cost of borrowing PMA refreshed taking
account of the latest interest rate outlook.
Furthermore, models were calibrated to
the latest observed credit performance
whilst ensuring unemployment rates were
adequately accounted for.
The Board reflected on the ongoing
appropriateness of probabilities attached
to the suite of IFRS 9 scenarios as the
macroeconomic outlook evolved throughout
the year. Scenarios remain symmetrical,
where the upside and downside scenarios
carry equal weightings, and the base case
has the highest probability.
• loan-term extension: a permanent
account change for customers in financial
distress where the overall term of the
mortgage is extended, resulting in a lower
contractual monthly payment
• payment holiday: a temporary account
change to assist customers through
periods of financial difficulty where
capital and interest accruals during the
payment holiday period are repaid from
the end of the payment holiday over the
remaining term. Any arrears existing at
the commencement of the arrangement
are retained
• voluntary-assisted sale: a period of
time is given to allow borrowers to sell the
property and arrears accrue based on the
contractual monthly payment
• reduced monthly payments: a
temporary arrangement for customers
in financial distress. For example, a
short-term arrangement to pay less
than the contractual monthly payment.
Arrears continue to accrue based on
thecontractual monthly payment
• capitalisation of interest: arrears are
added to the loan balance and are repaid
over the remaining term of the facility
or at maturity for interest only products.
Anew payment is calculated, which will
behigher than the previous payment
Forbearance
Where a borrower experiences financial
difficulty which impacts their ability to
service their financial commitments under the
loan agreement, forbearance may be used
to achieve an outcome which is mutually
beneficial for both the borrower and the Group.
Borrowers who are experiencing financial
difficulties, either pre-arrears or in arrears,
enter a consultative process to ascertain the
underlying reasons and to establish the best
course of action to enable the borrower to
develop credible repayment plans to see them
through the period of financial stress.
The specific tools available to assist
customersvary by product and the
customers’circumstances. The various options
considered for customers are as follows:
• temporary switch to interest only:
a temporary account change to assist
customers through periods of financial
difficulty where the contractual monthly
payment is reduced to the amount of
interest owed in the month for the duration
of the account change. Any arrears
existing at the commencement of the
arrangement are retained
• interest rate reduction: the Group
may, in certain circumstances, where the
borrower meets the required eligibility
criteria, transfer the mortgage to a lower
contractual rate. Where this is a formal
contractual change, the borrower will be
requested to obtain independent financial
advice as part of the process
• full or partial debt forgiveness: where
appropriate, the Group will consider
writing off part of the debt. This may
occur where the borrower has an agreed
sale and there is a shortfall in the amount
required to redeem the Group’s charge, in
which case repayment of the shortfall may
be agreed over a period of time, subject
to an affordability assessment; or where
possession has been taken by the Group,
and on the subsequent sale there has
beena shortfall loss
• arrangement to pay: where an
arrangement is made with the borrower
torepay an amount above the contractual
monthly payment, which will repay
arrears over a period of time
• promise to pay: where an arrangement is
made with the borrower to defer payment
or pay a lump sum at a later date
• bridging loans which are more than
30 days past their maturity date:
Repayment is rescheduled to receive a
balloon or bullet payment at the end of
the term extension, where the institution
can duly demonstrate future
cash-flowavailability
The Group aims to proactively identify and
manage forborne accounts, utilising external
credit reference bureau information to
analyse probability of default and customer
indebtedness trends over time, feeding pre-
arrears watch-list reports. Watch-list cases
are in turn carefully monitored and managed
as appropriate.
67OSB GROUP PLC | Annual Report and Accounts 2024
Strategic Report
Governance Financial StatementsOverview Appendices
Fair value of collateral methodology
The Group ensures that security valuations are
reviewed on an ongoing basis for accuracy and
appropriateness. Commercial properties are
subject to quarterly indexing using Commercial
Real Estate data. Residential properties are
indexed at least quarterly, using House Price
Index data.
Solvency risk
The Group maintains an appropriate
level and quality of capital to support its
prudential requirements with sufficient
contingency to withstand a severe but
plausible stress scenario. The solvency risk
appetite is based on a stacking approach,
whereby the various capital requirements
(Pillar 1, Pillar 2A, CRD IV buffers, Board
andmanagement buffers) are incrementally
aggregated as a percentage of risk-
weightedassets.
The Group’s interim MREL requirements
became binding in July 2024 and total
loss-absorbing capacity is subject to Board
approved risk appetite limits. All solvency
planning and reporting consider the total loss
-absorbing capacity requirement along with
the Group’s existing capital requirements.
Solvency risk is a function of balance sheet
growth, profitability, access to capital
markets and regulatory changes. The Group
actively monitors all key drivers of solvency
risk and takes prompt action to maintain
itssolvency ratios at acceptable levels.
The Board and management also assess
solvency when reviewing the Group’s
business plans and inorganic growth
opportunities. The Group’s CET1 and total
capital ratios increased to 16.3% and
19.7%, respectively as at 31 December
2024 (31 December 2023: 16.1% and 19.5%,
respectively) remaining significantly above
risk appetite. The Group’s leverage ratio was
7.7% as at 31 December 2024 (31 December
2023: 7.5%).
Liquidity and funding risk
The Group has a prudent approach to
liquidity management through maintaining
sufficient liquidity resources to cover
cash-flow imbalances and fluctuations in
funding, under both normal and stressed
conditions, arising from market-wide and
bank-specific events. OSB’s and CCFS’
liquidity risk appetites have been calibrated
to ensure that both Banks always operate
above the minimum prudential requirements
with sufficient contingency for unexpected
stresses, whilst actively minimising the risk
of holding excessive liquidity, which would
adversely impact the financial efficiency of
the business model.
The Group continues to attract new retail
savers and has high retention levels with
existing customers. In addition, the Group
is able to access a wide range of wholesale
funding options, including securitisation
issuances and the use of retained notes from
both Banks as collateral for Bank of England
facilities, and repurchase agreements with
third parties.
In 2024, both Banks actively managed their
respective liquidity and funding profiles
within the confines of their risk appetites
asset out in the Group’s ILAAP.
Retail funding rates decreased throughout
the year due to reductions in the Bank
of England base rate, however savings
rates have not fully decreased in line with
base rate, putting pressure on cost of
funds. Rateson the variable books have
been actively managed to ensure a stable
depositbase at an attractive cost of funds.
Swap rate decreases in 2024 also led to
the Group repaying a large proportion
of the variation margin collateral on the
Group’s interest rate swaps received
during rate increases in 2023. The Group
managed internal buffers to ensure that
sufficient funds were held at the Bank of
England to meet any swap margin calls
asratesreduced.
Each Bank’s risk appetite is based on internal
stress tests that cover a range of scenarios
and time periods and therefore are a more
severe measure of resilience to a liquidity
event than the standalone liquidity coverage
ratio (LCR). As at 31 December 2024, OSB
had a liquidity coverage ratio of 183% (2023:
208%) and CCFS 231% (2023: 139%), and
the Group LCR was 217% (2023: 168%), all
significantly above regulatory requirements.
Market risk
The Group is exposed to adverse movements
in interest rates, foreign exchange rates
and counterparty exposures. The Group
accepts interest rate risk and basis risk as
a consequence of structural mismatches
between fixed rate mortgage lending, sight
and fixed-term savings and the maintenance
of a portfolio of high-quality liquid assets.
Interest rate exposure is mitigated on a
continuous basis via asset and liability
management, the Group’s structural hedge
and the use of financial derivatives, within
limits set by the Group ALCO and approved
by the Board. The Group’s balance sheet
is predominantly GBP denominated. The
Group has some minor foreign exchange
risk from funding its OSBI subsidiary. This
is minimised by pre-funding a number of
months in advance and regularly monitoring
GBP/INR rates. Wholesale counterparty risk
is measured on a daily basis and constrained
by counterparty risk limits.
Operational risk
The operational risk management framework
has been designed to ensure a robust
approach to the identification, measurement
and mitigation of operational risks, utilising
a combination of both qualitative and
quantitative evaluations. The Group’s
operational processes, systems and controls
are designed to minimise disruption to
customers, damage to the Group’s reputation
and any detrimental impact on financial
performance. Where risks continue to exist,
there are established processes to provide
the appropriate levels of governance and
oversight, together with an alignment to the
level of risk appetite stated by the Board.
Risk profile performance overview continued
OSB GROUP PLC | Annual Report and Accounts 202468
Strategic Report
Governance Financial StatementsOverview Appendices
Risk profile performance overview continued
A strong culture of transparency and
escalation was cultivated throughout
the organisation, with the Operational
Risk function having a Group-wide remit,
ensuring a risk management model that is
well-embedded and consistently applied. In
addition, a community of Risk Champions
representing each business line and location
has been identified, together with dedicated
first line risk and controls teams in some key
areas of the business. Both the dedicated
first line risk and control teams and the
RiskChampions ensure that operational
riskidentification and assessment processes
are established across the Group in a
consistent manner.
A hybrid working model has been adopted
across the Group, with the exception being
front-line customer-facing colleagues. With
a high number of employees working and
accessing systems from home, the risk
of a cyber attack has heightened. Whilst
IT security risks continue to evolve, work
continues to enhance the level of maturity of
the Group’s controls and defences, supported
by dedicated IT security experts. The Group’s
ongoing penetration testing continues to drive
enhancements by identifying potential areas
of risk.
Regulatory and compliance risk
The Group is committed to the highest
standards of regulatory conduct and aims
to minimise breaches, financial costs and
reputational damage associated with
non-compliance.
The Group has an established Compliance
function which actively identifies, assesses
and monitors adherence with current regulation
and the impact of emerging regulation.
In order to minimise regulatory risk, the
Group maintains a proactive relationship with
key regulators, engages with industry bodies
such as UK Finance and seeks external expert
advice. The Group also assesses the impact
of forthcoming regulation on itself and the
markets in which it operates and undertakes
robust assurance assessments from within
the Risk and Compliancefunctions.
Conduct risk
The Group considers its culture and behaviour
in ensuring the fair treatment of customers,
and in maintaining the integrity of the market
sub-segments in which it operates, to be a
fundamental part of its strategy and a key
driver to sustainable profitability and growth.
The Group does not tolerate any systemic
failure to deliver good customer outcomes.
On an isolated basis, incidents can result in
customer harm due to human or operational
failures. Where such incidents occur, they are
thoroughly investigated, and the appropriate
remedial actions are taken to address any
customer harm and to prevent recurrence.
The Group considers effective conduct risk
management to be a product of the positive
behaviour of all employees, influenced
by a customer-centric culture throughout
the organisation and therefore continues
to promote a strong sense of awareness
andaccountability.
Throughout 2024, the Group continued to
review and evolve its approach to supporting
customers, particularly those that are
vulnerable and experiencing financial difficulty,
to ensure they continue to receive the level
of tailored support needed to deliver good
customer outcomes. The Group implemented
the FCA’s Consumer Duty requirements within
the required timelines.
Conduct losses have remained stable with no
breaches of risk appetite reported during the
last 12 months.
Financial crime risk
The Group provides relatively simple products
to UK-domiciled customers serviced through
a UK-registered bank account. The Group
has an established screening programme
that is deployed at the point of origination
and on a regular basis throughout the
customer lifecycle. The Group continues to
invest in a range of systems and controls
that are deployed across its product range
in order to detect and prevent the exposure
to fraud through the customer lifecycle. All
new-to-business applications are subject to
a range of controls to identify and mitigate
fraud. Customer activity is monitored in order
to detect suspicious activity or behaviour
that may be indicative of fraud.
Strategic and business risk
The Board has clearly articulated the Group’s
strategic vision and business objectives
supported by performance targets. The
Group does not intend to undertake any
medium-to long-term strategic actions,
whichwould put the Group’s strategic or
financial objectives at risk.
To deliver against its strategic objectives
and business plan, the Group has
adopted a sustainable business model
based on a focused approach to core
niche market sub-segments where its
experience and capabilities give it a clear
competitiveadvantage.
The Group remains focused on delivering
against its core strategic and financial
objectives, against a highly competitive and
uncertain backdrop.
Reputational risk
Reputational risk can arise from a variety
of sources and is a second-order risk. The
crystallisation of another principal risk can
lead to a reputational risk impact. The Group
monitors reputational risk through tracking
media coverage, customer satisfaction
scores, the Group’s share price and Net
Promoter Scores.
69OSB GROUP PLC | Annual Report and Accounts 2024
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Viability statement
The Group’s long-term direction is informed
by business and strategic plans which are
set on an annual basis and are reviewed
and refreshed quarterly. The operating and
financial plans consider, among other matters,
the Board’s risk appetite, the macroeconomic
outlook, market opportunity, the competitive
landscape, and sensitivity of the financial
plans to volumes, margin pressures and any
changes in capital requirements.
In making the assessment, the Board has
considered all principal and emerging risks,
including climate risk where the risk is likely
to emerge outside of the viability assessment
horizon. The impacts of climate risk have
been assessed as part of the Internal Capital
Adequacy Assessment Process (ICAAP), which
concluded that at present the associated
financial risks are not material for the Group.
The Group prepares financial forecasts over
a five-year time horizon, with the Board and
management focusing on the projections over
the first three years. Key events which will
impact the Group’s capital adequacy such
as the introduction of Basel 3.1, the impact of
the end state implementation of the Group’s
Minimum Requirements for Own Funds and
Eligible Liabilities (MREL) and the impact of the
peak stress point of macroeconomic forecasts
all fall within a three-year time horizon. Post
consideration of these factors, the Board
considers a viability assessment horizon of
three years to remain appropriate.
The Banks within the Group are authorised
by the PRA and regulated by the FCA and the
PRA. The Group has a robust set of policies,
procedures and systems to undertake a
comprehensive assessment of all the principal
risks and uncertainties to which it is exposed,
on a current and forward-looking basis.
The Group identifies, assesses, manages and
monitors its risk profile based on the disciplines
outlined within the Group Enterprise Risk
Management Framework, in particular through
leveraging its risk appetite framework (as
described in the Risk review). Potential changes
in the aggregated risk profile are assessed
across the business-planning horizon by
subjecting the operating and financial plans
to severe but plausible macroeconomic and
idiosyncratic stress scenarios.
The viability of the Group is assessed at both
the Group and the underlying regulated
bank levels, through leveraging the risk
management frameworks and stress testing
capabilities of both regulated banks.
Stress testing is an integral risk management
discipline, used to assess the financial and
operational resilience of the Group. The
Group has developed bespoke stress testing
capabilities to assess the impact of extreme
but plausible scenarios in the context of its
principal risks impacting the primary strategic,
financial and regulatory objectives. Stress
test scenarios are identified in the context of
the Group’s operating model, identified risks,
and the business and economic outlook. The
Group actively engages external experts
to inform the process by which it develops
business and economic stress scenarios.
A broad range of stress scenarios are
analysed considering the potential
impacts to changes in HPI, unemployment,
inflation and interest rates over a range of
severities. Stresses are applied to lending
volumes, capital requirements, liquidity and
funding mix, interest margins and credit
and operational losses. Stress testing also
supports key regulatory submissions such as
the ICAAP, ILAAP and the Group Recovery
and Restructuring Plan. ICAAP stress testing
assesses capital resources and requirements
over a five-year period.
The Group has identified a broad suite of
credible management actions, which can
be implemented to manage and mitigate
the impact of stress scenarios. These
management actions are assessed under a
range of scenarios varying in severity and
duration. Management actions are evaluated
based on speed of implementation, second
order consequences and dependency on
market conditions and counterparties.
This statement is made to comply with
Provision 31 of the 2018 UK Corporate
Governance Code which requires the
Board to assess the viability of the
Group over a stated time horizon.
Management actions are used to inform
capital, liquidity and recovery planning
understress conditions.
During the year the Group continued to
deliver against its planned MREL issuance
schedule and met its interim requirements
which came into effect during July 2024. The
Group is well positioned to meet its end-
state requirements in due course including
regulatory buffers.
In addition, the Group identifies a range of
catastrophic scenarios, which could result
in the failure of its current business model.
Business model failure scenarios (Reverse
Stress Tests or RSTs) are primarily used to
inform the Board of the outer limits of the
Group’s risk profile. RSTs play an important
role in helping the Board and Executives to
assess the available recovery options to revive
a failing business model.
The Group has established a comprehensive
operational resilience framework to actively
assess the vulnerabilities and recoverability of
its critical services. The Group also conducts
regular business continuity and disaster
recovery exercises.
The ongoing monitoring of all principal risks
and uncertainties that could impact the
operating and financial plan, together with
the use of stress testing to ensure that the
Group could survive a severe but plausible
stress, enables the Board to assess the
viability of the business model over a
three-year period.
The Group has maintained strong capital
and funding profiles with a view to ensuring
continued financial resilience. However,
the Group remains fully cognisant of the
uncertain macroeconomic environment and
ensures that stress testing activities consider a
range of potential scenarios.
OSB GROUP PLC | Annual Report and Accounts 202470
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Viability statement continued
The Board has also considered the potential
implications of the current macroeconomic
uncertainty in its assessment of the financial
and operational viability of the Group and
has a reasonable belief that the Group retains
adequate levels of financial resources (capital
and liquidity) and operational contingency.
In line with prior years, in the viability
assessment process the Board considered
the latest macroeconomic forward-looking
scenarios utilised for business planning and
the Group’s IFRS 9 calculations which consider
macroeconomic risks such as rising levels of
unemployment, inflation, interest rate rises
and movements in house prices. Utilising
analysis which identifies scenarios which
would result in the Group becoming unviable,
the Board considered the plausibility of these
scenarios materialising. Forecasts and capital
stress tests considered the impact of go-
forward MREL requirements phasing in, whilst
incorporating the Group’s simulation of the
impact of Basel 3.1 implementation.
The potential impact of the macroeconomic
environment on the Group’s operations is
subject to continuous monitoring through the
Group’s management committees, capital
and liquidity, operational resilience and
business continuity planning working groups,
with appropriate escalation to the Board and
supervisory authorities.
The Group has progressively enhanced its
approach to assessing the viability of its strategy
and business operating model. In particular the
Group has enhanced its capabilities by:
• further leveraging the Group-wide stress
testing tool to simulate the performance
of the loan book through macroeconomic
stresses including impacts on balances,
income, losses and RWAs.
• increasing the diversification of its funding
profile, supported by an enhanced
assessment of funding and liquidity
riskprofiles.
• enhancing the assessment of operational
resilience through the ongoing
review of priority business functions,
including supporting infrastructure
and dependencies through a simulated
business continuity exercise.
The current financial forecasts, risk profile
characteristics and stress test analysis,
coupled with the Group’s capital, funding and
operational capabilities support the Directors’
assessment that they have a reasonable
expectation that the Group will remain viable
over the three-year horizon and will be able to
continue to operate and meet its liabilities as
they fall due over this period.
71OSB GROUP PLC | Annual Report and Accounts 2024
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Strategic Report
Governance Financial StatementsOverview Appendices
OSB GROUP PLC | Annual Report and Accounts 202472
For further information see supporting
ESGdisclosures on our website.
Climate Transition Plan 2024
Net Zero Banking Alliance –
intermediate targets
Scope 1, 2 and 3 Basis of Reporting
Modern Slavery Act Statement
Gender Pay Gap Report
1. Ambition includes Scope 1 and 2 emissions, relevantScope 3 categories including category 15 – investments.
Just Transition
We are committed to environmental
stewardship, supporting the transition to
a low carbon economy, and achieving net
zeroacross our value chain by 2050
1
.
76 Transition plan, targets, and performance
82 Environmental policy
83 Greenhouse gas (GHG) emissions
84 Greenhouse gas (GHG) emissions table
76-85
PAGES
86-94
PAGES
95-99
PAGES
People
We are committed to having a positive
human and social impact on the lives of the
customers, colleagues and communities we
work with.
86 Supporting our customers
87 Supporting our colleagues
92 Supporting our communities
Stewardship
We are committed to operating
responsibly, ethically and transparently,
delivering sustainable value to all
ourstakeholders.
95 ESG Governance
96 Delivering positive customer outcomes
97 Ethical practices and policies
99 Tax contribution, cyber security and AI
Doing the right thing for
ourcustomers, colleagues,
communities and the planet.
73 Introduction
74 ESG Strategic Pillars
Sustainability Report
73OSB GROUP PLC | Annual Report and Accounts 2024
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Sustainability Report continued
Introduction
As a specialist mortgage lender focused on the
UK Private Rented Sector (PRS), we recognise
the vital role we play in supporting landlords to
prosper and, through the homes they provide
to tenants, to fulfil the needs of a dynamic
and evolving society. Supporting landlords
to improve housing standards, empowering
tenants through better living conditions, and
driving sustainable practices across the sector
reflects our understanding that long-term
success depends on balancing economic
growth, social responsibility, and environmental
stewardship. The OSB Group Landlord Leaders
Community continues to unite those with
influence to help drive positive change and
deliver collective progress see page 75.
In April, we published our inaugural Climate
Transition Plan, outlining our ambitions,
targets, and the steps we are taking to
address the challenges of climate change.
We made progress in reducing direct
emissions by 41% versus 2023, achieved
through investment and proactive estate
management. Reducing financed emissions
remains a challenge, with progress dependant
on government policy, customer appetite,
and technological advancements, although
an improvement was seen in the number of
properties with an EPC of C or better. Despite
these hurdles, we focused on data quality and
information availability to support our strategy
to help customers transition to energy-efficient,
low-emissions buildings.
The Group continued to establish itself as
a great place to work by fostering a culture
of diversity, equity, and inclusion. We
launched initiatives to enhance education
and awareness on DE&I topics, extended
career development programmes for
women to include entry-level management
and introduced supplementary policies
such as our Sexual Harassment policy.
Employee wellbeing was a key focus, with
the introduction of enhanced benefits,
including menopause support. These efforts
contributed to improvements in employee
engagement survey results. Notably, the
proportion of female colleagues in senior
roles increased to 36% (2023: 33%).
Our Employee Engagement Networks
(Our Diversity, Our Planet and Our
Community) continued to deliver
colleague and community engagement
and capacity building opportunities
and impact across the Group in areas
important to our diverse workforce in
boththe UK and India.
This Sustainability Report outlines
howwe progressed in 2024 embedding
environmental, social, and governance
(ESG) principles into our business.
We furthered our commitment to helping
customers, colleagues and communities
prosper through deeper integration of
ESG into our business operations.
1. Defined as Scope 1 and Scope 2 emissions
calculated using market-based methodology.
42.8%
EPC rating of C or better
2023: 41%
41%
reduction in direct
emissions (Scope 1 and 2)
2023: 12% increase
100%
of electricity from
renewable sources (UK)
2023: 99%
Just Transition People
60%
of UK employees engaged
in community activities
2023: 46%
£394k
total benefit to charities and
community organisations
2023: £288k
8th
consecutive year OSB India
confirmed as a Great Place
toWork
Stewardship
36%
of women in senior
management
2023: 33%
45th
of top 100 large companies
in Best Companies Survey
2023: 60th
7,038
volunteering hoursundertaken
2023: 4,998
Greenhouse gas emissions
101.83tCO
2
e
Scope 1
2023: 171.44
0.00tCO
2
e
Scope 2 (market-based)
2023: 1.39
294,137tCO
2
e
Scope 3 Financed emissions
2023: 314,413
Just Transition People Stewardship
OSB GROUP PLC | Annual Report and Accounts 2024
Strategic Report Governance Financial StatementsOverview Appendices
74
1. The Sustainable Development Goals (SDGs) are a set of 17 non-legally binding global goals established by the UN for countries and governments. Mapping was based on UN Global Compact – Blueprint for Business Leadership on the SDGs. References
included are indicative only and OSB Group make no representation, warranty or assurance of any kind, express or implied, or takes no responsibility or liability as to whether the areas of focus further the objective or achieves the purpose of the SDGs.
Sustainability Report continued
ESG Strategic Pillars
ESG Strategic Pillars
Supported by our Strategic Commitments
Identified UN SDGs
Customers
The Group’s approach will be
appropriately inclusive for our
customer base, ensuring that the
social mobility of our customer
base is not compromised through
our products or decisions.
Thought leadership, education,
awareness and products that
enable, incentivise and reward our
customers to embrace the transition
to a low-carbon housing economy
will be provided.
Colleagues
We will retain, recruit and train the
best talent, enabling all employees
to maximise their ambition and seek
to embed a diverse, inclusive and
equitable culture the Group is proud
of; ensuring appropriate ongoing
internal communications which
drive enthusiasm in proactively
supporting the ESG agenda and
helping the Group achieve its
Purpose and Vision.
Communities
A strategic and coordinated
programme will be defined
and delivered, supporting our
communities and wider social
economic environment, through
collaboration, partnerships and
volunteering. With focus on the
United Kingdom and India housing
projects, propositions that play a
vital role in the lending and savings
activities of the Group, including
supporting a strong PRS and
education of the owner-occupier
sector, will be developed.
Net zero
The Group’s environmental
ambitions and transition plan will
align to the Paris Accord on climate
change, achieving carbon net zero
across our operational emissions
by 2030 and our total emissions
by2050.
Supply chain
We will encourage and support our
value and supply chain with their
transition to an ESG strategy that
aligns to the Group’s ambitions.
Through our annual materiality assessment we
identify,assess and respondtothe ESG topics most
importantto our stakeholders.
The topics that matter most are embodied in our strategic pillars and commitments. In 2024,
ourassessmentincluded a mapping of our ambitions, commitments and targets to the United Nations
Sustainable Development Goals (SDGs) as an important reference point for our activitiesand impact.
1
A fair and equitable transition
to a low-carbon economy
Delivering on the needs of
people now and into the future
Acting responsibly to deliver
sustainable value
Establish our ambitions
Strategic Report
Governance Financial StatementsOverview Appendices
OSB GROUP PLC | Annual Report and Accounts 2024 75
Landlord Leaders
Sustainability Report continued
Find out more on our website /
https://landlordleaders.osb.co.uk
Each year, the Community captures fresh
insights through its Landlord Leaders
questionnaire, surveying 1,000 UK landlords.
The 2024 survey explored critical topics,
including challenges landlords face,
strategies for success, rising operational
costs and the importance of relationships
within the PRS value chain. Potential changes
to the Minimum Energy Efficiency Standards
for the PRS energy efficiency and EPC
reform, topics key to both the improvement
of UK housing stock and the Group’s climate
transition strategy, were included. These
insights shape the priorities for future
research, content, and events, ensuring the
Community continues to deliver value while
advancing its mission.
In 2024, the Community prioritised broadening
representation to reflect the sector’s diversity,
expanding its reach through new research,
digital content, and events. By year-end,
membership had grown to 111 members, with
over 8,500 visits to the Community’s website.
Responding to a dynamic landscape, the
Community shared timely content on topics
such as the General Election, the Budget,
and the Renter’s Reform Bill. It also hosted
four events, including round tables and panel
discussions, fostering dialogue on critical issues.
Through these initiatives, OSB Group
reaffirms its commitment to supporting a
sustainable PRS, contributing to a resilient
and inclusive housing market for all.
At OSB Group, our dedication to
sustainability extends beyond
financing homes; it encompasses a
deep understanding of tenants’ needs,
behaviours, and aspirations. Thought
leadership has been a cornerstone of the
Group’s approach since 2022, driving
research and dialogue to address a pivotal
question: what actionable steps can we
take to foster a truly sustainable and
functional PRS?
In 2023, we launched the Landlord Leaders
Community — a membership network uniting
individuals and organisations committed to
creating a fairer and more sustainable PRS. This
initiative serves as a platform for collaboration,
enabling stakeholders to share insights,
exchange ideas, and drive positive change. The
findings from our thought leadership initiatives
aim to guide those dedicated to shaping a
better future for the sector.
To complement our existing proprietary
research initiatives, including Landlord
Leaders and the Future Tenant Standard,
the Community published its latest thought
leadership report in late 2024 ‘Bricks
to Belonging: The Psychology of Home
Ownership’. This report explored the factors
influencing individual’s aspirations for home
ownership. Notably, it identified renters’
perceptions of their landlords as the fourth
most significant predictor of their decision
to move. To support landlords in navigating
these dynamics, the Community developed
the Bricks to Belonging playbook, which
distils key findings, offers practical advice,
and provides actionable recommendations.
OSB GROUP PLC | Annual Report and Accounts 202476
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Sustainability Report continued
Strategic Pillar – Just Transition
Climate Transition Plan
The Group published its inaugural Climate
Transition Plan (the Plan) in 2024, reinforcing
our ongoing commitment to addressing
climate change within the sector. The
Plan prioritises areas where we can deliver
tangible value to our stakeholders, leveraging
our influence, while seeking cross- sector
collaboration. We remain committed to
embedding climate change considerations
across our business processes, ensuring a
just transition that balances environmental
stewardship with shared prosperity for our
customers, colleagues and communities.
The five pillars of action outlined in the Plan
represent a responsible and proportionate
strategy, focusing on real economy
decarbonisation, footprint reduction, and
climate risk management. Our strategy
recognises the scale and complexity of
the challenge, and our dependence on
external stakeholders such ascustomers
andgovernment.
We acknowledge further work is needed
to align disclosures with guidance from
the Transition Plan Taskforce. We intend to
release an updated version of the Plan in
2027, following a comprehensive review of
our targets. Material updates will be shared
in future Annual Reports until then.
Progress summary
Since the Plan’s launch in April 2024, we have
made progress in advancing the priority
actions that contribute towards our emissions
reduction targets for direct operations (see
page 77) and financed emissions (see page
78). Our approach to managing the Plan has
matured with the introduction of a Climate
Transition Dashboard and a gap analysis
against Transition Plan Taskforce guidelines.
1. Scope 2 calculated using Market-based methodology.
We have an ambition to reduce
the carbon intensity of our
mortgage lending by 25% by
2030 from a 2022 baseline
We plan to achieve net zero
emissions in Scope 1 and
Scope 2 by 2030
1
We plan to reduce our
financed emissions to
net zero by 2050
Continuing to
embed climate
thinking
Further embedding
climate thinking into
our management
processes, ensuring we
have expertise where it
is needed to manage
risk and deliver
onopportunities
Greening
our offices
and branches
We accept
responsibility for
ensuring our buildings
deliver on our net
zero ambition and
recognise that we can
achieve this earlier
than the emissions
wefinance
Transition-friendly
products and
services
Our approach to
transition products
and services places
priority on delivering
on our customers’
needs, aligned to
increasing energy
efficiency and
reducing emissions
from UK housing
Connecting
our customers
Seeking ways to
connect customers to
the information and
services they want
and need, creating a
positive environment
for change
Thought leadership,
education and
awareness
Through research
we provide thought
leadership, aiming to
start a conversation
towards creating a fair
sector for all, offering
education and raising
awareness of the issues
faced in creating a
sustainable sector
Our pillars
for action
Our
objectives
77OSB GROUP PLC | Annual Report and Accounts 2024
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Strategic Pillar – Just Transition continued
Reducing the emissions from our operations (Scope 1 and 2)
Expected impacts are full year estimates of impact, not just those realised in 2024.
Action Progress Expected impact on emissions
Removal of gas from our office buildings and branches
Fit-out of new office location in Wolverhampton and replacement of gas heating system with electric solution Complete -34tCO
2
e
Removal of gas heating from a KRBS branch Complete -1.5tCO
2
e
Removal of diesel generator from an office location Complete Unknown
Rationalisation of corporate real estate
Fit-out of new office location in Wolverhampton with consolidation of two existing locations Complete -14.45tCO
2
e
Potential exit of existing location in Chatham Pending
Replacement of fluorinated gases with lower Global Warming Potential (GWP) alternatives
Continued maintenance of existing assets to limit risk of release Ongoing
Fit-our new office location in Wolverhampton with modern cooling technology and lower GWP Complete -28tCO
2
e (potential avoided)
Continue to purchase electricity from renewable sources
Continue to purchase electricity from REGO-backed tariffs Complete -387tCO
2
e
Increased energy efficiency through employee engagement and property management
Property services implementation of energy savings measures, following energy modelling exercises Ongoing Not yet calculated
Our planet – Employee network focus on energy efficiency and raising awareness Ongoing n/a
Developing a series of voluntary climate change training modules for employees to access Ongoing n/a
Pillars of action
Below and on the following page are summaries of activities completed towards the priority actions identified in the Plan.
OSB GROUP PLC | Annual Report and Accounts 202478
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Sustainability Report continued
Strategic Pillar – Just Transition continued
Reduce emissions from mortgage lending (Scope 3 – category 15)
Action 2024 Priorities Progress
Transition-friendly products and services
Providing products and services that
contribute to greater energy efficiency
and/or decarbonisation – existing products
See below See below
Providing products and services
that contribute to greater energy
efficiency and/or decarbonisation –
newproductdevelopment
Development and launch of a suite
of products aligned to the Group’s
transitionpriorities
A range of product concepts supported by market research were designed in 2024 and
presented to the Customer and Product Committee. Progress paused as resource was
prioritised towards alternative activities in the second half of the year.
The transformation programme will enable the development and implementation of transition
products in the future.
Connecting our customers
Providing accurate, reliable and
actionable information to support
retrofitdecision-making and action
Continuing to explore solutions that
provide information that customers will
value and trust
Continue to consider data and information
requirements in new process design
Internal stakeholders met with several potential solution providers during the year maintaining
awareness of market maturity and product capabilities.
Additional property criteria (e.g. EPC ratings), have been considered in the requirements of the
transformation programme.
Improving data – access and quality,
to support the product strategy and
customer journey
Continue working with third-party provider
to develop solution
Transition risk project completed with a third-party data provider to benchmark transition risk
and identify potential steps towards net zero.
Key outcomes included: property-level insight into actions to improve energy efficiency and the
costs of retrofit; data on drivers for energy efficiency; EPC profile of the OSB Group lending
book versus national average by segment (e.g. Buy-to-Let, Owner-occupier); modelling of
macroeconomic factors such as grid decarbonisation on the lending book.
Connecting customers to the retrofit
supply-chain
Continue working with third-party provider
to develop solution
Workshops took place to understand the capabilities of potential solutions with a set of OSB Group-
specific use cases developed to support a proof of concept in 2025 for one potential solution.
Thought leadership, education and awareness
Landlord Leaders Community – focused
on creating a fairer and more sustainable
Private Rented Sector
The community defined its mission
statement in 2023, and in 2024 will look to
make progress under four pillars:
1) Communication
2) Education and training
3) Collaboration
4) Positive industry perception
The Community continued to deliver member-led educational content relevant to the Private
Rented Sector, placing content in the places people are looking.
Topics included the psychology of home ownership, a political pulse event in advance of the
General Election and the annual Landlord Leaders questionnaire.
Thought leadership – commissioned
research to inform the work of the
LandlordLeaders Community
Quarterly meetings were planned for 2024
including refreshed research findings
to further inform the focus and work of
thecommunity
Four events took place in 2024 as planned, comprising three round table events and
one panel discussion.
Bricks to Belonging – The Psychology of Home Ownership was commissioned to understand
what influences people’s thinking when they talk about wanting to buy a home compared to
wanting or needing to rent, and to understand what drives their decision-making.
79OSB GROUP PLC | Annual Report and Accounts 2024
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Governance Financial StatementsOverview Appendices
Sustainability Report continued
Strategic Pillar – Just Transition continued
Thought leadership, education
andawareness
The Landlord Leaders Community,
convened by OSB Group, continued its
growth in 2024, reaching 111 members.
TheCommunity engaged on a variety
of issues, including home ownership
psychology, policy landscape changes, and
updated research on the evolving PRS from
an ESG perspective. Our findings suggested
that while landlords and tenants were
increasingly interested in energy efficiency
and heating decarbonisation, these were
notyetprioritised.
Connecting our customers
In 2024, we explored solutions to connect
customers to the retrofit journey, including
workshops with internal and external
technology solution stakeholders. These
sessions, alongside insights gained during
the year into the energy efficiency of
our mortgage lending book, will help
inform future product and technology
offerings aimed at supporting customers
intheirtransition.
Providing customers with
transition-friendly products
We continued to offer products to support
energy efficiency in property refurbishments
for our Buy-to-Let customers under the
Precise brand, however, uptake remained
limited. Through our InterBay brand, we
offered reduced rates for properties with an
Energy Performance Certificate (EPC) rating
of C or higher.
The Product Team developed new product
concepts in 2024 to help customers
navigate a number of the reported barriers
to retrofit such as the initial cost of work,
awareness of energy efficiency and
benefits, and ongoing affordability. Looking
ahead, our transformation programme
will allow us to offer more tailored energy
efficiency products. The Group recognise
the importance of providing customers
with supportive financing options for
energy-efficiency and retrofit works in
order to deliver progress towards our
2030interimtarget.
Greening our offices and branches
Significant progress was made in 2024.
Twomain office locations and two KRBS
branches transitioned to electric heating,
whichis expected to result in a Scope 1
emissions reduction of 63.3tCO
2
e versus 2023.
Our net zero targets were considered as part
of refurbishment works and we continued
sourcing 100% renewable electricity from
REGO-backed tariffs, ensuring zero market-
based emissions from purchased electricity.
Continue to embed climate thinking
We strengthened our Climate Risk team to
further our climate strategy and evolved the
Climate Risk Appetite to align with our net
zero target trajectory and expected Minimum
Energy Efficiency Regulations for the Private
Rented Sector. The Climate Transition
Working Group met five times in 2024,
overseeing progress and planning. A Climate
Transition Dashboard was also developed
to track progress against our targets, key
performance indicators and priority actions.
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Strategic Pillar – Just Transition continued
Emissions reduction targets
Our 2030 emissions reduction targets,
established in 2023, align with our
commitment to the Net Zero Banking Alliance
(NZBA). We continue to await clarification
on the SBTi Financial Institutions Net Zero
Standard to ensure interoperability with
ourNZBA commitments.
Approximately 96% of our total emissions
stem from financed emissions, which arise
from the properties we finance. These
emissions are a key focus of our climate
strategy. While our direct emissions are
smaller, they remain critical to achieving
our2030 net zero target for Scope 1 and
Scope 2 emissions.
Financed emissions – reduce the
emissions intensity (kgCO
2
e/m) of our
mortgage lending by 25% by 2030 from
a2022baseline.
Operations – reduce Scope 1 and Scope
2 emissions to net zero by 2030 from
a 2022 baseline.
Renewable electricity – Source 100% of
electricity from renewable sources where
OSBGroup have operational control.
PCAF data quality score
3.14
2023: 3.15
Scale is 1–5 with 1 being
thehighest quality
Financed emissions intensity
-18% vs 2022
2024: 24.56 kgCO
2
e/m2
2023: 24.89 kgCO
2
e/m2
2022: 29.88 kgCO
2
e/m2
As of 2025, we will review our targets to
ensure they remain relevant, incorporating
insights from the Climate Change
Committee’s Seventh Carbon Budget and
theBeyond Net Zero Pathway which was
used to set the existing target. This review will
allow the Group to assess progress towards
its ambition and interim target, beyond the
gains made through data improvements.
Estimates of financed emissions continue
to rely on external data sources, primarily
Energy Performance Certificates (EPCs),
which assess and estimate the emissions of
properties. In 2024, 83% of properties (2023:
83%) were matched to a valid EPC, while 16%
(2023: 17%) were either modelled or estimated
using postcode or national averages. The
remaining properties, representing less than
1% (by number), were assigned a D rating.
The Group identified a number of external
dependencies that impact our progress,
including energy grid decarbonisation,
pace of retrofitting, heat pump roll-out,
government policy, education and cost.
Moreinformation can be found in the
Climate Transition Plan.
For further information on our targets,
see Net Zero Banking Alliance Intermediate
Targets – Basis of Preparation – Basis of
Preparation.
Both emissions reduction targets use 2022 as
a baseline from which reduction trajectories
were calculated and progress is reported.
Progress against the baseline (2022) and
against the previous year (2023) are reported
here to demonstrate performance over time.
Reducing the emissions from
ourmortgage lending –
financedemissions
Over 97% of the Group’s 2024 lending was
secured against residential, Buy-to-Let,
semi-commercial and commercial properties.
Our financed emissions (see page 85) are
calculated using the Partnership for Carbon
Accounting Financials (PCAF) methodology,
and we track progress through emissions
intensity per square metre (kgCO
2
e/m).
In 2024, we saw a 19% reduction in financed
emissions (tCO
2
e) and a 18% reduction in
emissions intensity (kgCO
2
e/m) compared
to the 2022 baseline. This was primarily due
to improved data quality and the exclusion of
erroneous data included in the initial baseline.
Baseline physical intensity 29.93kgCOe/m
Mortgages – financed emissions
Physical intensity (kgCO
2
e/m²)
Performance 2024 24.56 kgCOe/m
2
Interim target 22.38kgCOe/m
CCC BNZP – pathway
0.00
5.0 0
10.00
15.00
20.00
25.00
30.00
35.00
2022 2023 2024 2025 2026 2027 2028 2029 2030
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Operational emissions
-34% vs 2022
2024: 101.83 tCO
2
e
2023: 172.83 tCO
2
e
2022: 153.87 tCO
2
e
There are inherent limitations in using EPCs
for calculating financed emissions. These
include delays in updating external data
sources, the age of certificates which may be
up to ten years old, and the fact that EPCs
do not prioritise carbon-neutral technologies
over fossil fuel-based alternatives. For further
details on our calculation methodologies,
please refer to our Basis of Reporting. In
2024, the Group engaged a third-party
environmental data specialist to assess the
Group’s mortgage portfolio and identify
potential actions customers could take
to improve energy efficiency and reduce
emissions. This data will inform our future
customer engagement strategies, ongoing
product development and the consideration
of technologysolutions.
Despite the challenges and dependencies
outlined in our Climate Transition Plan which
remain relevant, internal analysis revealed
that 66% of properties have the potential to
achieve an EPC rating of B, and 96% have
the potential for an EPC rating of C or better.
Less than 4% of properties would not be able
to achieve an EPC rating of C. The project
also quantified the costs associated with
retrofit activity to achieve an EPC C for each
property the Group provides financefor.
The UK Government has committed to further
consultation on Minimum Energy Efficiency
Standards for the Private and Social Rented
Sectors, which may require rental properties
to meet a minimum EPC rating of C by 2030.
While many details remain to be clarified, we
will continue to monitor these developments
to ensure our climate strategy remains
aligned with emerging requirements.
Sustainability Report continued
Strategic Pillar – Just Transition continued
Greening our offices and branches
– direct operational emissions
Our transition to net zero emissions by 2030
continues with tangible progress in Scope 1
and Scope 2 emissions. In 2024, we reduced
operational emissions by 41% compared to
2023 and 34% from the baseline of 2022.
Notable achievements include the new
Wolverhampton office design and fit-
out, which integrates energy-efficient
technologies powered by renewable
electricity, that contain lower Global
Warming Potential fluorinated gases in
cooling systems than the previous systems,
LED lighting throughout, and sustainable
materials such as carpets made from 75%
recycled materials. Four additional locations
also moved to electric heating solutions,
eliminating old gas boilers.
While direct emissions are a smaller element
of our total inventory, we continue to seek
reductions in this area.
Operational emissions
Scope 1 and Scope 2
(Market-based) tCO
2
e
160
80
100
120
140
180
200
60
20
40
0
2023
172.83 tCO
2
e
2024
102.00 tCO
2
e
2022
153.87 tCO
2
e
2022 2023 2024 2025 2026 2027 2028 2029 2030
Revised net zero trajectory
Performance
Baseline net zero trajectory
Additional Scope 3 emissions
Given the complexity of Scope 3 emissions
(categories 1-14) we continue to refine our
understanding and actions. 75% of the
top 20 vendors (Categories 1 and 2) by
spend have set net zero targets of some
kind. These categories contribute over
10,000tCO
2
e per year to our inventory, so
wehave expanded our Scope 3 reporting
to include them, showing our ongoing
commitment to transparency and accuracy
inemissionsmeasurement.
Engagement
The Group continued to collaborate with
organisations and initiatives to advance
our climate goals, enhance knowledge, and
benefit from shared insights. We contributed
to activities through UK Finance such
as a net zero homes policy paper which
accompanied a welcome letter sent from UK
Finance to Ed Miliband – Secretary of State
for Energy Security and Net Zero. The policy
paper outlined the opportunity of upgrading
the UK’s most energy-inefficient homes, four
requeststo unlock potential and the role
UKbanks can play in the transition.
Organisations we belong to and associations
that support our climate work include:
• UN Environment Finance Initiative –
NetZero Banking Alliance (Member)
• Science Based Targets Initiative (Committed)
• United Nations Global Compact (Signatory)
• UN Finance Sustainability
Committee(Participant)
• Partnership for Carbon Accounting
Financials (Member)
Raising awareness and developing climate
competence among our colleagues is a
vital part of embedding climate thinking
throughout the business. In 2024, this was
supported by the following initiatives:
• ESG Roadshows across offices and
branches, focusing on the Climate
Transition Plan
• Our Planet Employee Engagement
Network, which included articles, office
events, and ‘lunch and learn’ sessions
• The development of a series of employee
e-learning modules on climate change,
setto launch in 2025.
Electricity (MWh)
Renewables Non-renewables
20232022 2024
1,666
1,900
1,869
17
Gas (MWh)
2022 2023 2024
745
861
474
2022 2023 2024
Water (m
3
)
Consumption data is based on
estimates taken from invoices
10,486
7,180
7,0 51
Waste (tonnes)
2022 2023 2024
198
280
259
OSB GROUP PLC | Annual Report and Accounts 202482
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Strategic Pillar – Just Transition continued
Environmental and
energymanagement
The Group has established comprehensive
environmental policies to ensure compliance
with all relevant environmental obligations
and to mitigate negative impacts on the
environment. Our Environmental Management
System (EMS), is ISO 14001:2015 certified and
covers 100% of our UK corporate real estate,
including the KRBS branch network.
In 2024, we achieved a reduction in energy
consumption (purchased electricity and
natural gas) of 15% compared to 2023.
These reductions were realised through the
successful implementation of our Energy
Policy focusing on continuous improvements
in energy management practices. The policy
is aligned with our commitment to reach
operational net zero by 2030, with a strong
emphasis on emission reductions, energy
efficiency, responsible consumption, and
minimising environmental impact during
refurbishment of buildings.
To meet Energy Saving Opportunity Scheme
(ESOS) legislation, we conducted energy
audits that provided valuable insights
into our energy consumption. This helped
us identify opportunities for reducing
unnecessary energy use by improving control
within our building management systems.
Our office buildings now have optimised
temperature set-point controls, which help to
ensure energy is not wasted when buildings
are unoccupied. We estimate these measures
could reduce energy usage by 90,765kWh.
Transitioning to net zero emissions will not
result in consistent year-on-year reductions.
Some actions require time before their full
benefits are realised. For example, in October
2023, we replaced end-of-life boilers at one
of our office buildings with energy-efficient
electric alternatives. The energy savings from
this initiative became evident throughout 2024,
resulting in an annual natural gas saving of
approximately 123,950.73 kWh. We expect
further reductions in emissions in 2025 due to
continued investment and action taken in 2024.
Electricity and gas
In 2024, the Group reduced its natural
gas consumption by 386,634kWh (-45%)
compared to 2023. This was primarily due to
the replacement of gas heating at Exchange
Court and the KRBS Chatham branch, as
well as the move of KRBS Gravesend to a
new location, which is exclusively heated
andcooled by renewable electricity.
We maintained our commitment to
purchasing 100% renewable electricity.
Asaresult, 2024 Scope 2 emissions using
themarket-based methodology were
zero tCO
2
e, reflecting that all electricity
purchased for our offices and branches
within our operational boundary came
fromrenewable sources. Emissions from
purchased electricity reported using the
location-based methodology were 386.91
tCO
2
e (2023: 396.95 tCO
2
e).
We will continue to seek greater energy
efficiency through enhanced energy
management and by replacing outdated
equipment with more energy-efficient
alternatives. While future energy savings are
expected to be smaller incremental gains, our
Our Planet Employee Engagement Network
implemented several initiatives in 2024,
including lunch and learn sessions, sharing
case studies on reducing carbon footprints,
and conducting office audits.
Both absolute and intensity metrics (tCO
2
e
perm and per FTE) are used to track and
report our progress against our 2030 target for
Scope 1 and Scope 2 emissions (see page 80).
Water
Water is used responsibly with 7051m
3
used in
2024 (2023: 7180m). This consumption is for
hygiene and drinking purposes only. All water
used is potable.
83OSB GROUP PLC | Annual Report and Accounts 2024
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Strategic Pillar – Just Transition continued
Waste
In the UK, the Group manages waste
contracts at certain locations, ensuring that
waste is diverted from landfill in accordance
with the waste hierarchy and legislation.
Non-recyclable materials are sent to an
energy-from-waste facility.
In 2024, we generated 259 tonnes of waste
(2023: 280 tonnes). Recycling and waste
segregation (recyclables and food waste)
stations are available at all our offices and
branch locations.
Our operational processes do not generate
hazardous waste or pollutants beyond those
typically found in an office environment.
All hazardous waste, such as batteries and
electrical equipment, is stored and disposed
of in accordance with UK regulations.
Carbon mitigation
To offset emissions directly associated with
our business activities in 2024, the Group
purchased and retired 3800 tonnes of carbon
credits. These credits were selected based
on the principles outlined in our offsetting
strategy, which adopts a structured,
proportionate, and adaptable approach
to carbon offsetting, following the Oxford
Principles for Net Zero-Aligned Carbon
Offsetting. All offsetting projects are verified
and certified under reputable standards
such as the Gold Standard or Verified
Carbon Standard. The projects supported
are a combination of avoidance, reduction,
and removal efforts. The use of carbon
credits do not contribute towards the
Group’s emissions reduction targets.
Nature
The Group is in the early stages of
understanding the UK Government’s approach
to the voluntary Taskforce on Nature-Related
Financial Disclosures. We are evaluating how
these systems will evolve and assessing the
extent to which our activities impact nature
and biodiversity. We will continue to monitor
developments in this area as they emerge.
Greenhouse gas emissions
The Group follows the Greenhouse Gas
Protocol: A Corporate Accounting and
Reporting Standard for all GHG accounting
across Scopes 1, 2 and 3. By obtaining a
comprehensive view of our greenhouse gas
emissions (GHG) inventory we can have
greater control of (or over) emissions.
We have reported on all emissions sources
in accordance with The Companies Act
2006 (Strategic Report and Directors’
Report) Regulations 2013 and the
Companies (Directors’ Report) and Limited
Liability Partnerships (Energy and Carbon
Report) Regulations 2018 – also known as
Streamlined Energy and Carbon Reporting.
As part of these regulations, we provide
annual reports on greenhouse gas emissions
from Scope 1 and 2, covering electricity, gas
and transport. All emissions are reported in
tonnes of carbon dioxide equivalent (CO
2
e).
The Group’s 2024 Greenhouse Gas
emissions basis for reporting are publicly
available on our corporate website: https://
www.osb.co.uk/sustainability/our-environment/
Verification and assurance
Deloitte LLP provided independent limited
assurance over the following metrics
and ESG information for the year ending
31December2024
1
:
Greenhouse gas (GHG) emissions
• Total direct (Scope 1) emissions – tCO
2
e
• Total indirect (Scope 2) emissions
– market-based – tCO
2
e
• Total indirect (Scope 2) emissions
– location-based – tCO
2
e
GHG intensity
• Scope 1 and 2 metric tonnes of CO
2
e per
full-time employee (FTE)
• Scope 1 and 2 metric tonnes of CO
2
e per
£m turnover
TCFD
• The description of activities undertaken to
meet the recommendations of the TCFD
Deloitte’s assurance statement can be found
on page 268.
In accordance with ISO 14064-1:2018
requirements, Categories 3, 5, 6, 7, and 8
within Scope 3 were verified to a limited
level of assurance by Interface-NRM, an
ISO 14064-1 accredited verification and
certification body. The third-party verification
was conducted in compliance with ISO
14064-3:2019 standard.
1. Under the International Standard on Assurance Engagements 3000 (Revised) Assurance Engagements other than
Audits or Reviews of Historical Financial Information (ISAE 3000 (Revised)) and the International Standard on Assurance
Engagements 3410 Assurance Engagements on Greenhouse Gas Statements (ISAE3410).
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Greenhouse gas emissions continued
Greenhouse gas (GHG) emissions
Direct and indirect GHG emissions
(Scopes 1, 2 and 3) Further description Specific fuels where applicable 2022 2023 2024
Amounts in metric tonnes
CO
2
equivalent
Scope 1
Stationary combustion Combustion of fuel on-site On-site: natural gas, diesel for generators
138.22 157.10 86.86
Fugitive emissions Fugitive emissions Leaks and other irregular releases of
gases or vapours from a pressurised
containment: air-conditioning units 15.65 14.34 14.97
Total Scope 1 direct emissions
153.87 171.44 101.83
Scope 2
Purchased electricity
Total Scope 2 location-based Electricity – location-based
322.13 396.95 386.91
Total Scope 2 market-based Electricity – market-based
0.00 1.39 0.00
Total Scope 1 and 2
directemissions
Combustion of fuel on-site, fugitive emissions,
electricity – market-based 153.87 172.83 101.83
Scope 3
Purchased goods and services Products and services purchased
– – 8,582.04
Capital goods Fixed assets, plant, property and equipment
– – 2,651.86
Business travel Unknown vehicle fuel, rail, bus, taxi, hotel stays Unknown vehicle fuel
193.00 256.67 466.43
Employee commuting Rail, bus, taxi, hotel stays, home working Unknown vehicle fuel
–
1
2,021.06 2139.71
Fuel and energy-related activities
(not included in Scope 1 or 2)
Well-to-tank (WTT) emissions for fuel use,
upstream emissions for non-renewable electricity
generation, transmission and distribution losses in
the electricity network 136.71 155.95 141.69
Water Water use
0.78 1.27 1.08
Waste Waste from operations
4.20 5.95 1.67
Leased assets Combustion of fuel on-site, fugitive emissions,
electricity – market-based – 55.95 50.38
Total indirect Scope 3 emissions
(Category 1, 2, 3, 5, 6, 7 and 8)
Unknown vehicle fuel, water, waste,
homeworking, energy-related activities 334.69 2,496.85 14,034.06
Total operational emissions
(location-based) 810.69 3,065.24 14,552.80
85OSB GROUP PLC | Annual Report and Accounts 2024
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Direct and indirect GHG emissions
(Scopes 1, 2 and 3) Further description Specific fuels where applicable 2022 2023 2024
Total operational emissions
(market-based) 488.56 2,669.68 14,135.89
Total indirect Scope3
– financed emissions
(Category15)
Category 15 Investments (financed emissions).
Calculated by multiplying an attribution factor
(outstanding amount of loan divided by the
property value at origination) by the emissions
associated with the property taken from EPC.
Calculated for Buy-to-Let and residentiallending
Gas & Electricity for heating, hot water
and lighting only
363,680.00 314,413.00 294,137.00
Total GHG emissions
(location-based)
All measured emissions for the year
364,490.69 317,479.24 308,659.80
GHG intensity
GHG intensity ratio Description 2022 2023 2024
Full Time Equivalent (FTE)
employees (UK)
full-time equivalent (FTE) is a unit of measurement
equal to one full-time employee 1,237 1,427 1,530
Annual turnover £million
775 658 667
Scope 1 and Scope 2
location-based
metric tonnes of CO
2
equivalent per full
timeequivalent 0.38 0.40 0.32
Scope 1 and Scope 2
location-based
metric tonnes of CO
2
equivalent per £million
totalincome
0.61 0.86 0.73
Scope 3 financed emissions –
physical emissions intensity
kgs of CO
2
equivalent per square metre*
29.9 24.9 24.6
Energy consumption
Energy usage kWh 2022 2023 2024
Electricity
1,665,812.80 1,916,950.94 1,868,449.85
Gas
744,504.18 860,512.00 473,877.66
Total kWh Electricity; natural gas
2,410,316.98 2,777,462.94 2,342,327.51
N/M = not measured
1. 2023 was the first year of reporting emissions from employee commuting and leased assets.
2. 2024 is the first year of reporting Scope 3 category 1 and 2 emissions.
* Financed emissions physical intensity ratio is calculated by multiplying the total estimated attributable financed emissions in tCO
2
e for 2024 (294,137 tCO
2
e) by 1,000 to give kgC02e (294,137,000 kgCO
2
e). This is divided by the total floor area in m
2
of the properties taken from the Energy Performance Certificate (11,974,297m). Estimated absolute financed emissions were 470,596 tCO
2
e for 2024. Financed emissions estimates are for the mortgage portfolio as the largest asset class. It does not
cover non-modelled book or securitised loans.
Sustainability Report continued
Greenhouse gas emissions continued
Customers
Building meaningful connections
for long-term success
The foundations of our business lie in the
trust and satisfaction of our intermediaries
and customers, which drive our success.
To achieve our Vision, we offer a
comprehensive range of competitive
propositions, strive for exceptional customer
service, and provide the necessary support
to customers who may face financial
difficulties. Through our specialist brands we
focus on continuous investment in customer-
focused solutions that deliver the outcomes
our customers want and we are positioned
to meet the unique needs of our borrowers
andsavers.
Working with intermediaries, we help bridge
the gap in housing demand across the UK,
providing funding for first-time homebuyers,
shared ownership, affordable housing
developments, Buy-to-Let investments, and
commercial properties. Our representatives
actively participated in both physical and
virtual events with brokers throughout
2024. This understanding has allowed
us to continuously refine our customer
propositions, with our efforts recognised
inour broker Net Promoter Score (NPS)
of+57for OSB and +52 CCFS (2023: OSB
and CCFS +57).
Our mortgages are distributed via
intermediary partners across England, Wales,
and Scotland, except for our Heritable brand,
which operates directly with developers.
OX Living
Founded in 2016 by David Granat,
OX Living is committed to developing
high-quality co-living environments
that embody the values of happiness,
boldness, openness, and community.
Theorganisation provides premium
house shares designed for young
professionals throughout Oxfordshire.
The properties managed by OX Living
are located in desirable areas where the
aim is to transform the co-living sector
by offering luxurious, sustainable, and
innovative living solutions.
In 2024, OX Living expanded its portfolio,
signifying another year of substantial
growth. A key challenge encountered
was the outdated perceptions regarding
shared accommodations within the
local community and among planning
authorities. OX Living is dedicated to
reshaping this narrative by offering
properties that enhance the standards
of shared living. Furthermore, the rising
costs of utility bills for residents pose a
significant challenge. To address this
concern, they are improving the energy
efficiency of their properties through
enhanced insulation, the installation
of triple glazing, the addition of solar
panels, and the use of smart thermostats.
This progress has been facilitated by
strategic partnerships with Kent Reliance,
whose competitive rates, outstanding
service, and dependability have been
crucial in supporting expansion.
Our dedicated Client Management Team
provides portfolio clients with specialised
services. In recognition of our commitment
to service excellence, the Group won the
Mortgage Strategy Award for Best Specialist
Lender and Commercial Lender of the Year
atthe Crystal Ball Awards.
We are committed to supporting vulnerable
customers, and through our highly trained
Financial Support Teams, we provide
tailored assistance to those facing financial
difficulties. As a Mortgage Charter signatory
we ensure the right support is available for
customers who are up-to-date with payments
but concerned about their financial situation.
In 2024, we enhanced our initiatives, focusing
on developing a proactive, personalised
approach, simplifying the customer
experience, and signposting to trusted
charitable partners for additional support.
We support savers through channels
including online and telephone services,
inaddition to our nine KRBS branches in
theSouth East.
Our savings products maintained strong
retention rates, with 90% of customers with
maturing fixed rate bonds and ISAs at Kent
Reliance and 85% at Charter Savings Bank
choosing to reinvest with the same brand
(2024: 91% and 85% respectively). Our
savings products were also recognised in
theindustry, with Charter Savings Bank
being named Cash ISA Provider of the Year.
Sustainability Report continued
Strategic Pillar – People
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Strategic Pillar – People continued
In 2024, we continued to invest in
training, development and engagement
activities to ensure that the Group
provides a compelling and attractive
employee proposition both for our existing
employees and for candidates considering
joining theGroup.
Retention and progression
We have a genuine desire to retain, support
and develop our employees. During 2024,
over 140 UK employees were promoted to a
more senior grade along with 185 employees
within OSB India.
We actively promote internal and career
development opportunities for existing
colleagues. In 2024, 27% of UK vacancies
were filled by way of internal appointments
with just over 7% of vacancies at OSB India
being filled by existing employees.
At 7%, the 2024 UK regretted attrition rate
was lower than the 2023 rate of 9%. The OSB
India regretted attrition rate was broadly
flat to 2023 at just 12% which compared
favourably with rates within the local
sector demonstrating a strong culture and
compelling employee proposition.
A redundancy programme in late 2024 saw
us apply a high level of focus on reducing
staff costs that affected 139 colleagues
across the Group. A robust UK collective
consultation process was undertaken, with
several employees being redeployed into
alternative roles. However the UK non-
regretted attrition rate increased from 2% in
2023 to 12% in 2024. A similar programme
was undertaken within OSB India, with non-
regretted attrition rate increasing to 16%
from 6% in 2023.
Recruitment
Our Talent Acquisition teams provide bespoke
support in attracting high quality candidates
for vacant positions and, through robust and
inclusive interview and selection processes,
assist in making strong recruitment decisions.
During 2024, our teams filled almost 600
vacancies, resulting in the Group welcoming
almost 250 new UK employees and almost
290 new employees in India. There were
2,498 Group employees as at the end of
2024 (2023: restated 2,506).
A key focus for our Talent Acquisition team
was the proactive identification of potential
candidates directly and through improved
use of our website and external job boards.
In 2024, they filled almost 40% of UK
vacancies on a direct recruitment basis,
resulting in a saving of over £1.1m of agency
recruitment fees. Within OSB India, over half
of all the vacancies which closed in 2024
were because of direct recruitment activity,
resulting in a further saving of over £300k
ofagency fees.
Remuneration and benefits
We believe in rewarding our employees fairly
and transparently, enabling them to share
in the success of the business. Details of the
Group’s remuneration policies can be found in
the Remuneration Report on pages 154 to 179.
As an accredited Living Wage employer, we
ensured that all UK employees and regularly
contracted third-party staff earned more
than published Real Living Wage rates and
we continued to encourage our employees
to hold shares in the Group, through our
Sharesave Scheme, which is offered
annually to all UK employees.
Colleagues
The skills, expertise and commitment of our
colleagues have always been fundamental to the
achievement of the Group’s strategic goals.
Group vacancies filled
by the Talent Acquisition
c.
600
2023: over 1,068
Employee promotions across
UK and India
327
2023: 183
1. Restated due to change in calculation methodology.
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Just under 470 employees joined the 2024
Sharesave scheme and, including the
schemes launched in previous years, over
800 UK employees were Sharesave Scheme
members as at the end of 2024.
2024 saw the Group further enhance its
UK employee benefit offering, providing
colleagues and their partners with fully funded
reproductive health support as well as funded
access to advanced health assessments
and in-house clinical services. In addition,
we became a member of Employers for
Carers and launched our Carer Leave Policy,
providing colleagues with an entitlement of
35 hours of carers’ leave, of which the first
14hours are treated as paid leave.
Employee engagement and culture
Our 2024 Best Companies survey result saw
us retain an overall ‘2 Star’ rating, with Best
Companies defining this as an outstanding
level of employee engagement. This resulted
in the Group moving up to 45th place on
their 2024 Top 100 list of large companies
(between 200 and 1,999 people). Colleagues
within OSB India participated in a separate
survey, run by the Great Place to Work
Institute and following which OSB India were
officially certified as a ‘Great Place to Work’
for the eighth consecutive year.
We continued to see strong feedback through
Glassdoor, with the UK score at the end of
2024 sitting at 4.1 and the OSB India score
slightly higher at 4.2. The scores were based
on reviews submitted by current and former
UK employees, reflecting the positive culture
that exists throughout our teams.
Following the launch of the Group’s People
and Culture Strategy last year, significant
progress was made regarding many of the
initiatives that had been identified to support
the wider achievement of business strategy,
the transition to a modernised working
environment and the achievement of our
People Vision of becoming recognised as
agenuine employer of choice.
To further support our cultural progression,
2024 saw us welcome both our Chief People
Officer and our Group People Transformation
and Skills Director, which enabled us to refine
our ongoing areas of cultural focus and
commence our journey towards becoming
askills-based organisation.
The Group’s Workforce Advisory Forum
(Our Voice) continued to meet regularly in
2024, including employee representatives
from all geographical locations, including
OSB India. The aim of the forum is to further
enhance the level of engagement that the
Group Executive Committee and the Board
have with the wider workforce. To achieve
this, in addition to employee representatives,
the forum is attended by rotating Non-
Executive Directors and Group Executive
Committee members to ensure that they can
hear directly from the employees and share
feedback on important matters.
Employee recognition and awards
In 2024, the Group recognised the significant
tenure of around 170 UK employees who
reached a five, ten, 15 or 20 year milestone of
employment through our Long Service Award
programme. At the end of 2024 there were
seven UK employees who had over 20 years’
continuous service. In OSB India, over 50
employees reached a five or ten-year service
anniversary and around 200 OSB India
colleagues had five or more years’ service,
ofwhich almost 50 were with OSB India
forover ten years.
Each quarter, all employees are invited to
nominate colleagues as part of our Galaxy
Award Scheme. Nominations are sought for
categories that link directly to each of our
Values with individual winners and
runners-up for each category.
For our 2024 awards, over 400 nominations
were submitted, with the details of all nominees
being shared internally, along with details
of the quarterly award winners and their
nomination rationale.
Training and development
Our People Transformation and Skills team,
based in both the UK and India, concentrate
on providing learning and development
opportunities for all employees, using a mix
of internal and externally sourced content,
which are delivered through a range of media,
including workshop and digital formats.
Throughout 2024, the team delivered almost
2,500 internal workshops, with the number
of recorded training hours averaging over
4,500 hours per month, representing around
11 workshop training hours per UK employee
and over 38 hours per OSB India employee.
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The team also worked in partnership with MGI
Learning to become accredited to deliver a
key programme in support of our Consumer
Duty response, providing a methodology for
front-line colleagues to utilise when dealing
and communicating with our customers.
2024 saw a continued focus on leadership
development with the team delivering three
bespoke programmes to different levels
of existing leadership and management
employees. 30 employees joined our Future
Supervisors and Managers Programme, 11
managers commenced the Essential Managers
Programme and 16 managers completed the
Essential Managers Apprenticeship.
We also continued our partnership with WDI
Consulting to deliver the Group’s Women in
Leadership initiative, supporting 31 female
managers and senior leaders with their
individual progression pathways. In addition,
35 female future leaders commenced a
Women in Leadership Apprenticeship Scheme,
launched in partnership with Raise the Bar.
In 2024 we commenced our journey
to become a skills-based organisation
by joining the Financial Services Skills
Commission and we continued to support the
professional development of colleagues, with
26 UK employees receiving financial support
topursue their professional qualifications
during the year.
Diversity, equity and inclusion
We recognise the benefits that diversity brings
to the business, and we actively promote and
encourage a culture and environment that
values and celebrates our differences.
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Colleagues continued
In 2024, we continued our journey to become a
truly diverse and inclusive organisation which
is committed to providing equal opportunities
through the recruitment, trainingand
development for all employees.
We continued to support mental health and
wellbeing through the provision of advice and
workshops for employees and line managers.
We increased our UK network of trained
UK Mental Health First Aiders to 50 and
introduced a network of 21 trained Mental
Health First Aiders within OSB India.
Our published 2024 Gender Pay Gap
Report is available on the Group’s website
(www.osb.co.uk) and shows that OSB
Group’s mean gender pay gap as at the
snapshot date of 5 April 2024 was 35.5%,
reducing from the 2023 reported figure of
36.1%. Whilst it is pleasing to see continued
progress, we are committed to reducing these
gaps further. Fundamentally, the gaps relate
to the structure of our workforce and reflect
the fact that we have more men than women
in senior roles and more female employees
undertaking clerical roles.
We recognise the need to improve our gender
balance and having achieved our previously
published commitment as a signatory of
HM Treasury’s Women in Finance Charter
(WIFC) of 33% of senior management
positions within the UK undertaken by female
employees by the end of 2023, we increased
this to a commitment of achieving 40% by
the end of 2026. At the end of 2024, further
positive progress was made, with our WIFC
percentage increasing considerably to 36.1%.
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Colleagues continued
The Group applied a continued focus in
the year to enhancing ethnicity diversity,
particularly in respect of the senior
management population. The proportion of
senior managers identifying as non-white
increased to 15% at the end of 2024 from
14% in the prior year. In line with the Parker
Review requirement applicable to all FTSE
350 companies, we will prioritise increasing
ethnic diversity among Executive Committee
members, with an aim of 14% by 2027, from
11% at the end of 2024.
We increased DE&I initiatives across the
Group, including employee communication
and events enhancing awareness and
celebrating our differences. These were often
aligned with the dates of national events
such as Pride, Black History Month, National
Inclusion Week and International Women’s
Day, with related activities being coordinated
by the internal ‘Our Diversity Network’ made
up of passionate volunteers.
Our internal Inclusivity Survey was completed
by nearly 800 UK colleagues and over
600 OSB India employees, with the results
showing an overall improvement across all
categories compared to the 2023 results
when the survey was first undertaken.
This demonstrated a positive shift in how
colleagues viewed our overarching approach
to DE&I and provided insights as to where
additional focus can be applied to further
enhance inclusivity throughout the Group.
We continue to capture diversity data from
our UK employees and at the end of 2024,
over 80% of colleagues submitted some or all
of their data. We introduced this within OSB
India in September 2024 with around 19% of
colleagues having submitted data.
At the end of 2024, around 56% of our UK
workforce was female similarly almost 54%
of employees who joined us in 2024 were
female. Within OSB India, females constitute
40% of all employees, with over 46% of 2024
starters being female. In addition, 27% of our
Group Executive Committee were female as
were 44% of the OSB Group Board.
The Group achieved all required targets
in respect of Board diversity of which two
females hold the senior Board positions
of CFO and Senior Independent Director.
Additionally, two members of the Board
werefrom a minority ethnic background.
For the CEO and the CFO, gender and
ethnicity data is collated within the Group’s
HR System, in a manner consistent with all
UK employees. Both Board members who
confirmed their ethnically diverse status have
self-reported this to the Group HR Director
within responses required by the Parker
Review (FTSE 350 Ethnic Diversity Submission
for 2024).
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Strategic Pillar – People continued
Colleagues continued
Male Female
Number of Board
Directors (OSB Group) 5 4
Number of Directors of
subsidiaries 16 0
Number of senior
managers (not Directors)
1
157 92
All other employees
1
1,074 1,150
1. Includes all UK and OSB India colleagues. Senior
managers are employees within the Grade A
toEpopulation.
Board diversity
Gender Number
Minority ethnic
background
Men 5 1
Women 4 1
Safety and welfare
The Group operates to all applicable Health
and Safety regulations, with access to
competent advisors, and processes in place
to assess risks and monitor compliance with
internal policies, procedures and controls.
Training is provided to employees who
perform in the roles of fire marshals,
first- aiders and mental health first-aiders.
In 2024, there was one incident classified
as a lost-time incident (2023: one) resulting
in five lost working days. The incident did
not meet the criteria for reporting under
the Reporting of Incidents, Disease and
Dangerous Occurrences Regulations 2013.
The total injury rate was 8.452 (2023: 5.054).
OSB India
OSB India, which is a wholly owned subsidiary
of the Group, is based in Bangalore and
Hyderabad, and at the end of 2024 had 949
employees. OSB India supports the Group
across various functions including Support
Services, Operations, IT, E-Labs and Finance.
OSB India is a holder of ISO 27001: 2013
certification, demonstrating high standards
ofinformation security.
To help support our ongoing growth, our
new office in central Hyderabad became
operational in 2024. It aided in attracting
new employees and supporting the retention
of existing colleagues given that for the
vast majority, the new location significantly
reduced commuting time. As at the end of
2024, our Hyderabad employee base grew
toalmost 260.
In compliance with the Modern Slavery
Act, OSB India does not support excessive
overtime and all employees in India are
encouraged to work in accordance with
local legislation. Employees are based in our
modern Bangalore and Hyderabad offices
and are provided with a range of benefits
which include 22 days of annual leave,
12days’ sick leave and cafeteria services.
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91
Communities
Our employees have sparked positive
change in our communities.
2024 was a year marked by significant change and challenge for many,
with low social mobility remaining a persistent issue, disproportionately
affecting underserved elements of communities.
We believe that everyone, regardless of
background or origin, deserves opportunities
to thrive, and as a business we have a
responsibility to contribute to a fairer
societyby sharing our skills and resources.
Our employees are passionate about
making a difference and throughout 2024
they actively supported many community
organisations, helping to create a lasting
impact and build stronger, more equitable
communities, wherever they live and work.
Connection and collaboration:
Depaul UK and Demelza
Children’s Hospice – pop-up shop
In September we partnered with
Demelza Children’s Hospice and
Depaul UK, two of our corporate
charity partners, and delivered a
combined clothing pop-up shop
and recruitment advice session for
Depaul’s young homeless clients.
Prior to the event, Depaul’s clients created
mood boards to give an idea of the kind
of clothing they wanted to see at the
event, and we encouraged our employees
to search their wardrobes and donate
anything they no longer needed.
We received some wonderful donations
across all of our UK office locations, which
were collected by Demelza’s warehouse team
and taken to be sorted prior to theevent.
The outfits chosen for the event were
based on the mood boards, ensuring we
delivered items in the style and sizing
requested. Demelza has 31 charity shops
in Kent and the South East and was the
perfect logistical partner for this event.
The young people were able to walk
around the racks of donated clothing,
choosing outfits they would feel confident
wearing within (and outside) a work
environment. The Group volunteer Grace
Sawyer was on hand to help them sort
through the donated clothing and find
items they were excited about.
Through volunteering, raising funds through
charity events, and providing small grants to
local community groups that are important
to our colleagues, we made a distinct impact
across our local and national communities.
Our approach to making an impact on our
communities is about making informed
decisions to improve the wellbeing and
outcomes for our customers, our people, and
the communities we serve. Through strong
partnerships, we combine financial support,
business skills, and the power of our voices
tocreate a truly meaningful difference.
Our Purpose – to help customers, colleagues,
and communities prosper – guides our
commitment to wellbeing, the environment,
education, and the arts, and is purpose-built
upon the strength of our ‘connection and
collaboration’ foundations. These building
blocks enhance the quality of life for those
who use our products, work with us, and
support our vision of becoming the UK’s
leading specialist bank.
Depaul benefitted by:
£55,145
Demelza benefitted by:
£69,177
Total benefit to all
charities/organisations:
over £394k
2023: over £288k
I really liked meeting the young
people, talking to them and
hearing their career aspirations,
and it felt wonderful putting an
outfit together for them.
Grace Sawyer,
Our Community Employee
NetworkRepresentative
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Communities continued
We strive to do more than just improve
financial wellbeing. We aim to empower
individuals to flourish, thrive, and achieve
their personal and professional goals.
To achieve this, we prioritise people and the
planet. We recognise that community impact
isn’t a by-product but a core responsibility of
our business.
Understanding the unique needs of diverse
communities, we collaborate with local
and national organisations and charities to
effectively allocate resources and maximise
our reach. This ensures that our collective
efforts, underpinned by robust collaborative
partnerships, foster a supportive environment
where partners can mutually benefit and
amplify each other’s efforts.
By measuring and learning from outcomes,
we ensure our actions create a lasting positive
impact. With the Group amplifying the
combined impact, we leverage our collective
strengths to achieve our commongoals.
Overall benefit
When combining monetary support from
initiatives including the Good Causes Fund,
fundraising and match-funding, EV car
park charging, and Pennies from Heaven,
as well as the value of donations in kind
including preloved office furniture and
equipment, multiple charities and community
organisations benefitted by a combined total
of over £394k (2023: £288k) in 2024.
OSB India
Our colleagues in OSB India delivered
support to vulnerable people and causes
in their local communities or where needs
are greatest. Across the business, our
colleagues volunteered their time across
a range of local community partners,
spending 500 hours helping those in need.
Our teams have supported many
community initiatives from providing
education to orphanages and government
schools, and healthcare equipment to
hospitals in economically disadvantaged
communities, providing funding for
healthcare for those who can’t afford it.
In a key collaboration, a team of 20
volunteers, joined by our UK Group
Underwriting Director, dedicated over
100 hours to connect with and support
the incredible work happening at SOS
Children’s Villages of India. Our teams had
the privilege to meet the inspiring mothers
and children who form the heart of this
unique initiative focused on family support,
where children without parental care or
at the risk of losing it, receive quality care
services that goes beyond childcare alone,
ensuring comprehensive child development.
We also have a close relationship with HBS
Hospital which provides medical services
to individuals who are living below the
poverty line within the community in and
around the vicinity of Shivajinagar, located
in central Bengaluru.
HBS’s mission is to provide accessible,
affordable, high quality, curative and
preventive healthcare to the less fortunate,
by bringing together strengths and
contributions of healthcare professionals,
staff, volunteers, and community.
OSB India has focused on supporting the
crucial dialysis services, providing care
for 335 patients, with 1,704 sessions of
sponsored dialysis care – which translates
to almost 7,000 hours of life-saving dialysis
given in the last year.
Total volunteer hours:
7,038
41% increase on 2023
Donations to good causes:
£64,484
60% increase on 2023
Total fundraising & matching:
£112,393
Donations to HBS Hospital:
£11,200
(GBP equivalent)
Total hours volunteered:
500
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93
Communities continued
Charity partners
Partnering for impact: Our long-term
partnerships with charities and community
organisations are crucial to our community
impact strategy. By collaborating with these
important organisations, we can address
local needs beyond our core business.
Depaul UK: We support Depaul UK’s vital
work with young people experiencing, or
at risk of, homelessness. Our contributions
extend beyond financial assistance to include
skills development, such as coaching Board
members, advising on energy efficiency, and
providing HR support to help young people
secure employment and a home of their own.
Demelza Children’s Hospice: We’ve
partnered with the hospice since 2017 to offer
the Demelza Children’s Savings Account. By
encouraging young people to save, even small
amounts, we instil valuable financial habits.
Additionally, we match a portion of the total
annual average balances in these accounts to
support Demelza’s essential services for children
and their families. This is on top of the valuable
volunteering and fundraising we support
alongside the donations raised through the
savings account.
Sponsorship
The Group operates partnerships, supplying
charities and organisations with more than
monetary donations – we share skills and
experience too, and encourage each partner
to support one another so they can increase
the power and reach of the messaging. And
we do this by working together, amplifying
the impact across our separate channels.
Volunteering
We’re committed to being better neighbours
– and we recognise that we can achieve this,
not only through the donation of money,
but through the donation of our time, skills,
and expertise across a broad spectrum of
organisations. To demonstrate this commitment,
all Group employees are entitled to 14 hours
volunteering time per year and are actively
encouraged to use the full allocation to give
something back to our communities.
Community organisations supported:
144
Match-funding
Every year, we engage in a variety of
fundraising events to raise money for important
organisations focused on helping the sick
and disadvantaged. We positively encourage
individuals, teams, and departments to think
about the different ways they can raise money
in a fun and inclusive way. We know that
every penny makes a huge difference to our
communities, and that’s why we’re proud to
offer match-funding to all UK colleagues.
Community organisations supported:
52
Donations in kind
OSB provides financial support, specific
business skills and training sessions, as well as
support through our volunteering programme.
Where possible we also donate office furniture
and equipment that is no longer needed, or
has been replaced, to local organisations who
can make use of it.
During the year, office desks, chairs, computer
display screens and other items were donated
to Coventry Rugby Foundation, Wolves Play
Cafe, and Icknield Primary School.
Partnership with Coventry
Rugby Foundation:
Number of underprivileged
children supported:
1,700
Number of nutritional food
parcels supplied:
1,350
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Strategic Pillar – People continued
Good Causes Fund
Our Good Causes Fund is designed to
financially support projects and causes
thatare close to our employee’s hearts.
All UK employees can apply on behalf
of a registered charity, school, club,
community group, animal sanctuary,
orvoluntaryorganisation.
Grants of up to £500 are available to help
local charities and organisations make a
positive difference in our communities.
Community organisations supported:
131
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Strategic Pillar – Stewardship
ESG Governance
At OSB Group, we embrace
ourrole asresponsible stewards,
underlining ourcommitment to
conducting operations ethically,
transparently, andsustainably,
while delivering lastingvalue
toour stakeholders.
The Board-approved ESG Strategy is vital
in managing ESG risks while enabling the
pursuit of strategic opportunities that
benefit our stakeholders. In 2024, the Board
oversaw the development, evaluation,
endorsement and progress of key
governance initiatives, including:
• ESG Operating Framework: Establishing
clear processes and responsibilities.
• Materiality Assessment (non-financial).
• ESG Scorecard: Measuring performance
against ESG objectives and targets and
strategic opportunities.
• ESG Strategy: Analysis of progress
against the Group’s ambitions,
commitments, targets and ratings and
Diversity, Equity and Inclusion, Community
Impact, and People and Culture strategies.
To ensure accountability and drive
progress, the Group links ESG performance
to executive and senior management
compensation through the Performance
Share Plan, for further details see page 173.
By continuously
reviewing and
enhancing our
governance structures and
processes, the Group reaffirms
its commitment to creatinga
positive, lasting impact and ensuring
thatESG principles are considered in
ourstrategy and operations.
The Group’s ESG Operating Framework
works along the three lines of defence model.
First-line reporting, risk management and
coordination of strategic opportunities is
executed by business functions, the EENs
and the Climate Transition Working Group.
Governance and oversight is provided
by the ESG Committee, a dedicated
management committee chaired by the
Chief Sustainability Officer, that reports to
the Group Executive Committee. The ESG
Operating Framework identifies how ESG-
related matters are communicated through
the Group’s existing governance committees.
In 2024, the Terms of Reference for the
Group’s ESG Committee were thoroughly
reviewed to ensure their continued alignment
with the Group’s objectives. This review
reinforced the Committee’s role as a
cross-functional body, providing strategic
guidance on ESG and sustainability matters.
The process also ensured the Committee
had access to the necessary expertise to
support informed and effective decision-
making, further strengthening the Group’s
ability to address evolving ESG challenges
andopportunities.
In 2024, the Group made its first submission
as a member of United Nations Global
Compact, demonstrating our commitment
to aligning our operations with recognised
principles in the areas of human rights,
labour, environment, and anti-corruption.
As a new participant, we have begun
integrating the ten principles of the Global
Compact into our strategies and operations
reinforcing our dedication to transparency,
responsible business practices, and long-
term sustainability, while supporting the UN
Sustainable Development Goals. We look
forward to building on this partnership and
strengthening our ESG commitments.
In 2024, the Group’s existing Employee
Engagement Networks (EENs) were further
enriched with the launch of the OSB India
Network. Together, these networks promote
awareness, encourage participation, and
foster collaboration on sustainable initiatives
across the organisation.
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Consumer Duty
The Group successfully completed the
implementation of Consumer Duty for our
closed book products in July 2024, in line
with the regulatory deadline. The first annual
assessment report regarding customer
outcomes was presented to the Board and
was approved. The FCA’s guidance on
good and poor practice allows us to ensure
that our approach remains aligned with
regulatory expectations.
Group policies
The policies that govern our customer
interactions are detailed in the following
section. Each policy document identifies
where training is required.
Group Arrears Management
andForbearance policy
The policy emphasises equitable treatment of
customers experiencing financial challenges,
actively engaging individuals exhibiting
indicators of possible distress. Arrears rates
are monitored on a monthly basis by the
Group Credit Committee, ensuring senior
management is informed. Tailored assistance
is provided to customers dealing with
financial pressure.
Group Complaint Handling policy
The policy is designed to meet regulatory
standards while prioritising a customer-
focused approach. Thorough and unbiased
investigations of complaints are conducted
and facilitated by trained staff. Processes
are accessible to all customers, including
those in vulnerable situations. Management
information is provided to Committees and
the Board, aiding informed decision-making.
Group Lending policy
The policy defines responsible lending
guidelines consistent with our credit risk
appetite and established criteria. Assurance
processes serve as a secondary line of
defence, providing independent oversight
across first line assurance. Control measures,
such as system parameters and underwriting
procedures are in place. Our approach to
affordability considers recent fluctuations
in the cost of borrowing, thereby ensuring
a current evaluation of a customer’s
creditworthiness.
Group Customer Vulnerability policy
The policy establishes standards and the
methodology for recognising and assisting
vulnerable customers, ensuring equitable
outcomes across the Group. The Vulnerable
Customer Working Group conducts regular
evaluations to provide a comprehensive
assessment of the state of Vulnerable
Customer service across the organisation.
Our strategy aims to support colleagues to
recognise challenges and obstacles faced by
these customers, while providing appropriate
tailored support and effective solutions.
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Customers
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Ethical practices
In 2023, the Group became a signatory
of the UN Global Compact and in 2024
provided its first submission. The ten
principles serve as a reference for the
evolution of our approach to stewardship
supported by the following policies:
Modern Slavery Statement
andVendor Code of Ethics
The Group delivered a new statement that
endorses the UN Declaration of Human
Rights and supports the UN Guiding
Principles of Business and Human Rights. The
Group adheres to the International Labour
Organisation Fundamental Conventions and
does not tolerate child labour or forced labour.
The Group also respects freedom of association
and the rights of employees to be represented
by trade unions or works councils.
The UK Vendor Code of Conduct and Ethics
(UK VCCE) is provided at the initiation
of any new partnership and is reviewed
annually. OSB India maintains a Vendor
Code of Conduct that is subject to external
verification by qualified legal professionals
in India.
To mitigate the most significant risks of
modern slavery within our supply chain,
Indian operations, and employment practices,
our Vendor Management team conducts
evaluations of essential controls. Breach
reporting protocols are in place and there
were no reportable incidents in 2024.
Group Vendor Management
andOutsourcing policy
The outsourcing policy establishes the
requirements for effectively managing
and overseeing third-party relationships
and complying with regulatory standards.
The policy establishes a framework for
the identification and onboarding of new
third-party providers and the oversight and
performance monitoring during the life of
acontract.
During 2024, the policy was enhanced to
place a greater emphasis on ESG matters,
and consideration through the key lifecycle
stages including ESG questions within
selection criteria during on-boarding
due diligence, aconfirmed commitment
to OSB Vendor Code of Conduct and
Ethics (orequivalent), in defining contract
requirements and during periodic reviews.
We monitor third party compliance with
our standards to meet our obligations
tostakeholders.
Group Whistleblowing policy
The policy aims to promote a workplace
where all employees and concerned
individuals feel empowered to report any
serious misconduct promptly. Whistleblowing
cases are treated with fairness and
consistency, with a focus on protecting the
whistleblower’s identity. The Group Audit
Committee has, as a standing agenda item,
Whistleblowing Reports, where updates
are noted and an Annual Whistleblowing
Report is delivered to the Board. A Non-
Executive Director has been appointed as
thewhistleblowing champion.
Conflicts of Interest policy
The policy is focused on identifying and
managing conflicts, and commits to preventing
them whenever possible. It is incorporated into
the mandatory financial crime training for all
employees and into the Vendor Management
and Outsourcing policy, ensuring an
integrated approach. The Group Compliance
function supervises the conflicts of interest
register, which is evaluated quarterly by the
Group Conduct Risk Management Committee
and annually by the Group Nomination
and Governance Committee for Executives
andDirectors.
Sustainability Report continued
Strategic Pillar – Stewardship continued
97OSB GROUP PLC | Annual Report and Accounts 2024
Strategic Report
Governance Financial StatementsOverview Appendices
Group Financial Crime policy
The policies concerning Sanctions, Anti-Money
Laundering, Anti-Bribery, and Fraud have
been integrated into a unified Group Financial
Crime policy through ongoing improvement
initiatives. The policy is a vital component of
our Group Financial Crime Risk Management
Framework and is reviewed and approved
annually by the Group Audit Committee.
The Group’s approach to financial crime is
to ensure compliance with legal standards
and implementing effective systems and
controls to reduce the risk of the Group and
its products being used for the furtherance
of financial crime; the approach promotes
a zero-tolerance policy towards financial
crime, while also recognising the inherent
risks associated with business activities.
The Groups strategy on Anti-Money
Laundering and Counter Terrorist Financing
articulates the roles and responsibilities of
key responsibility holders and all employees.
It establishes a strict zero-tolerance stance
towards any violations of anti-money
laundering or counter terrorist financing
laws. The Anti-Bribery and Corruption
stancereflects our commitment to
conducting business ethically and with
honesty, and a zero-tolerance policy. This
policy applies to employees, contractors,
and third-party service providers to uphold
ethical practices in accordance with local
laws in alljurisdictions where we operate.
All employees participate in mandatory
Financial Crime awareness training on an
annual basis to foster a culture of vigilance and
responsibility. A specialised Group Financial
Crime Team investigates any suspected
financial crime-related incidents and initiates
recovery actions whennecessary. Multiple
committees are engaged in monitoring and
evaluation to ensure effectiveoversight and
response. Senior management conducts
regular reviews of key risk and performance
indicators. This process generates management
information that enhances visibility into
our exposure to financial crime, toenable
informed decision-making and effective risk
management strategies.
Group Health and Safety policy
The policy outlines our approach to
identifying and meeting legal obligations,
identifying and managing risks and creating
a safe environment for employees, customers,
and other stakeholders. Risks are assessed
across the Group on an annual basis.
Training is provided for all employees. We
routinely evaluate our controls to verify their
effectiveness. An accountable Executive is
responsible for the Health and Safety policy,
which undergoes an annual review prior to
Operational Risk Management Committee
approval. Management information is
provided to Committees and the Board.
Group Operational Resilience policy
The policy reflects our commitment to
enhancing operational resilience in order to
meet the needs of our customers alongside
our financial and legal obligations. This
policy is intended to ensure that the Group
complies with the supervisory regulator
requirements. The policy establishes the
operational resilience framework which
incorporates a range of activities to prepare
for, prevent, detect, respond to, recover
from, and learn from disruptions. Regular
review and testing takes place to support our
resilience strategies so the Group can adapt
to new threats, regulatory changes, and
business evolution.
Group Data Retention policy
The policy and underlying procedures set
out measures to protect the personal data of
our customers, employees and third parties
and ensure adherence to the UK General
Data Protection Regulation (GDPR) and the
Data Protection Act 2018. We view effective
privacy practices as vital to our corporate
governance and accountability framework.
The Group Data Protection Officer provides
reports to both the Group Executive
Committee and the Board.
Sexual Harassment policy
In 2024, the Group introduced a sexual
harassment policy that plays a vital role in
ensuring a secure and respectful working
environment. This policy is relevant to all
employees and contracted staff in the UK
connected to the Group. Additionally, it
complements the OSB India Prevention of
Sexual Harassment policy, which addresses
obligations in India. The policy articulates a
clear definition of sexual harassment, describes
the reporting mechanisms, and specifies the
potential disciplinary actions for any violations.
Trans Inclusion and
GenderIdentitypolicy
The Group is dedicated to fostering equal
employment opportunities and creating
a supportive and inclusive workplace,
irrespective of gender identity. In alignment
with the Gender Recognition Act 2004 and the
Equality Act 2010, the Group has implemented
a policy focused on trans inclusion and
gender identity, which safeguards the rights
and dignity of transgender and non-binary
individuals. The policy is relevant to all
employees and contracted staff and outlines
the procedures for reporting incidents and
shares the possible disciplinary measures
that may be imposed for any infractions;
supporting the Group’s commitment of
ensuring inclusivity, respect, and the
protection of individuals from discrimination
based on their gender identity.
Sustainability Report continued
Strategic Pillar – Stewardship continued
Ethical practices continued
OSB GROUP PLC | Annual Report and Accounts 202498
Strategic Report
Governance Financial StatementsOverview Appendices
Sustainability Report continued
Strategic Pillar – Stewardship continued
2024 2023
Taxes paid £m £m £m £m
Corporation tax 109.6 92.6
Bank surcharge 8.9 10.2
Irrecoverable VAT 23.3 22.1
Employer’s NIC 11.8 10.8
Other 1.8 2.3
Total taxes paid 155.4 138.0
Taxes collected
Income tax 25.6 23.2
Employee’s NIC 4.3 5.3
VAT 3.6 3.8
Total taxes collected 33.5 32.3
Total tax contributions 188.9 170.3
The Group is proud to make a significant
UK tax contribution each year. During the
2024 period our contribution was £188.9m
(2023:£170.3m).
The Group believes it is important to pay the
right amount of tax, in the right place, at
the right time. All of the Group’s subsidiaries
(including those incorporated in Guernsey
and Jersey) are tax resident in the UK, with
the exception of OSB India Private Limited
(OSBi) which is tax resident in India and pays
all appropriate taxes in India. We do not use
tax havens for tax avoidance purposes.
The Group is open and honest in all dealings
with tax authorities in both the UK and India.
In the UK we have signed up to the Banking
Code of Conduct and always follow the spirit
and the letter of tax law. Our strategy can be
found at https://www.osb.co.uk/sustainability
/tax-strategy.
Tax
OSB Group recognises that its tax contributions make an important
social and economic impact, benefitting the communities we operate in
by delivering valuable public services and building infrastructure that
allowscommunities to thrive.
Cyber security
The Group’s cyber resilience programme is
founded on recognised frameworks for cyber
risk and controls, including those from the
National Institute of Standards and Technology,
the Microsoft Cloud Security benchmark, and
the Centre for Internet Security. Oversight
is provided across the conventional three
lines of defence, with reporting structures
established for governance committees
and the Group Board. The framework not
only facilitates effective reporting but
also continuous improvement to our cyber
security posture and in addressing potential
vulnerabilities. The cyber programme aims
to deliver robust counter-measures, effective
monitoring, and a responsive approach to
incidents in the face of both existing and
evolving threats.
The Group conducts regular security testing
and engages independent reviews from
specialised CBEST-accredited third parties to
evaluate the effectiveness of its operational
and technical capabilities in cyber resilience,
which are necessary for regulated financial
services organisations.
Artificial Intelligence
ResponsibleUse policy
The policy provides guidelines on how to
interact and utilise AI tools and applications.
Additionally, the Group is currently
progressing with several controlled Proof of
Concepts in supporting business functions
with a view to understanding the risks,
accuracy, ethics and reliability. Given the
maturing nature of AI technology and its
usage, the Group takes a proactive but
cautious approach to the adoption of AI.
Ethical practices continued
99OSB GROUP PLC | Annual Report and Accounts 2024
Strategic Report
Governance Financial StatementsOverview Appendices
Task Force on Climate-Related Financial Disclosures
Listing Rule 9.8.6R (8) requires that
the Group provides climate-related
financial disclosures consistent with
the recommendations set out by the
Task Force on Climate-related
Financial Disclosures (TCFD).
The Board confirms that it has disclosed sufficient information to comply
with TCFD and Companies Act 2006 requirements as amended by the
Companies (Strategic Report) (Climate-related Financial Disclosure)
Regulations 2022. The Group will continue to enhance these disclosures
over time in line with regulatory expectations and emerging best practice.
The Group remains committed to addressing
climate change and achieving our ambition
of net zero emissions across our broader
business activities by 2050.
Through the Group’s membership and
involvement in several initiatives including
the Net Zero Banking Alliance (NZBA), we
continued to support the wider efforts of the
financial services industry to minimise the
impact it has on climate change.
Throughout the year, the Group focused
on reducing the environmental impact of
our own operational footprint and how we
can support the decarbonisation of the UK
housing stock we finance, publishing our first
Climate Transition Plan.
The Board is conscious that regulatory
expectations and industry best practices
continue to evolve and further work is required
to enhance our climate risk operating model.
The disclosures below were drafted to be
consistent with TCFD recommendations
aligned to the UK legislation on The
Companies (Strategic Report) (Climate-
related Financial Disclosure) Regulations 2022
– and provide transparent reporting to assist
our stakeholders in understanding the impact
of climate change on the Group. The current
assessment indicates a low climate risk impact
to the business, however we remain cognisant
that climate risks may evolve over time.
In the table overleaf, we describe the
progress made against each TCFD pillar
during 2024 and where relevant ongoing
considerations for 2025 and beyond.
OSB GROUP PLC | Annual Report and Accounts 2024100
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Governance Financial StatementsOverview Appendices
Task Force on Climate-Related Financial Disclosures continued
1. Governance
Approach Looking Ahead Further details
1a) Board oversight of climate-related risks and opportunities:
• All Committee and Board papers continued to include an assessment in relation to the Group’s environmental commitments to allow the
Directors to consider any climate-related risk impacts or implications to the Group’s stated climate ambitions. Climate risk and Environmental,
Social and Governance (ESG) matters are key considerations to the Group’s strategy for which the Board assumes responsibility.
• In addition to its direct oversight, the Board delegates responsibility for the Group’s climate-related risk appetite, risk monitoring,
provisioning and capital and liquidity management to the Group Risk Committee. The setting of climate risk appetite limits is a key
tool utilised to ensure that the Group’s risk profile continues to be managed to an acceptable level, whilst the inclusion of a climate risk
assessment in the Internal Capital Adequacy Assessment Process (ICAAP) ensures that the Group continues to hold sufficient capital to
address climate specific risks to which it may be exposed.
• Kal Atwal (Non-Executive Director) maintains responsibility for championing ESG matters on behalf of the Board.
• The Board considers and approves emission reduction goals and targets in line with the Group’s net zero by 2050 commitment and
receives monthly performance updates.
• The Group Executive Committee meet on a periodic basis, receiving emissions performance information and updates on ESG
opportunities. Additional papers from the ESG Committee are submitted where approvals and escalations are required.
• The Group Audit Committee continues to monitor the Group’s compliance with TCFD requirements.
• The Group Risk Committee is a Board level committee which oversees the Group’s climate risk management and provides advice to the
Board on climate risk exposures and metrics relative to the climate risk appetite.
• During 2024, the Group’s Executive Risk Committee which oversees other Principal Risks for the Group (e.g. Operational risk) was
appointed to oversee and approve the Group’s Climate Risk Management Framework on an annual basis (previously approved at the
Group Risk Committee), aligning the oversight approach followed by other sub-level frameworks.
• The Group Remuneration and People Committee integrated greenhouse gas (GHG) emission reduction targets into the Performance
Share Plan with performance against these targets presented to the Board.
• For further details on how climate-related risks and opportunities are linked to Executives and Senior Management’s remuneration, see
Directors’ Remuneration Report on pages 154-179.
• Ongoing enhancement to ensure effective oversight of
climate-related risks and opportunities
• Ongoing monitoring and assessment of performance
targets aligned to the Group’s climate risk strategy
• Ongoing review of the Group’s climate risk appetite in
accordance with the Group’s Risk Appetite framework
• Educate and create awareness via workshops, internal
training and external gatherings to support the Group’s
Climate Transition Plan and to improve internal expertise
Directors’ Remuneration
Report – pages 154-179
101OSB GROUP PLC | Annual Report and Accounts 2024
Strategic Report
Governance Financial StatementsOverview Appendices
Task Force on Climate-Related Financial Disclosures continued
1. Governance continued
Approach Looking Ahead Further details
1b) Management’s role in assessing and managing climate-related risks and opportunities:
• The ESG Committee is a Management Committee which reports into the Group Executive Committee. During 2024, the Committee met
on a periodic basis, ensuring effective identification and management of climate-related risks and goals. The Committee’s output is
summarised and shared annually with the Board for consideration. Management information and analysis on climate-related topics are
presented to the ESG Committee and subsequent committees relating to greenhouse gas (GHG) emission reductions and climate risk
appetite limits.
• Senior management level responsibility is held by Non-Executive Director on the Board, Chief Executive Officer (CEO), Chief Financial
Officer (CFO), Chief Risk Officer (CRO) and Chief Sustainability Officer (CSO) who are part of the relevant committees overseeing
climate-related issues to review and guide the Group’s strategy.
• The Chief Sustainability Officer is responsible for ensuring the Group’s strategy is aligned and consistent with the various climate-
related initiatives across the Group as well as ensuring that the Group is well positioned to meet its ESG reporting requirements.
• The Climate Transition Working Group acts as the forum that oversees the implementation of the Group’s Climate Transition Plan,
whilst providing regular updates to the ESG Committee.
• Climate risk is recognised as an Environmental, Social, Governance Risk and forms part of the Group’s Business & Strategic principal risk
under the Group’s Enterprise Risk register. The Group Climate Risk Management Framework articulates how the Group identifies, monitors,
and manages climate risks. The Framework, implemented in 2020, is subject to annual review and has been further enhanced in 2024.
• A review of existing risk management frameworks across principal risk areas were conducted to ensure climate risk is appropriately
embedded and monitored in line with existing risk tools and frameworks. Any changes or updates to the Group’s suite of Risk
Management Frameworks are approved at the Group Risk Management Committee.
• During 2024, cross-functional workshops were established internally and externally (provided by external third parties) to educate and
increase the Group’s awareness on climate-related risks and opportunities. As an example, analytical insights driven by data to support
the Group’s Transition Plan.
• Between 2023 and 2024, the Group increased its headcount to strengthen climate-related expertise within the risk and finance function.
As a result, enhanced specialist knowledge has provided support to management in monitoring climate-related issues, provide horizon
scanning on regulatory outlooks, and enhancing the Climate Risk Management Framework.
• Consider further embedding of climate-related risks within
the Group’s other sub-risk management frameworks,
whererequired.
• Continue to monitor and manage performance against
emissions reduction targets for financed (mortgages) and
direct emissions.
OSB GROUP PLC | Annual Report and Accounts 2024102
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Governance Financial StatementsOverview Appendices
Task Force on Climate-Related Financial Disclosures continued
2. Strategy
Approach Looking Ahead Further details
2a) Climate-related risks and opportunities identified over the short, medium, and long-term:
The Group determined the following as relevant and/or material risks to be reviewed annually:
Time periods considered are defined as short term 0-5 years, medium term 5-10 years and long term greater than 10 years. The short-
term time horizon aligns to the Group’s planning and ICAAP stress testing assessment periods. The long-term time horizon has been
utilised within scenario analysis to assess climate risks which may occur over a longer time frame. The medium-term horizon therefore,
relates to risks and opportunities which are inside our long-term assessment horizon, but sit outside of our short-term assessment period.
The Group’s lending is to individuals and small and medium enterprises in the UK, where the specific climate risks and opportunities are
assessed. The Group’s operational sites in both the UK and India (OSBI) are exposed to physical and transition risk. Currently, the Group
does not deem it necessary to describe risks and opportunities by geography. The Group provides lending in the UK primarily against
residential and commercial properties, with low exposure to non-property collateral backed funding lines or asset finance lending which
istypically secured against hard assets, and therefore does not have significant credit exposure to carbon-related assets.
For further details on time horizons related to the Group’s Principal Risks (financial and non-financial), please refer to the Risk
Management section of the TCFD Report page 109.
Each of the following risks and opportunities (actual/potential) identified includes a time-horizon associated with it. Represented with:
S
Short-term
M
Medium-term
L
Long-term
Identified risks – Lending
Physical risk
L
Changes in precipitation patterns and extreme variability in weather patterns, rising mean temperatures and rising sea levels
The Group primarily lends on residential assets, either for owner occupation or for investment by professional landlords. The Group
undertook the annual scenario analysis of its portfolio using best-case and worse-case scenarios to determine the level of exposure to
climate-related risks. The key physical risks used for scenario analysis are flooding, subsidence and coastal erosion in the long-term
(>10years), which considers the behavioural and contractual life of the Group’s primary lending types.
Transition risk
S
Policy and legal – mandates on and regulation of existing products and services
Energy Performance Certificate (EPC) rating requirements are considered a key transitional risk in the short term (0-5 years). The Group’s
current exposure to transition risk as a proportion of the total lending is relatively small.
Uncertainty in market proposition
Commissioned research indicated varying levels of awareness amongst borrowers around climate change, mitigation, support available
and understanding of EPC ratings. There is a potential risk that landlords might be leaving or not entering the market if climate risks make
investment less attractive.
Policy and legal – exposure to litigation relating to greenwashing and also failing to comply with evolving regulations or standards that
would impact the mortgage market. The uncertainty on governmental policies proves as a risk to the Group which will impact uncertainty
in the market within the short-term time horizon.
Reputational – increased concern or negative feedback from the Group’s stakeholders based on financed emissions and failure to meet
the Group’s emission reduction targets.
• Continue to seek opportunities relating to climate-friendly
products, whilst being cognisant of any governmental
changes and any conduct risks
• Consider climate financial risks within the Group’s planning
processes subject to governmental and regulatory changes
(e.g. MEES – Minimum Energy Efficiency Standard)
• Enhance analytical approaches to assess climate change
in conjunction with the Group’s Principal Risk types
TCFD Report (Risk
Management) – page 109
Sustainability Report
– page 83
103OSB GROUP PLC | Annual Report and Accounts 2024
Strategic Report
Governance Financial StatementsOverview Appendices
Task Force on Climate-Related Financial Disclosures continued
2. Strategy continued
Approach Looking Ahead Further details
2a) Climate-related risks and opportunities identified over the short, medium, and long-term continued
Identified risks – Operations
Physical risk
L
Increased severity of extreme weather events such as cyclones and floods. The Group’s operations in the UK and OSBI could be impacted
by an increased number or severity of extreme weather events. Increased costs may be incurred during the period in which operational
processes are recovered.
Transition risk
L
Increased pricing of GHG emissions, enhanced emissions-reporting obligations. The Group offsets some emissions on an annual basis,
whilst it aims to reduce total emissions. It is expected that the cost of offsets from the voluntary carbon market will increase significantly
towards 2030. In addition, it is reasonable to anticipate that the government may introduce policy mechanisms to penalise fossil fuel use
in support of the government’s net zero ambitions.
Policy and legal
Increase of emerging and evolving frameworks. The Group’s operations, business strategy and risk management will be impacted if there
are insufficient controls in place (e.g. horizon scanning) to identify the requirement(s) the Group may be obliged to comply with.
Reputational – increased concern or negative feedback from the Group’s stakeholders based on direct emissions and supply chain
emissions as well as failure to meet the Group’s emission reduction targets.
Identified opportunities – Lending
Products and services
S
Increased revenue through demand for lower emissions products and services.
Improved competitive position to reflect shifting consumer preferences, resulting in increased revenues.
Green financing and lending products have the ability to finance retrofit and new-build projects that increase carbon efficiency or reduce
the carbon footprint of investments contributing to real economy decarbonisation, and the Group’s ambitions and commitments.
The Group continues to focus its lending opportunities via market research as part of the Group’s business strategy. This ensures the
Group fully understands broker and customer perceptions, attitudes and knowledge within the mortgage market and identifies any risks
related to product development. Government and regulatory change remain as a challenge within the UK mortgage market (e.g. minimum
EPC requirements and definitions of greenwashing), therefore, the Group will remain diligent via market insights to continue to identify
climate-friendly products as an opportunity. Through the course of 2022 to 2024, various research had been conducted which has
supported the Group’s business strategy.
The Group identified a range of opportunities that would support in reducing the Group’s financed emissions (via a commissioned third-
party consultancy). As a result, the key focus relates to retrofitting and cost-effective ways that can support our brokers and borrowers in
this area (e.g. marketing communication). The assessment was a key driver in the Group’s thought leadership in educating and providing
awareness to our brokers and borrowers.
Resilience
S
Increased revenue through new products and services
Transition planning is a significant focus for regulators and continues to gain the attention of shareholders. Exploring revenue streams
through new products and services supports the ongoing resilience of the Group as a specialist lender.
OSB GROUP PLC | Annual Report and Accounts 2024104
Strategic Report
Governance Financial StatementsOverview Appendices
Task Force on Climate-Related Financial Disclosures continued
2. Strategy continued
Approach Looking Ahead Further details
2a) Climate-related risks and opportunities identified over the short, medium, and long-term continued
Identified opportunities – Operations
Resource efficiency
S
Reduced operating costs (e.g. through efficiency gains and cost reduction)
Increasing the Group’s energy efficiency is an opportunity that will reduce the ongoing operating costs of electricity and natural gas,
which are the key drivers of Scope 1 and Scope 2 emissions. Increased efficiency also provides a level of protection against the current
uncertainty of energy security and pricing.
Energy source
S
Use of lower-emission sources of energy, use of supportive policy incentives
The use of low or zero carbon technologies is likely to reduce operating costs associated with carbon intense energy sources for the future
and the need to fund offsetting. The Group will also be afforded a level of protection from fossil fuel price increases.
Resilience
S
Data
Explore evolving data availability in the market to enhance the assessment of climate-related risks providing additional value to Senior
Management to support informed business and risk decisions. This will include the accuracy, timeliness and frequency of the data
received (e.g. latest EPC ratings).
105OSB GROUP PLC | Annual Report and Accounts 2024
Strategic Report
Governance Financial StatementsOverview Appendices
Task Force on Climate-Related Financial Disclosures continued
2. Strategy continued
Approach Looking Ahead Further details
2b) Impact of climate-related risks and opportunities on the Group’s businesses, strategy, and financial planning:
• Climate-related risks and opportunities are considered during a wider ESG risk and opportunity analysis where the impact assessment
must be consistent with the Group’s risk culture and risk policies. The opportunities are determined based upon a quantitative
assessment, where data is available, or a qualitative assessment, based on factors such as the potential impact, importance of risks,
growth or cost management and the degree of importance to stakeholders.
• The Group continues to progress in managing risks and developing potential areas of opportunity with respect to products and services,
supply/value chain mitigation activities and operations. The Group’s current strategy and simple business model mean that risks and
opportunities relating to investment in research and development, acquisitions and access to capital are deemed non-material and
therefore were not areas of focus.
• The Group’s financial plans are set on an annual basis and are reviewed and refreshed periodically. They consider, among other matters,
the Board’s risk appetite, macroeconomic outlook, market opportunity, the competitive landscape and sensitivity of the financial plans to
volumes, margin pressures and any changes in capital requirements. For the 2024 financial plans, the Board considered all principal and
emerging risks including climate risk, where the risk is likely to emerge, outside of the viability assessment horizon.
• In 2024, the Group developed its first Climate Transition Plan which sets out the roadmap and steps the firm intends to take in
progressing towards its committed emission reduction targets. For further details, please refer to the Group’s Climate Transition Plan and
the Just Transition pillar of the Sustainability Report page 76.
• The Group considers the UK Climate Change Committee (CCC)’s sectoral scenario analysis as a key factor in driving the ESG strategy,
targets and commitments. This is supported by quantitative assessment based on the Group’s financial planning and financial risk
assessment driven by stress testing from Bank of England’s Climate Biennial Exploratory Scenario (CBES), where macroeconomic
indicators are considered and recalibrated for each annual review of the ICAAP.
• In 2024, notwithstanding the Group’s existing refurbishment products for Buy-To-Let (launched in 2023), the Group has further
expanded into EPC-based products as part of our Commercial lending. The Group remains diligent in approaching new climate-friendly
products and therefore continues to focus market research to ensure the Group complies with regulatory standards.
• Data insights and third-party consultancy remained a strong focus in 2024. This ensures the Group is well informed internally and
externally when conducting business and risk decisions as part of the Group’s strategic and financial planning. Results from data
provided by third-party consultancy indicate areas of improvement to reduce the Group’s financed emissions as well as potential cost-
efficient solutions that can contribute towards the Group’s emission reduction targets. Findings are presented at relevant committees or
working groups to ensure management is well informed to support business and risk decisions from a forward-looking perspective.
• During 2024, the Group Risk Committee approved a number of enhancements to the Group Vendor Management and Outsourcing
Policy. The improvements placed a greater emphasis and a confirmed commitment to ESG with key considerations through each of the
Procurement and Supply Chain key stages including: (i) Mandatory ESG questionnaire and selection criteria during the Sourcing stage for
new vendors/new services (ii) during on-boarding due diligence, a confirmed commitment to OSB Vendor Code of Conduct and Ethics (or
equivalent), (iii) contractual agreement negotiations (iv) Periodic reviews during the life of the contract e.g. annual checks/ attestations.
• The Group calculates its Scope 3 financed emissions using the Partnership for Carbon Accounting Financials (PCAF) methodology in line
with industry standards. The methodology supports the Group’s progress in reducing emissions by benchmarking against its peers and
comparison with market standards. The PCAF calculation covers the largest asset class within the Group which is mortgage portfolio.
For further details, please see the Sustainability Report page 83.
• Increase awareness via internal and external market research
to ensure impacts are appropriately assessed in line with the
Group’s business, strategy, and financial planning
• Monitor and manage Scope 3 financed emissions against
agreed targets
• Ensure the Group’s climate risk underwriting criteria complies
with evolving governmental and regulatory standards
• Ensure impacts related to changes in governmental and
regulatory standards are considered as part of the Group’s
business, strategy, and financial planning
• The Group remains optimistic in identifying new product
opportunities resulting from the impacts delivered by the
transformation programme.
Climate Transition Plan
Sustainability Report
– page 76
Sustainability Report
– page 83
OSB GROUP PLC | Annual Report and Accounts 2024106
Strategic Report
Governance Financial StatementsOverview Appendices
% of properties with a flood
probability >20% in the region
2.4%
0.8%
0.5%
0.4%
0.3%
0.2%
0.1%
Task Force on Climate-Related Financial Disclosures continued
Portfolio profiling and scenario
analysis insights (TCFD
recommendations: Strategy 2a,
2cand Metrics and targets 4a)
OSB Group plc is a leading mortgage lender
predominantly in the professional Buy-
to-Let and specialist Residential market
sub-segments secured against residential
property. The Group also provides loans to
limited companies and individuals secured
against commercial and semi-commercial
properties, residential development financing,
funding lines to non-bank finance companies
and asset finance lending.
At present the Group has identified the
physical risks relating to flooding, subsidence
and coastal erosion which could reduce
the value of properties as well as the ability
of borrowers to afford or refinance their
mortgages, as the most material physical
climate risks to be assessed and managed.
The Group has also identified the transitional
risks relating to changes in regulatory policy
resulting in material levels of investment
being required to ensure minimum EPC
requirements are met. This spend, for
example, may be required to ensure Buy-
to-Let properties are eligible to let, loan-to-
value levels are not adversely impacted, void
periods and defaults do not materialise which
would result in loan losses and higher capital
requirements. As such, the Group considers
the above risks as the most material and
therefore focuses on their assessment,
monitoring and management.
The climate risks relating to the Group’s
operational premises are considered less
material than the physical and transitional
risks to the properties which underpin the
Group’s loan portfolios.
Only 0.8% of properties (219 properties) in this
region are exposed to a flood risk currently
greater than 20%. Northern Ireland has the
highest proportion of properties with a flood
probability of greater than 20%, however
this amounts to only four properties in the
Group’sportfolio.
Sensitivity analysis for subsidence indicates
the increase from best-case to worst-case
increase is 0.05% (2023: 0.05%), with the
portfolio risk of subsidence being less than
0.5%. For coastal erosion, across the Group
over 92% (2023: 92.6%) of the portfolio is
more than 1,000 metres from the coastline.
Of the properties within 1,000 metres, only
0.09% of properties on the portfolio (110
properties) are in areas likely to experience
coastal erosion (2023: 0.09%, 121 properties).
The physical impact of climate change on
our real estate portfolio across the UK is
expected to be limited.
Overview
The Group profiles the mortgage portfolio
through both Physical and Transitional Risk
measures, completing a full comparative
analysis on an annual basis.
Physical risks
Exposure to flood, subsidence and coastal
erosion are considered in the physical
riskprofiling.
Properties are geolocated within a one-
metre accuracy for the purpose of physical
peril impact considerations. This resolution
is essential because flood and subsidence
risk factors can vary considerably between
neighbouring properties.
The Group’s physical risk profile remained
broadly stable during 2024, when compared
to 2023.
Sensitivity analysis completed using
Representative Concentration Pathway (RCP)
scenarios on increases in global temperatures
by 2100, compared the least severe scenario
(RCP 2.6 – increase of 0.9ºC to 2.3ºC) to the
most severe (RCP 8.5 – increase of 3.2ºC
to5.4ºC).
At a Group level, our flood analysis shows that
the exposure to the probability of flood over
the next decade increases by 0.04% (2023:
0.04%) from the best-case scenario to the
worst-case scenario, only 0.44% (2023: 0.46%)
of the Group’s portfolio is in an area with a
flood risk currently greater than 20%.
Regional mapping analysis (see diagram to
the right) shows the proportion of the Group’s
mortgage portfolio that is exposed to a flood
probability greater than 20% within each UK
region. The highest regional concentration is
to the South East, representing 20.4% of the
Group’s mortgage portfolio.
107OSB GROUP PLC | Annual Report and Accounts 2024
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Governance Financial StatementsOverview Appendices
Transitional risks
Exposure by Energy Performance Certificate
(EPC) rating is considered in the Transition
Riskprofiling.
For transitional risk, EPC ratings are based
on a Standard Assessment Procedure
calculation which uses a government
methodology to determine the energy
performance of properties by considering
factors such as construction materials,
heating systems, insulation and air leakage.
The Group observed marginal improvements in
EPC ratings for existing stock assessed in both
2024 and 2023. In addition, enhancements in
the climate data processes improved insight
into the transitional riskprofile.
At a Group level, c.42.8% of properties (2023:
40.8%) have an EPC rating of C or better,
c.44.7% (2023: 45.7%) have an EPC rating
of D, c.11.1% (2023: 12.1%) an EPC rating of E
and c.1% (2023: 1.1%) have an EPC rating of
F or G. Ofthe properties with an EPC rating
of D or worse, c.92.7% (2023: 92.4%) have the
potential to reach at least anEPC rating of C.
Adverse movements in the EPC rating
distribution of the Group’s loan portfolios
and any potential change in government
policy have the potential to result in larger
future financial impact for the Group. To
mitigate this risk, the Group actively monitors
and assesses the possible financial risks
associated with the EPC rating distribution
of the Group’s loan portfolios and horizon
scans for any changes in regulatory or
governmental policy.
Embedding scenario analysis
The Group’s ICAAP assessment includes
the financial impact of climate-related risks
including flood, subsidence, coastal erosion
and minimum EPC ratings. As part of the
stress testing, the Group’s ICAAP considers
a range of scenarios aligned to the PRA’s
CBES (where the 2050 global temperature
range is from 1.8ºC to a 3.3ºC) within the
five-year financial planning and the 2024
ICAAP indicated that the Group has a low
risk to climate change, and its strategy and
business model performs resiliently across a
number of climate scenarios.
97% of the Group’s total lending is related
to carbon-related assets (i.e. mortgages)
excluding Development Finance, Funding Lines
and Asset Finance portfolios and contributes
to the Group’s total emissions (indirect
emissions, Scope 3 Category 15 – Financed
Emissions). Details of the Group’s strategic
approach in transitioning into a low-carbon
economy consistent with a 2ºC or lower climate
scenario is outlined in the Group’s Climate
Transition Plan and refer to the Sustainability
Report – Just Transition page 76.
Governmental policies are key drivers
impacting the Group’s risk strategy and risk
decisions to address climate-related risks and
opportunities. The current UK governmental
outlook remains uncertain for the mortgage
market and how the changes will impact the
Minimum Energy Efficiency Standard (MEES)
Regulations which the Group’s current
lending policies comply with. Therefore, risk
monitoring and analysis are established to
monitor the EPC distribution of our lending
portfolio aligned to the Group’s Financed
Emissions reduction targets (aligned to a
2ºCor lower climate scenario).
The Group’s climate risk management covers
a wide range of risk analysis including;
climate risk appetite monitoring, conducting
scenarios and assumptions for the Group’s
ICAAP assessment and other ad hoc data
analysis in order to support the Group in
assessing climate-related financial impacts.
The Group’s current risk appetite, IFRS 9
and ICAAP (as of year end 2023*) climate
risk assessments have all indicated that the
Group is currently exposed to a low climate-
related financial risk, using the materiality
assessment scale which supports other
financial disclosures within the Group’s
Annual Report and Accounts.
Looking ahead
The Group will continue to ensure climate
risk assessments (e.g. ICAAP assessment or
risk-related analysis) support the Group’s
management of the climate risk profile.
* There is a timing difference between the Group’s
annual disclosure and ICAAP process, therefore,
conclusion is based on the 2023 ICAAP assessment
(conducted in 2024)
Task Force on Climate-Related Financial Disclosures continued
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2023 Group EPC Distribution – Current vs Potential
A
Current
Potential
B C D E F G
0.2%
14.2%
50.2%
26.4%
35.7%
45.7%
12.1%
9.5%
3.9%
0.5%
1.1%
0.1%
0.3%
0.0%
2024 Group EPC Distribution – Current vs Potential
A
Current
Potential
B C D E F G
14.6%
51.0%
27.9 %
35.1%
44.7%
11.1%
9.7%
0.3%
3.6%
0.5%
1.0%
0.1%
0.3%
0.0%
Potential climate-related impacts on Group’s principal risks (financial risks):
Following from the Strategy section of the Group’s TCFD(2a), the below outlines the time horizon and potential risk associated with each principal risk type.
Principal risk type Climate risk type Description Time Horizon Potential Risk
Credit risk Physical Extreme weather events (such as heatwaves, floods, wildfires, and storms) that can lead to physical
damage to the value of assets or collateral held
Long-term Low
Transition Arise from the process of adjustment towards a low-carbon-economy which could impact the value
of the assets and lead to stranded assets
Short-term Low
Market risk Physical
Adverse movements impacted by climate change impacting interest rates
Long-term Low
Transition Medium-term Low
Liquidity
and funding
Physical and
transition
Adverse movements impacted by climate change impacting foreign exchange volatility Short-term Low
Solvency Physical and
transition
Climate-related risks which would require the Group to hold additional capital Short-term Low
Task Force on Climate-Related Financial Disclosures continued
2023 current proportion of EPC D to G which have a EPC Potential of C or above; D: 95.5%, E: 84.2%, F: 62.4%, G: 55.4%2024 current proportion of EPC D to G which have a EPC Potential of C or above; D: 95.6%, E: 84.8%, F: 63.3%, G: 55.9%
109OSB GROUP PLC | Annual Report and Accounts 2024
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Governance Financial StatementsOverview Appendices
3. Risk Management
Approach Looking Ahead Further details
3a) Processes for identifying and assessing climate-related risks:
• Climate-related horizon scanning is in place to monitor regulatory or legislative changes which could impact
the Group which feeds into the assessment of transition risks.
• The Group’s risk function continues to assess climate risks against its key principle (traditional banking) risks
and considers credit risk as the key risk which could be adversely impacted by future climate change.
• The enterprise risk register process allows the Group to consistently size, scope and reassess the relative
significance of all risks including climate risk, considering the likelihood and potential impact of the risk
emerging to provide an inherent risk rating. The risk terminology at an Enterprise Risk level remains consistent
when applied to the Group’s ESG Materiality Assessment related to impact assessment which includes
Severe, Significant, Moderate and Minor.
• The Group utilises Bank of England’s Climate Biennial Exploratory Scenario (CBES), which includes the
scenario narrative and corresponding climate and macro paths, which are then input into the Group’s stress
testing engine to assess the financial impact on the Group.
• Scenario analysis is used as a valuable tool to understand and inform the potential impact of climate change
on the Group’s loan portfolios and contributes towards the Group’s climate change portfolio analysis
(covering both physical and transitional risks). The scenario analysis is fully embedded within the Group’s
Credit risk which supports the assessment on Solvency risk (i.e. ICAAP). Outside of the scenario analysis,
the financial impact of climate change is considered within other principal risk types as outlined later in this
section (Potential climate-related impacts on Group’s principal risks), for non-financial principal risk types,
the Group acknowledges the importance of climate change and the potential risk that may occur within the time
horizons mentioned, however, further assessment will be required while processes and frameworks are maturing.
• The outcome of the scenario analysis detailed within the Group’s ICAAP provides an indication of the size and
scope of climate-related risks. For further details on the scenario analysis outputs, please see page 108.
• Climate risk is a key consideration in the Group’s wider assessment of ESG risks and opportunities which uses
the outputs of scenario analysis to support the assessment of material ESG risks and opportunities, which
further informs the ESG strategy. Within the Group’s ESG materiality assessment, climate-related topics
are identified and the degree of importance to stakeholder groups are assessed. Collectively, the Group
considers a wide range of global issues, industry, and sector-specific considerations (i.e. regulatory and
disclosure requirements) to ensure consistency on the Group’s values and risk culture (e.g. risk classifications)
are reflected in the ESG Operating Framework and Climate Risk Management Framework.
• Support brokers/borrowers in educating and
provide awareness of energy efficiency and
their carbon footprint
• Produce climate risk management information
with trend analysis and alignment to the
Group’s scenario analysis selection
TCFD Report
(Strategy)
– page 108.
Task Force on Climate-Related Financial Disclosures continued
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3. Risk Management continued
Approach Looking Ahead Further details
3a) Processes for identifying and assessing climate-related risks (continued):
• During 2024, an ESG indicator was implemented within the Group’s Operational Risk Management System as
an added feature for the Group’s Risk and Control Self-Assessments (RCSA) to support the ongoing visibility
of ESG risks (including climate risk) and enhance the identification of ESG risk as part of the Group’s business
strategy, financial planning and risk management.
• The Group’s Market and Liquidity risk considers climate-related risks for both IRRBB (Interest Rate Risk in the
Banking Book) and foreign exchange from funding its OSB India subsidiary and taking into consideration how
the monsoon season in India will impact GBP/INR FX rates as part of the ILAAP process.
• Third-party research and consultancy is a key factor in identifying and managing climate-related risks.
Results from activity conducted in 2024 indicates two main factors; (i) uncertainty in the UK regulatory
regime relating to the property sector and (ii) methods that can be implemented to reduce the Group’s
financed emissions. The Group will continue to present related findings at relevant committees to inform
management of challenges and opportunities that aligns with the Group’s ESG strategy.
3b) Processes for managing climate-related risks:
• The existing lending policies and criteria help to manage climate risk across the Group’s loan portfolios i.e.,
setting out the EPC requirements for Buy-to-Let lending. Flood, subsidence, and coastal erosion risks are in
part mitigated by independent property valuation, which forms part of the underwriting process.
• Climate risk appetite statements and limits remain in place helping to inform the Group’s ESG strategy
and facilitate monitoring of the Group’s climate risk profile. Monitoring and reporting of relevant climate
risk appetite and climate risk profiles (such as EPC profile and new originations/existing lending stock) are
presented to related committees on a quarterly basis (e.g. ESG Committee).
• Outputs derived from analysis related to the climate risk appetite and related thresholds provides key
information in assessing forward-looking potential risks. The process includes trend analysis and scenario
analysis related to the Group’s ESG targets and strategy to ensure clear visibility on potential future risks.
Theclimate risk appetite statements and limits are reviewed bi-annually (via governance channels such as
ESG Committee and Risk Committee) to ensure they are fit for purpose and fulfil the role that would drive
ESG and climate risk strategies for the Group.
• Non-Executive Directors’ workshops are held as part of the review and approval process of climate risk
appetite which keeps the Board informed and aware of the Group’s approach to climate risk management.
• Monitor the EPC profile and related risk
indicators that will support the Group in
managing its climate-related risks
• Identify enhancements to internal training
that would support the Group in managing
climate-related risks
Task Force on Climate-Related Financial Disclosures continued
111OSB GROUP PLC | Annual Report and Accounts 2024
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Governance Financial StatementsOverview Appendices
3. Risk Management continued
Approach Looking Ahead Further details
3b) Processes for managing climate-related risks (continued):
• Since 2022, Group-wide training was established for ESG which incorporated environmental and climate change-
related topics. In 2024, the Group further enhanced climate-related training by developing educational videos
internally on climate change due to launch in 2025. The training and the Group’s Employee Engagement network
named Our Planet, raises the awareness and educates across all three lines of defence best practise in managing
climate-related risks.
• The Group is a UK entity and regulated by both the PRA and FCA. Therefore, the Group takes high priority
onregulatory or legislative changes which feeds into physical and transition climate risk (e.g. policy and
legalrisk as per TCFD Recommendations).
• The Group prioritises credit risk associated with the lending book as borrowers are subject to transitional and
physical risk. The Climate Risk Management Framework and its principles are established for credit risk and
acts as a guidance in supporting other risks in managing climate-related risks.
• The Group’s ESG Materiality assessment is an essential tool within the first line of defence to support in
managing climate-related risks. Both first line and second line of defence establish a review and challenge
relationship to ensure both ESG commitments and climate-related risks are in alignment. The process takes
into consideration of best practices derived from international/regulatory standards where recommendations
may or may not be relevant to the Group’s business model.
• As part of the Group’s Operational Resilience arrangements, the risk is assessed by estimating the likelihood
and impact on Important Business Services, locations and/or business-specific threats, this includes events
caused by extreme weather.
• On an annual basis, the Group conducts a complete review of its loan book from a climate perspective. This
enables the Group to determine the potential impact of climate-related risks. Quarterly monitoring of the loan
book is performed based on new loan business to assess the trend of the loan book throughout an annual cycle.
• For physical risk, the Group aligned its scenario analysis processes with UKCP18 climate change predictions
for the UK that were issued by the Met Office in collaboration with other agencies.
• Monitor the EPC profile and related risk
indicators that will support the Group in
managing its climate-related risks
• Identify enhancements to internal training
that would support the Group in managing
climate-related risks
Task Force on Climate-Related Financial Disclosures continued
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4. Metric and targets
4a) Metrics used to assess climate-related risks and opportunities:
The Group utilises a variety of metrics to assess climate-related risks and opportunities which are outlined in both the Sustainability Report and the Risk Review section of the Strategic Report (please
see the below table for mapping). Metrics also take consideration of cross-industry metrics, global standards (e.g. ISO14001) and related metrics that are utilised for the Group’s Remuneration policy.
In 2024, the Group evolved in creating a Transition dashboard which included a suite of metrics and targets to support discussions and assess the current progression relating to the Group’s emission
targets. Metrics and targets include; historical trend analysis relating to emission targets, climate risk appetite, climate risk profiling based on current/historic loan portfolio and metrics related to
transitional finance.
The Group continues to track its performance through discussions via channels such as the Climate Transition Working Group and the ESG Committee. Disclosures of progression related to emissions
reduction targets will continue to be outlined within the Group’s Climate Transition Plan. For further details, please refer to the Climate Transition Plan and updates under the Sustainability Report –
Just Transition section page 76.
The metrics related to physical and transition risks previously mentioned are considered as part of the Group’s risks and opportunities (please refer to the Strategy section of the Group’s TCFD
Report). This includes the following mapping:
Topic Type Description Further details
Lending –
physical
Risk The Group considers risk exposures based on climate risk perils which includes flood,
subsidence and coastal erosion. The risk exposures are modelled which will include
data considerations such as; winter precipitation, shrink swell clay risk, summer
precipitation, erosion sensitivity and height above sea level.
– Metrics: page 52
– Targets: N/A
– Trend analysis: page 109
Lending –
transition
Risk The transitional risk metrics are based on the loan portfolio’s EPC distribution and GHG
emissions calculated using the GHG Protocol Corporate Standard.
– Metrics (GHG Emissions): Sustainability Report page 83
– Targets: Sustainability Report page 80 (To reduce
emissions intensity of our mortgage lending by 25%
by2030 from a 2022 baseline)
– Trend Analysis: Sustainability Report pages 84-85,
TCFD:Insights from our Scenario analysis page 109
Uncertainty in
marketproposition
Risk Analysis derived from the transitional risk metrics (i.e. EPC, GHG emissions) supports
the Group’s oversight of its mortgage portfolio which can be impacted by market
propositions, fluctuations and policy changes.
– Trend analysis: page 109
Reputational Risk Transitional risk metrics (i.e. EPC, GHG emissions) are assessed to measure the
progress against the Group’s emission targets.
– Targets: Sustainability Report page 80
Operations –
physical
Risk The Group considers the location of its operations based on climate risk perils which
includes flood, subsidence and coastal erosion. Exposure to the climate risk perils will
mean disruption to the business. The perils factor data considerations would include;
winter precipitation, shrink swell clay risk, summer precipitation, erosion sensitivity and
height above sea level.
– Metrics: page 52
Operations –
transition
Risk Transitional risk metrics (i.e. EPC, GHG emissions) are assessed to monitor the Group’s
total emissions and mortgage portfolio which can be impacted by new governmental
or policy changes.
– Trend analysis: Sustainability Report pages 84-85
TCFD:Insights from our Scenario Analysis page 109
– Targets: Sustainability Report page 80
Task Force on Climate-Related Financial Disclosures continued
113OSB GROUP PLC | Annual Report and Accounts 2024
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Governance Financial StatementsOverview Appendices
Topic Type Description Further details
Lending –
transition
Opportunities Transition risk metrics (i.e. EPC, GHG emissions) are utilised to assess the Group’s
portfolio. The outcome of the assessments help drive thought leadership relating to
opportunities on the Group’s products and services.
– Metrics (GHG Emissions): Sustainability Report page 83
– Trend Analysis: Sustainability Report ages 84-85
TCFD:Insights from our Scenario analysis page 109
Opportunities –
resource efficiency
Opportunities The GHG emissions (Scope 1 and Scope 2) are key metrics that would contribute to the
Group’s monitoring of its direct emissions. Therefore, increasing the Group’s energy
efficiency can help lower the Group’s direct emissions and operating costs.
– Metrics (GHG emissions): Sustainability Report page 83
Opportunities –
energy source
Opportunities GHG emission metrics would be a measure in assessing low or zero carbon technologies. – Metrics (GHG emissions): Sustainability Report page 83
Other
Water, energy and
waste management
Risk Monitored via the Group’s Environmental Management System (EMS) which is certified
to ISO14001.
– Metrics: Sustainability Report page 82
Performance metrics
incorporated into
remuneration policies
Performance Greenhouse gas (GHG) emission reduction targets is a performance measure which is
considered as part of Executives’ and Senior Management’s remuneration.
– Metrics: Directors’ Remuneration Report pages 173-174
Internal carbon
prices, revenue
from products and
services designed for
low-carbon economy
Performance The revenue generated from the Group’s energy efficiency products indicates low
revenue generated due to a low number of completed applications.
In 2024, the Group engaged with a third-party consultancy to establish a potential
strategy on internal carbon price as a metric that would support the Group with its
strategy and risk management.
Looking ahead
• Utilise metrics and targets to support thought leadership and internal discussions via committees and working groups.
• Review the metrics and targets of physical and transitional risk to support in managing the Group’s climate risk profile and risk appetite thresholds.
• Consider carbon pricing to support the implementation of the Transition Plan.
Task Force on Climate-Related Financial Disclosures continued
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Task Force on Climate-Related Financial Disclosures continued
4b) Scope 1, 2 and 3 GHG emissions and the related risks/4c) Targets used to manage climate-related risks and opportunities:
Metric Description Reference Targets Reference
Scope 1
Scope 1, 2 and 3 emissions have been disclosed (where relevant and
availablefor Scope 3), emissions are calculated in line with the GHG
ProtocolCorporate Standard. Criteria for reporting GHG emissions
canbefound ontheGroup’swebsite.
Sustainability Report page 83
Intensity based target
Sustainability Report page 80
NZBA Intermediate Targets
Scope 2 Base year target
Sustainability Report page 80
NZBA Intermediate Targets
Scope 3 Key Performance
Indicators
Sustainability Report page 79
Historical periods and trend analysis are utilised to monitor the performance/progress of all emissions reduction targets and management information is presented at relevant committees,
management meetings and working groups for progression tracking (i.e. Energy Management meetings and at the Climate Transition Working Group).
Methodologies used to calculate targets and measures (including interim targets)
Metrics derived from trend analysis such as historic data are utilised to consider new proposed thresholds when considering the Group’s climate risk appetite. The metrics support’s the Group
inmonitoring the progress associated with emissions reduction targets and the Transition Plan.
Analysis and insights provided by third-party consultancy are drivers that support the Group in strategy planning in reaching its targets.
Looking ahead
• Assess the risks and opportunities associated with Scope 1, 2 and 3 emissions and manage accordingly.
• Track performance against the agreed Climate Transition Plan, taking management actions if required.
• Seek enhancements on metrics and targets as risk management and transition planning matures.
115OSB GROUP PLC | Annual Report and Accounts 2024
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Governance Financial StatementsOverview Appendices
Non-financial and sustainability information statement
The requirements of sections 414CA and 414CB of the Companies Act 2006 relating to non-financial reporting are
referenced in the table below and cross referenced to relevant sections within the Annual Report to better understand
theimpact and stakeholder outcomes across a range of policies and guidance.
Reporting requirement Policies, guidance and standards
Further information to understand
impact and outcomes
Environmental
Environmental policy See page 82
TCFD – Climate-related disclosures See pages 100 – 115
Energy Policy See page 82
ESG Operating Framework See page 95
Employees
Group D,E & I Inclusion policy See page 89 – 90
Trans Inclusion and Gender Identity policy See page 98
Sexual Harrassment Policy See page 98
Group Health and Safety policy See page 98
Social Matters
Group Data Retention policy See page 98
Tax See page 99
Lending policy See page 96
Group Complaint Handling policy See page 96
Group Customer Vulnerability policy See page 96
Group Arrears Management and Forbearance policy See page 96
Consumer Duty See page 96
Human Rights
Modern Slavery Statement and Vendor Code of Ethics See page 97
Group Vendor Management and Outsourcing policy See page 97
Anti-Bribery
andCorruption
Group Whistleblowing policy See page 97
Group Financial Crime policy See page 98
Conflicts of Interest policy See page 97
Group Operational Resilience policy See page 98
Artificial Intelligence Responsible Use policy See page 99
Cyber Security See page 99
Reporting requirement
Further information to understand
impact and outcomes
Description of the business model and strategy See pages 14 – 19 and 24 – 26
Policy embedding, due diligence and outcomes See pages 72 – 115
Description of the principal risks and impact of business activity See pages 54 – 69
Description of the non-financial key performance indicators See pages 73 – 91
Climate-related financial disclosures
Governance arrangements in relation to assessing and managing
climate-relatedrisks and opportunities
See pages 101 – 102
Risk management processes for identifying, assessing and managing
climate-related risks
See pages 110 – 112
Climate-related risks and opportunities
See pages 76 – 79 and 103
– 105
Potential impacts on the business model and strategy See page 106 – 108
Targets used to manage climate-related risks and opportunities and
performanceagainst those targets
See pages 80 – 81
Key performance indicators used to assess progress against targets See pages 80 – 85
OSB GROUP PLC | Annual Report and Accounts 2024116
Strategic Report
Governance Financial StatementsOverview Appendices
Corporate
Governance
Report
118 Board of Directors
120 Group Executive Committee
122 Corporate Governance Report
136 Group Nomination and Governance
Committee Report
143 Group Audit Committee Report
150 Group Risk Committee Report
153 Other Committees
154 Group Remuneration and People
Committee Report
158 Directors’ Remuneration Report
180 Statement of Directors’ Responsibilities
181 Directors’ Report: other information
Strategic Report
Governance Financial StatementsOverview Appendices
117
OSB GROUP PLC | Annual Report and Accounts 2024
Our Board of Directors
David Weymouth
Board Chair
Tenure
7 years 3 months
Skills, experience and qualifications
David was appointed as Chair of OSB in
September 2017. He has over 40 years’
experience across many sectors in financial
services including serving as Global Chief
Information Officer for Barclays Bank plc,
Chief Operations Officer and Chief Risk
Officer for RSA Insurance Group PLC. David
has served as a Non-Executive Director on a
number of Boards in the UK and US, including
Chair of Fidelity Investments, Chair of Mizuho
International PLC and Senior Independent
Director and Chair of Risk Committee at
Royal London Mutual Insurance Society.
David has a wealth of experience in
operations, technology, risk management
and Board level leadership.
Current external appointments
David is Chair of Pension Insurance
Corporation PLC and Pension Insurance
Corporate Group Limited, and Chair of the
Board Risk Committee at Marsh Limited.
Andy Golding
Chief Executive Officer
Tenure
13 years 0 months
Skills, experience and qualifications
Andy was appointed Chief Executive Officer
of OSB in December 2011. Prior to that he
was Chief Executive of Saffron Building
Society for five years, and held senior
positions at National Westminster Bank
plc, John Charcol Limited and Bradford &
Bingley plc. Andy served as a Non-Executive
Director for Kreditech Holding SSL GmbH
and Northamptonshire Healthcare NHS
Foundation Trust. He served as a member of
the Building Societies Association’s Council
and the Financial Conduct Authority’s
Smaller Business Practitioner Panel. Andy
is a highly regarded leader with a deep
understanding of banking and over 30 years’
experience in financial services.
Current external appointments
Andy is a Director of the Building Societies
Trust Limited.
N
C
Re C
Noël Harwerth
Senior Independent Director
Tenure
7 years 6 months
Skills, experience and qualifications
Noël was appointed to the Group Board and
the position of Senior Independent Director
in October 2019. She was appointed to the
Board of CCFS in June 2017, assuming the
role of Senior Independent Director from
August 2017. She held several Non-Executive
board roles with Sirius Minerals plc, Standard
Life Aberdeen plc, RSA Insurance Group
plc, GE Capital Bank Limited, Sumitomo
Mitsui Banking Corporation Europe Limited,
Avocet Mining plc, Alent plc, Corus Group
plc, Logica plc, The London Metal Exchange,
Standard Life Assurance Limited and
Scotiabank Europe Limited. Noël also held a
variety of senior positions with Citicorp for 15
years, latterly serving as the Chief Operating
Officer of Citibank International plc. Noël
has extensive experience in both the public
sector (government bodies) and the private
sector (global banking companies) bringing
valuable insight to the Boardroomdebate.
Current external appointments
Noël is a Non-Executive Director of CAB
Payment Holdings plc and Crown Agents Bank
Limited. Noël was appointed as a Director of
Hansard Global plc in September 2024.
N
A
ReC
RiM
 Committee
Chair
N
Group Nomination and
Governance Committee
Re
 Group Remuneration
and People Committee
C
Board Capital and
Funding Committee
M
Group Models and
Ratings Committee
A
 Group Audit
Committee
Ri
 Group Risk
Committee
Director tenures are as at 31 December 2024
Committee membership:
Victoria Hyde
Chief Financial Officer
Tenure
0 years 6 months
Skills, experience and qualifications
Victoria joined OSB Group in September
2022. Prior to joining OSB, Victoria worked
at Barclays for 21 years, most recently as
Finance Director of the Consumer, Cards and
Payments segment. Victoria is a qualified
Chartered Management Accountant and
has over 25 years’ experience in finance.
She has supported retail, corporate and
investment banking business lines across
a range of finance roles including product
control, treasury finance, costs andbusiness
planning and analysis.
Victoria was appointed as Chief Financial
Officer and Executive Director, joining the
Board on 22 July 2024.
Current external appointments
None held.
OSB GROUP PLC | Annual Report and Accounts 2024118
Strategic Report Governance Financial StatementsOverview Appendices
A
MM
ACA
CReM
RiRiRi
Our Board of Directors continued
Kal Atwal
Independent Non-Executive Director
and ESG Champion
Tenure
1 years 10 months
Skills, experience and qualifications
Kal was appointed to the Group
Board on 7 February 2023. Kal has
significant experience as a Non-
Executive Director across FTSE 100,
FTSE 250 and mutual businesses
and was previously a Non-Executive
Director of Admiral Financial Services
Limited and WH Smith PLC. At BGL
Group, Kal was Managing Director
and became the Founding Managing
Director of comparethemarket.
com, a division of BGL. Following
promotion to Group Director of BGL
Limited, Kal was responsible for
brand-led businesses, group strategy
and corporate communications. Kal
is an experienced strategy leader
with international experience in
start-up, scale-up, fintech and
digitalbusinesses.
Current external appointments
Kal is a Non-Executive Director of
Royal London Mutual Insurance
Society Limited, Whitbread Plc and
Chair of FunkyPigeon.com Limited,
asubsidiary of WH Smith PLC.
Henry Daubeney
Independent Non-Executive Director
Tenure
0 years 6 months
Skills, experience and qualifications
Henry was appointed to the Group
Board in July 2024. He has extensive
experience in the financial services
sector following a 38 year career with
PricewaterhouseCoopers LLP where
he was a senior audit bank partner
and most recently the Global Head
of Corporate Reporting Services –
IFRS and Sustainability Reporting.
He has also been a member of the
IFRS Advisory Council and member
of the Corporate Reporting Group of
the Global Public Policy Committee
(GPPC) and Co-Chair of the GPPC
Bank Working Group. Henry has
extensive experience of financial and
regulatory reporting in the UK and
US with a strong background in
internal and financial controls,
governance and compliance.
Henry is a Fellow of the Institute
ofChartered Accountants.
Current external appointments
None held.
Re
A
Re
Sarah Hedger
Independent Non-Executive Director
and People Champion
Tenure
5 years 10 months
Skills, experience and qualifications
Sarah was appointed to the OSB
Board in February 2019 and previously
held leadership positions at General
Electric Company (GEC) for 12 years
in its Corporate, Aviation and Capital
business development teams, leaving
General Electric Company as Leader
of Business Development and M&A for
its global GE Capital division. Prior
to General Electric Company, Sarah
worked at Lazard & Co. Limited for
11years, leaving as Director, Corporate
Finance and also spent five years as
an auditor at PricewaterhouseCoopers
LLP. She served as an Independent
Non-Executive Director of Balta
Group NV, a Belgian company listed
on Euronext, until December 2021
and as Non-Executive Director of
GE Money Bank AB for three years
during her time at GEC. Sarah has
significant capital management and
merger and acquisitions experience in
financial services. Sarah qualified as a
chartered accountant.
Current external appointments
None held.
N
Rajan Kapoor
Independent Non-Executive Director
and Whistleblowing Champion
Tenure
8 years 3 months
Skills, experience and qualifications
Rajan was appointed to the Group
Board in February 2020 and the
OSB and CCFS subsidiaries in
October 2019 and September 2016
respectively. He was Financial
Controller of NatWest Group
(formerly Royal Bank of Scotland
Group) and held a number of
senior finance positions during a
28 year career. Rajan has extensive
experience of financial and
regulatory reporting in the UK and US
with a strong background in internal
financial controls, governance and
compliance. Rajan is a Fellow of the
Institute of Chartered Accountants
and of the Chartered Institute of
Bankers in Scotland.
Current external appointments
Rajan is a Non-Executive Director
of Allica Bank Limited and Revolut
Newco UK Ltd.
Simon Walker
Independent Non-Executive Director
and Consumer Duty Champion
Tenure
2 years 11 months
Skills, experience and qualifications
Simon was appointed to the Group
Board in January 2022. He joined
KPMG in 1980 and was made a
partner of the firm in 1992, going
on to lead the firm’s National
Building Societies and Mortgage
Practice and subsequently became
banking partner in Financial Risk
Management. Simon graduated
in Law from University College
London and is a qualified chartered
accountant. Simon was previously
a Non-Executive Director of IWP
(Holdings) Limited and Leeds Theatre
Trust Limited. Simon has significant
experience in financial services
and mortgages, SME lending, risk
management and regulation within
the banking sector.
Current external appointments
Simon is a Non-Executive Director
of H&T Group plc, the Bank of
London Group Ltd and The Bureau
ofInvestigative Journalism.
119OSB GROUP PLC | Annual Report and Accounts 2024 119
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Our Group Executive Committee
Meet our strong leadership responsible for delivering the Group’s strategy
Jens Bech
Group Commercial Director
Experience and qualifications
Jens joined OSB as Chief Risk Officer
in 2012, before becoming Group
Commercial Director in 2014.
Jens joined from the Asset Protection
Agency, an executive arm of HM
Treasury, where he held the position
of Chief Risk Officer. Prior to joining
the Asset Protection Agency,
Jens spent nearly a decade at
management consultancy Oliver
Wyman Limited where he advised a
global portfolio of financial services
firms and supervisors on strategy
and risk management. Jens led Oliver
Wyman Limited’s support of Iceland
during the financial crisis.
Debra Bailey
Interim Group Chief
Information Officer
Experience and qualifications
Debra joined OSB Group as Interim
Group Chief Information Officer
in January 2025. She is a business
and technology leader with a
breadth of experience in strategic,
transformational, operational
and change roles in sizeable
organisations across financial
services, telecommunications,
logistics and the public sector.
The majority of her career has
been in financial services, at the
Woolwich, Barclays and Nationwide
Building Society where she was an
Executive Committee member with
operations and operational resilience
alongside technology and security
responsibilities. In her last role she
was Chief Information Officer and a
member of the Executive Committee
at Royal Mail responsible for IT
strategy, operations and change,
architecture and security.
Jon Hall
Group Managing Director,
Mortgages and Savings
Experience and qualifications
Jon joined OSB Group in November
2021. Jon has significant experience
within the financial services
sector and joined the Group from
Aspinall Financial Services, a pre-
authorisation bank start-up, having
previously led Masthaven Bank from
2016 to early 2021 as their Chief
Commercial Officer and Deputy
Chief Executive. Jon started his
career with PricewaterhouseCoopers
LLP, before joining Aviva plc and
subsequently became Chief
Executive of Saffron Building Society.
Jon is a Fellow of the Institute of
Chartered Accountants inEngland
and Wales.
Jason Elphick
Group General Counsel
and Company Secretary
Experience and qualifications
Jason joined OSB in June 2016.
Hehas over 25 years of legal private
practice and in-house financial
services experience. Jason’s private
practice experience was primarily in
Australia with King & Wood Mallesons
and in New York with Sidley Austin
LLP. He has been admitted to
practice in Australia, New York and
England and Wales.
Jason’s previous in-house financial
services experience includes serving
as Director and Head of Bank Legal
at Santander UK Group. He also held
various roles at National Australia
Bank Limited, including General
Counsel Capital and Funding, Head
of Governance, Company Secretary
and General Counsel Product,
Regulation andResolution.
Orlagh Hunt
Chief People Officer
Experience and qualifications
Orlagh joined OSB Group in
September 2024. Orlagh has over
25years’ executive experience
spanning retail, FMCG and
financial services. She has a
breadth of experience in driving
change, colleague engagement
and capability building. She is a
Member of the Chartered Institute of
Personnel and Development.
Prior to joining us, Orlagh was the
Chief People Officer at Yorkshire
Building Society and brings a wealth
of experience having previously
worked as Head of HR for AXA Sunlife
and as Group HR Director for both
Royal & Sun Alliance and Allied
IrishBank.
OSB GROUP PLC | Annual Report and Accounts 2024120
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Our Group Executive Committee continued
Hasan Kazmi
Group Chief Risk Officer
Experience and qualifications
Hasan joined OSB in September 2015
as Chief Risk Officer. He became
Group Chief Risk Officer in 2021.
Hasan has over 25 years of risk
experience having worked at several
financial institutions, including
Barclays Capital, Royal Bank of
Canada and Standard Chartered
Bank. Prior to joining OSB, he was a
Senior Director at Deloitte LLP within
the risk and regulatory practice with
responsibility for leading the firm’s
enterprise risk, capital, liquidity,
recovery and resolution practice.
Hasan graduated from the London
School of Economics with a MSc in
Systems Design and Analysis and
aBSc in Management.
Clive Kornitzer
Group Chief Operating Officer
Experience and qualifications
Clive joined OSB in 2013. Clive has
over 25 years of financial services
experience, having worked at several
financial organisations including
Yorkshire Building Society, John
Charcol Limited and Bradford and
Bingley plc. Prior to joining OSB, Clive
spent six years at Santander UK Plc
where he was the Chief Operating
Officer for the intermediary
mortgage business. He has also held
positions at the European Financial
Management Association and has
been the Chair of the FS Forums
Retail Banking Sub-Committee. Clive
is a Fellow of the Chartered Institute
of Bankers and recently completed
an advanced Leadership Program
at INSEAD, as well as the FT Non-
Executive Directors Diploma.
Lisa Odendaal
Group Chief Internal Auditor
Experience and qualifications
Lisa joined OSB in April 2016 from
Grant Thornton, where she led
outsourced internal audit functions
for a variety of financial institutions,
including investment banks, retail
banks, and asset managers. Her
career spans audit and operational
roles at PricewaterhouseCoopers LLP,
Morgan Stanley, HSBC, and Man
Group plc, with experience gained
in the UK, UAE and Switzerland.
AChartered Internal Auditor, Lisa
has worked on risk management,
regulatory compliance, and
governance frameworks across
multiple jurisdictions, supporting
businesses in adapting to evolving
regulatory and market demands.
Richard Wilson
Group Chief Credit and
Money Laundering Reporting Officer
Experience and qualifications
Richard joined OSB in 2013. Prior to
joining OSB, Richard was responsible
for credit and collections strategy
for Morgan Stanley’s origination
businesses in the UK, Russia and
Italy. Between 1988 and 2006,
Richard held various roles at the
Yorkshire BuildingSociety.
121OSB GROUP PLC | Annual Report and Accounts 2024 121
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Corporate Governance Report
OSB GROUP PLC Board
Chair Executive Directors Independent Non-Executive Directors
David Weymouth Andy Golding
Chief Executive
Officer (CEO)
Victoria Hyde
Chief Financial
Officer (CFO)
Noël Harwerth (SID) Rajan Kapoor Sarah Hedger
Simon Walker Kal Atwal Henry Daubeney
Group Risk
Committee
Group Audit
Committee
Group Remuneration
and People Committee
Group Nomination and
Governance Committee
Read more onpage 150 Read more onpage 143 Read more onpage 154
Read more onpage 136
The OSB Group Board also have a Board Capital and Funding Committee.
9 May 2024
April Talintyre steps
downas CFO and
Executive Director
1 July 2024
Henry Daubeney appointed
as Independent Non-
Executive Director (INED)
22 July 2024
Victoria Hyde
appointed as CFO
andExecutiveDirector
Board changes in 2024
9
Directors
66.7%
Independent
(excluding Board Chair)
44%
Female Directors
2
Directors from ethnically
diverse backgrounds
Our balanced and
diverse Board
Board Committees
OSB GROUP PLC | Annual Report and Accounts 2024122
Strategic Report
Governance Financial StatementsOverview Appendices
Dear Shareholder,
Welcome to our 2024 Corporate Governance
Report for the year ended 31 December 2024.
This section of the Annual Report and Accounts
describes how our corporate governance
framework operates, details the composition of
the Board and its Committees and details how
they have approached key areas of focus and
addressed any strategic issues arising during
the course of the year.
This section also details how we have applied and complied
with the principles and provisions of the Financial Reporting
Council’s UK Corporate Governance Code (the Code). A
statement disclosing compliance with the Code can be found
on page 124, and disclosures on how the Company engages
with its stakeholders, can be found on pages 132-135. I am
confident that, not only has the Board complied with the
requirements of the Code and its other legal and regulatory
obligations, but that it has successfully discharged its
responsibilities to ensure the good governance of the Group.
Engagement with stakeholders
I, together with the rest of the Board, really value feedback
from investors and other stakeholders and we were pleased
with the level of shareholder support for the resolutions
proposed at the 2024 Annual General Meeting (AGM) (all
resolutions were passed with at least 80% of votes in favour).
During the course of 2024, I have enjoyed meeting a number
of shareholders and other stakeholder groups. In respect
of shareholder meetings, this provides an opportunity to
gain insights into investor issues and areas of focus. I have
found them incredibly insightful and would encourage all
shareholders to take advantage of any future opportunities
for dialogue.
In addition to meetings with shareholders, I have also
attended Our Voice, the Group’s Workforce Advisory
Forum,which includes employee representation from all
geographical locations, including OSB India. This has
provided an opportunity for myself and other Board
membersto hear directly from employees and gain
insights into those issues (positive or negative) which
havebeenaffecting them.
Board effectiveness
During the year, we undertook an externally facilitated
review of the Board, its Committees and individual Directors’
effectiveness. As a Chair, I always find these processes
incredibly helpful in providing a different perspective and
challenging the status quo. Some areas of development were
identified, and I look forward to seeing the impact of these
developments on the effectiveness of the Board during 2025
and beyond.
Board changes and composition
During 2024 we welcomed Henry Daubeney and Victoria
Hyde to the Board. Henry Daubeney joined as an additional
INED, with a view to succeeding Rajan Kapoor as Chair of
the Group Audit Committee in 2025. He brings extensive
experience in financial services, following a 38-year career
with PricewaterhouseCoopers LLP (PwC) and we look
forwardto his contributions over the years to come.
Victoria Hyde replaced April Talintyre as CFO and Executive
Director on 22 July 2024. Victoria joined the Group in
September2022, following a significant career with Barclays,
and is making valuable contributions to the Board as well as
theFinance function.
In February 2025, we also announced the appointment
of Sally Jones-Evans as an INED and successor to Sarah
Hedger as Chair of the Group Remuneration and People
Committee. Sally brings extensive non-executive Board
experience, having served as a Board member and chaired
audit, risk and remuneration committees. We look forward to
welcoming Sally to the Board and collaborating with her. At
the same time, we extend our sincere thanks to Sarah Hedger
for her valuable contributions and dedication during her time
ontheBoard.
Conclusion
I am delighted to invite all of our shareholders to further
engage with us at our AGM on 8 May 2025. The Annual
Report and Accounts and Notice of the AGM will be sent to
shareholders at least 20 working days prior to the date of the
meeting. Shareholders are encouraged to participate inthe
AGM process and all resolutions will be proposed and voted on
at the meeting by shareholders or their proxies. Voting results
will be announced and made available on the Company’s
website, www.osb.co.uk.
David Weymouth
Chair of the Board
12 March 2025
Corporate Governance Report continued
123OSB GROUP PLC | Annual Report and Accounts 2024 123
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Governance Financial StatementsOverview Appendices
Corporate Governance Report continued
UK Corporate Governance Code – statement of compliance
Our Corporate Governance Report reflects the requirements of the 2018 Financial Reporting Council’s (FRC) UK Corporate Governance Code (the Code). During 2024, the Board confirms that
the Group has complied with the provisions and applied the principles of the Code. To view how we comply with the Code, please see below:
Section Code principles How we complied with the Code
Board leadership and
Company purpose
A) A balanced and diverse Board with a role to promote the long-term sustainable success of the Group and generate value for shareholders 122-131
B) Purpose, values and culture 125
C) Performance measures, risks and controls framework 125, 150-152
D) Stakeholder engagement 132-135
E) Workforce policies and practices 158-159
Division of
responsibilities
F) Leadership of Board and Board operations 125, 129
G) Board composition, Board roles and independence 125, 128-129
H) Directors’ responsibilities and time commitment 129
I) Board support, information and advice 130-131
Composition,
succession
andevaluation
J) Board appointments and succession plans for Board and senior management 137
K) Board skills, experience and knowledge 138-139
L) Annual Board evaluation 131, 140-141
Audit, risk and
internal control
M) Effectiveness of external auditor and internal audit 147-149
N) Fair, balanced and understandable assessment of the Company’s position and prospects 145
O) Risk Management and Internal Control Framework 150-152
Remuneration P) Remuneration and alignment to Company’s purpose, strategy and values 154-179
Q) Executive and senior management remuneration 161-174
R) Authorisation of 2024 remuneration performance outcomes 160-170, 175-179
A copy of the Code can be found on the FRC’s website.
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Corporate Governance Report continued
Role of the Board and
Companyculture
The Board is responsible for promoting the
long-term sustainable success of the Group
as a whole, generating value for shareholders
and contributing to wider society. It sets
the Group strategy, including raising and
allocation ofcapital.
Through its oversight and monitoring of
business operations, the Board ensures
competent and prudent management,
sound planning, proper procedures for the
management of adequate accounting and
other records and systems of internal control,
and for compliance with statutory and
regulatory obligations.
The Board is responsible to the shareholders
for exercising all powers of the Company,
subject to any relevant laws and regulations
and in accordance with the Articles of
Association (the Articles). The Articles permit
the Board to delegate its authority to any
Director or Committee as required. The
Board remains responsible, however, for all
acts of the Company notwithstanding such
delegation of authority.
Fundamental to the Board’s role are
maintaining high standards of corporate
governance, in particular those set out in the
Code as well as other guidance provided by
the Prudential Regulation Authority (PRA),
Financial Conduct Authority (FCA) and other
industry regulators.
The Board determines the business strategy
and associated risk appetite performance
which is monitored against set criteria and
reported to shareholders, as appropriate.
The Board maintains a robust system
of internal systems and controls, which
provide assurance of effective and efficient
operations, internal financial controls and
compliance with all applicable laws and
regulations. It ensures senior management
maintains effective risk control and oversight
of processes across the Group to enable the
delivery of strategy and business performance
within the approved risk appetite and risk
control framework. Fundamentally, the Board
is the primary decision-making body for
the Company and therefore addresses all
matters of significance in relation to strategic,
risk, financial, key person, regulatory or
reputational implications.
As well as driving business strategy, the
Board has primary responsibility for
establishing the Company’s purpose
and values, ensuring alignment with the
Company’s culture. The Board regularly
assesses the Company’s ESG objectives and
commitments, to embed ESG into culture and
align it with purpose, value and strategy.
Every Board member is expected to act with
integrity, lead by example, and promote the
Company’s desired culture.
How the Board operates
The Board met ten times during the year.
Meetings are convened by the Company
Secretary and the Board Chair. Formal
meetings are scheduled in advance with ad
hoc meetings called when circumstances
require. The Board agrees its annual agenda
calendar to ensure that all matters are
given due consideration and reviewed at
the appropriate point in the regulatory and
financial cycle.
An agenda of items to be discussed, together
with corresponding papers are circulated
to Board members sufficiently in advance
of the meeting date. All Directors have the
opportunity to propose business items to be
considered by the Board.
In addition to the formal meetings, the Board
held two strategy days to consider and
develop the Group’s strategic direction. During
the year, Directors have attended several ad
hoc meetings, workshops and training sessions
and contributed to discussions outside of the
meeting calendar. During 2024, the Board
and Group Executive Committee conducted
the majority of their meetings across Kent and
London sites.
Board membership and composition
As at 31 December 2024, the Board
comprised the Chair (independent on
appointment), six INEDs and two Executive
Directors. All of the INEDs, including the
Board Chair, have been determined by the
Board to be independent in character and
judgement, and free from relationships or
circumstances which may affect, or could
appear to affect, the relevant individual’s
judgement. The independence of the
INEDs is continuously monitored, including
a formal annual review.
Any INED who does not meet the
independence criteria will not stand
for election or re-election at the AGM.
Biographies of the Directors are included
on pages 118-119 and are also available at
www.osb.co.uk, which does not form part
ofthis Annual Report.
The Group Nomination and Governance
Committee considers the membership and
tenure of the Board and its Committees as a
whole and receives proposals for refreshing
membership during the year, ensuring an
appropriate balance of knowledge, experience
and diverse representation. Further details can
be found on pages 136-142.
The length of service for each Board member,
in years, as at 31 December 2024, is outlined
on pages 118-119. At the end of 2024, the
average term of Directors was 4.5 years.
The letters of appointment of the INEDs will
be available for inspection at the AGM.
Board diversity
The Board is committed to ensuring that
it is diversely constituted and reflective of
broader stakeholders. A diverse Board, with
broad skills and experiences, creates an
environment that promotes constructive
debate and independent opinion, driving
informed decision-making.
The Board has agreed a set of commitments
(contained within the Group’s Diversity,
Equity and Inclusion (DE&I) Policy, approved
in December 2024 and available at
www.osb.co.uk) to address behavioural,
gender and ethnic bias and basing
appointments on merit and objective criteria
and, within this context, promoting diversity
of gender, social and ethnic backgrounds,
cognitive and personal strengths.
125OSB GROUP PLC | Annual Report and Accounts 2024 125
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Corporate Governance Report continued
Performance against FCA diversity targets
Target Outcome Position (as at 31 December 2024)
At least 40% of Board Directors are women Exceeded Four of nine Board members are women
At least one senior Board position
1
is held by a woman Exceeded The positions of the SID and CFO are held by women
At least one Director is from a minority ethnic background Exceeded Two Board members are from a minority ethnic background
1. Senior positions are the Board Chair, SID, CEO and CFO.
2. The appointment of Sally Jones-Evans, with effect from 1 April 2025, does not impact the outcome.
Matters reserved to the Board
The Board retains specific powers in relation
to the approval of the Group’s strategic aims,
policies and other matters, which it must
approve in line with legislation or the Articles.
These powers are set out in the Board’s
written Terms of Reference and Matters
Reserved to the Board, which are reviewed
atleast annually.
Board activities undertaken during the
year are set out on page 127. The Board’s
Committees (illustrated on page 122)
operated under Board delegated authority
as prescribed in their individual Terms of
Reference, which are also reviewed at least
annually. The activities of each Committee
during 2024 are on pages 136-157.
Matters reserved for the sole decision-making
power of the Board is set out in the Board
Terms of Reference. Those matters include
material decisions relating to:
• Strategy and management
• Structure and capital
• Risk management
• Financial reporting and controls
• Remuneration
• Corporate governance
• Board members
Responsibility for the day-to-day running
of the Group has been delegated to the
CEO, supported by the Group Executive
Committee, to make operational decisions
and execute the Board’s agreed strategy.
Further numerical data on the sex or gender
identity and ethnic diversity of the Board
and Executive Management is outlined in
thetables on page 140.
Elements of the
GovernanceFramework
How governance contributes
tothedelivery of our strategy
Our governance arrangements fosters
accountability and responsibility,
establishing clear information flows and
facilitating independent insights from INEDs.
Governance oversight occurs at Board
and Board Committee meetings, strategy
days and one-to-one meetings with senior
management including the CEO and CFO.
Executive Directors
Non-Executive Directors
0–3 Years
4–6 Years
7–9 Years
Executive and Independent
Non-Executive Directors
Independent Non-Executive
Director tenure
2
7
3 3
1
OSB GROUP PLC | Annual Report and Accounts 2024126
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Key Board focus areas during 2024
The Board regularly receives and reviews reports on matters such as strategy, market competition and performance across each business area. The Board also receives updates on investor relations, legal,
governance and regulatory matters, together with updates on the work of its Committees. A non-exhaustive list of other significant matters overseen by the Board during the yearis set out below.
Key area of focus Board role (approval/consideration) Stakeholders (for key please see below)
Strategy • Approved the 2024 Strategic and Financial Plan being Return on Equity, Transformation, Data and People.
• As part of the Board strategy days, considered reports on the external competitor environment, M&A activity
and market trends.
• Agreed the governance principles for the Transformation programme, receiving regular updates on progress
against key milestones (i.e. launch of the new Savings platform), resources, costs and mitigation of potential risks.
Financial • Approved the share repurchase programmes of 14 March and 5 September 2024.
• Approved payment of interim dividends and recommended a final dividend to shareholders.
• Approved the Annual Report, half year report and quarterly interim management statements.
• Approved a £1.25bn deconsolidated securitisation transaction.
• Received regular updates from the CFO, including key financial highlights.
Risk management and
control and regulatory
• Approved Group risk appetite statements and framework.
• Reviewed, challenged and approved the Internal Liquidity Adequacy Assessment Process (ILAAP), Internal
Capital Adequacy Assessment Process (ICAAP) and Additional Tier One (AT1) payments.
• Received regular updates on recovery and resolution.
Customers • Progress on implementation of Consumer Duty, including approval of the Consumer Duty and Attestation Report.
People and Culture • Approved of the Board DE&I Policy.
• Considered Board and Executive succession planning.
• Considered and approved a Group-wide redundancy programme.
• Received regular cultural updates.
Governance • Approved the appointment of Henry Daubeney as INED and Victoria Hyde as CFO and Executive Director.
• Agreed the approach to the external review of Board Effectiveness and approved the recommendations from
the 2024 externally facilitated Board evaluation.
• Received regular updates of Board Committee activity from respective Committee Chairs.
In considering the above the Board aims to consider the views of all impacted stakeholders whilst acting in the best interests of the Company and members as a whole, as set out in the section 172 statement.
Corporate Governance Report continued
Key
 Customers
 Colleagues
 Communities
 Regulators and
policymakers
Intermediaries
 Suppliers
 Investors and
ratingagencies
127OSB GROUP PLC | Annual Report and Accounts 2024 127
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Corporate Governance Report continued
Board and Board Committees
Board leadership and Group
Corporate Governance Framework
Through its strong leadership and robust
corporate governance, the Board sets the
Group’s strategy for maintaining a sustainable
and profitable business, underpinned by a
robust risk management framework.
Board and Committee meeting
composition and attendance
1, 2
Directors are expected to attend each meeting
unless exceptional circumstances prevent
them from doing so. Directors who are unable
to attend meetings still receive the relevant
papers and are given an opportunity to provide
any comments or challenges to the relevant
Committee Chair in advance. The table below
shows each Director’s Board and Committee
meeting attendance during the year, in
accordance to their membership.
As at 31 December 2024 Board
Group Audit
Committee
Group
Remuneration and
People Committee
Group Nomination
and Governance
Committee
Group Risk
Committee
Current Directors
David Weymouth (Chair) 10/10 n/a 6/6 7/7 n/a
Kal Atwal
4
9/10 n/a 6/6 n/a n/a
Henry Daubney
3
5/5 3/3 n/a n/a 2/2
Andy Golding
4
9/10 n/a n/a n/a n/a
Noël Harwerth
4
10/10 7/7 6/6 7/7 5/6
Sarah Hedger
4
9/10 7/7 5/6 6/7 n/a
Victoria Hyde 6/6 n/a n/a n/a n/a
Rajan Kapoor 10/10 7/7 6/6 n/a 6/6
Simon Walker 10/10 7/7 n/a n/a 6/6
Former Directors
April Talintyre
3
4/4 n/a n/a n/a 3/3
1. The Group Chief Risk Officer and other Group Executives are invited to attend as appropriate.
2. Attendance at meetings of the Board Capital and Funding Committee were not included due to its transactional nature.
3. Henry Daubeney was appointed on 1 July 2024. April Talintyre resigned as Director of the Group on 9 May 2024.
4. Kal Atwal, Andy Golding and Sarah Hedger were unable to attend one Board meeting in 2024, which was arranged on an ad-hoc basis, due to prior commitments. Noël Harwerth missed one Group Risk Committee meeting during the year
due to personal reasons. Sarah Hedger was unable to attend one joint meeting of the Group Nomination and Governance Committee and Group Remunerations and People Committee, called on an ad-hoc basis, due to prior commitments.
Comments/questions were provided by all Directors in advance to the Board Chair.
Board Committees
The Board is supported in its work by its
Committees, as set out on pages 136-157, all
of which play an essential role in overseeing
certain business on the Board’s behalf,
allowing the Board to focus on the strategic
and business performance matters.
Their roles and responsibilities are set out
in their Terms of Reference and are
available at www.osb.co.uk, which do not
form part of this Annual Report. The Terms
of Reference are reviewed at least annually
by each Committee.
Directors may be invited to attend meetings of
Committees where they are not a member, if it
is considered appropriate.
Meetings are generally held concurrently with
OneSavings Bank plc, with business specific
to each Company identified and recorded as
appropriate reflecting the decisions taken by
the Board of the relevant entity.
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Division of responsibilities
There is a clear division of responsibilities
between the operation of the Board and the
Executive responsibility for the day-to-day
running of the business. The Board Chair is
responsible for the leadership of the Board and
its overall effectiveness, ensuring appropriate
balance of skills, experience and development
so that it can focus on the key issues affecting
the business. The Board Chair is pivotal in
creating the conditions for overall Board and
individual director effectiveness, both inside
and outside the boardroom.
The Board has delegated authority to Andy
Golding, as CEO, for the day-to-day running
of the Group, implementing the Board
approved strategy. With the support of the
Group Executive Committee, Andy regularly
reports progress to the Board. He ensures that
the Group operates effectively at strategic,
operational and administrative levels and is
responsible for:
• all the Group’s activities;
• leadership and direction to encourage
execution of strategies agreed by
theBoard;
• channels expertise, energy
andenthusiasm;
• building individual capabilities within
theteam;
• developing and encouraging talent within
the business;
• identifying commercial and business
opportunities for the Group, building
strengths in key areas; and
• all commercial activities of the Group,
liaising with regulatory authorities
whereappropriate.
He is responsible for the quality and financial
wellbeing of the Group, represents the Group
to external organisations and builds awareness
of the Group externally.
An experienced Group Executive Committee,
comprising specialists in finance, banking,
risk, operations, internal audit, legal and
IT matters, assist the CEO in carrying out
his responsibilities. The biographies for the
Group Executive Committee are set out on
pages 120-121.
Senior Independent Director (SID)
Noël Harwerth was appointed as SID
in October 2019 and fulfilled this role
throughout 2024. She is a sounding board
for the Board Chair, another point of contact
for other INEDs and an alternative route of
communication for shareholders when other
channels of engagement are not available.
Noël also leads the annual appraisal on
Board Chair performance.
There is a clear division of responsibilities,
which has been agreed by the Board, and
the roles and responsibilities of the Board
Chair, CEO and SID are outlined in writing.
Company Secretary
The Company Secretary, Jason Elphick (also
the General Counsel), plays a key role within
the Group, advising on good governance
and assisting the Board in discharging its
responsibilities, acting with integrity and
independence to protect the interests of
the Company, its shareholders and wider-
group stakeholders. Jason advises the Board
on statutory and regulatory compliance
matters and works closely with the Board
Chair, Committee Chairs and the CEO
to ensure the highest standards of board
governanceareupheld.
Jason also provides the Directors with advice
and support, including facilitating induction
programmes and training in conjunction with
the Board Chair.
Role of Independent
Non-Executive Directors
The Board is constituted by majority INEDs,
who are expected to challenge Executives
and senior management constructively
and help develop strategy, participate
actively in the decision-making process of
the Board, and scrutinise the performance
of management in meeting agreed goals
andobjectives.
Independent Non-Executive
Directors’ terms of appointment
and time commitment
In order to discharge their responsibilities
effectively, INEDs must commit sufficient time
to their role. Typically, INEDs are expected
to commit a minimum of 30 days per year
for core Board activities and membership of
Board Committees; however, this increases
to 35 days for Committee Chairs. The SID
is expected to commit a minimum of 36
days per year and the Board Chair will, on
average, dedicate a minimum of 60 days to
Company business.
In addition, the Board Chair and the INEDs
are expected to allocate sufficient time to
understand the business through meetings
with management, employees and regulators
to foster an open and transparent working
relationship. This is in addition to the time
commitment referred to above. The Company
Secretary develops an annual Board
Engagement Programme to facilitate regular
touch points with the wider business.
Directors’ time commitments are reviewed
annually by the Group Nomination and
Governance Committee. The Board Chair
has confirmed with each INED that they
have sufficient time to devote in order to
fulfiltheirduties.
There has been no increase in the Board
Chair’s external commitments during
the year which would impact his ability
to devote sufficient time to discharge
hisresponsibilities.
Board tenure
The Articles require the Board to be
re-elected annually, in compliance with
the Code. At the AGM, the Board Chair will
recommend the election or re-election of
any INED, following a formal performance
evaluation, confirming the individual Director
continues to be effective, demonstrates
commitment to the role and continues to
beconsideredindependent.
Stakeholder engagement and
therole of Board Champions
The Board is committed to maintaining
effective engagement and active dialogue
with its stakeholders and ensuring that
stakeholder views and interests are a key
consideration in the Board’s decision-making.
The Board engages with colleagues directly
through attending Our Voice meetings. During
the year Board members attended three Our
Voice sessions which focused on employee
pay, benefits and culture. The Board and
its Committees covered a broad range of
sustainability considerations, receiving
regular updates on ESG and its impact
ontheorganisation’s strategy.
Corporate Governance Report continued
129OSB GROUP PLC | Annual Report and Accounts 2024 129
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The Board fosters open and transparent
engagement with its regulators (particularly
the PRA and FCA). The Board and Group
Nomination and Governance Committee
have continued to monitor DE&I, both as part
of ongoing Board and Executive succession
planning and in relation to activities aimed
at developing a diverse and inclusive talent
pipeline below Board level. The role of the
DE&I Specialist progresses the Group’s
ambitions in diversity, equity and inclusion.
Further information on DE&I can be found
onpages 89-91 and pages 182-183.
Consumer Duty Champion
As part of the implementation of Consumer
Duty, firms were expected to have a
‘Consumer Duty Champion’, preferably
an INED, working with the Board Chair
and CEO to ensure that Consumer Duty
is raised in all relevant discussions and
encourages appropriate challenge where
necessary or appropriate. Simon Walker
isthe Board Consumer Champion.
ESG Champion
Section 172 of the Companies Act 2006
(the Companies Act) requires ‘the directors
of a company act in the way most likely to
promote the success of the company for the
benefit of its members as a whole, and in
doing so, have regard to the interests of the
company’s employees’. An effective Board
understands a Company should engage
with its workforce, and build and maintain
relationships with suppliers, customers and
others in order to be successful over the
long-term. Shareholders, via proxy agencies,
encourage the use of ESG Champions
as they are seen as a way to measure a
Company’s long-term sustainability and
risk profile. In order to discharge these
responsibilities above, it was agreed to
appoint an ESG Champion and Kal Atwal
took over this role (from Sarah Hedger)
duringthe second half of 2023.
People Champion
Provision 5 of the Code recommends three
methods to engage with your workforce:
• A director appointed from the workforce;
• A formal workforce advisory panel; or
• A designated non-executive director.
The Board discharges it duties by a
combination of a formal workforce
advisory panel (Our Voice) and appointing
a designated INED to represent the views
of the workforce. Sarah Hedger, Chair
of the Group Remuneration and People
Committee is the People Champion.
Whistleblowing Champion
The Chair of the Group Audit Committee,
Rajan Kapoor, is the Group’s designated
Whistleblowing Champion responsible for
overseeing the integrity, independence and
effectiveness of the Whistleblowing Policy.
Further details can be found in the Group
Audit Committee Chair’s Report on
pages143-149.
Corporate Governance Report continued
Full details of how the Board engages with the Group’s key stakeholders are included on pages 132-135
In addition, the Board has appointed
champions for Consumer Duty, ESG, People
and Whistleblowing to ensure that voices of
our stakeholders are heard and considered
aspart of our decision-making process.
A summary of the champion roles are
explained below.
Board resources
Induction, training and development
The Board Chair supported by the Company
Secretary, has overall responsibility for
ensuring that all Directors receive suitable
training to ensure that they can discharge
their duties effectively. In addition, the Board
Chair also ensures that all Directors receive a
tailored induction on joining the Board, with
the aim of providing any new Directors with
the information required to allow them to
contribute to the running of the Group.
Typically, the induction programme will
include a combination of key documents
and face-to-face sessions covering
the governance, regulatory and other
arrangements of the Group from internal
experts and external advisors.
As senior managers, by virtue of the Senior
Managers Certification Regime, all Directors
are required to maintain skills, knowledge
and a certain level of expertise in order
to meet the demands of their positions of
‘significant influence’ within the Group.
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As part of the annual fitness and propriety
assessment, Directors are required to
complete a self-certification that they have
undertaken sufficient training during the
year to maintain their skills, knowledge and
expertise and to make declarations as to
their fitness and propriety. The Company
Secretary supports the Directors to identify
relevant internal and external courses to
ensure that Directors are kept up to date with
key regulatory changes, their responsibilities
as senior managers and other matters
impacting the business.
The Board Chair also holds regular
conversations with each INED throughout
the year to understand their perspectives
on business and review their individual
performance and development needs.
The SID is responsible for the evaluation
of the Board Chair’s performance and
developmentneeds.
Further details are available in the Group
Nomination and Governance Committee
Chair’s Report.
Information and support
The Board Chair in consultation with the
Company Secretary and wider Board agree
the schedule of matters to be discussed at
each meeting to ensure that all key Board
responsibilities are discharged over the year.
Board agendas and accompanying papers
are circulated to Directors in advance of
each meeting. These include reports from
Executive Directors and other members of
senior management. All Directors have direct
access to senior management should they
require additional information on any of the
items to be discussed. The Board and Group
Audit Committee also receive regular and
specific reports to allow the monitoring of the
adequacy of the Group’s systems and controls.
The information supplied to the Board and its
Committees is kept under review and formally
assessed on an annual basis as partof the
Board evaluation exercise to ensure that it
is fit for purpose and that it enables sound
decision-making.
There is a formal procedure through
which Directors may obtain independent
professional advice at the Group’s expense.
The Directors also have access to the services
of the Company Secretary as described on
page 129.
Conflicts of Interest
The Company’s Articles set out the policy for
dealing with Directors’ conflicts of interest
and these are in line with the Companies Act.
The Articles permit the Board to authorise
conflicts and potential conflicts, as long
as the potentially conflicted Director is not
counted in the quorum and does not vote
on the resolution to authorise the conflict.
The Company Secretary then records this
in the Register of Directors’ Interests. The
Board approves the register annually and
Directors are required to notify the Board
ofany changes to their interests throughout
theyear.
Directors complete an annual confirmation
(fitness and propriety questionnaires),
requesting them to declare any external
interests and potential conflicts. They are
also required to declare their interests in the
business to be discussed at each Board and
Board Committee meeting. The interests
of new Directors are considered during
the recruitment process and authorised, if
appropriate, by the Board at the time of their
appointment. The Group Nomination and
Governance Committee reviews conflicts of
interest relating to Directors at least annually;
periodic reviews are also undertaken as required.
The Group also operates a Conflicts of
Interest Policy, which includes a procedure for
identifying potential conflicts of interest within
the Group.
Executive Directors are not normally
expected, and do not, hold any significant
external directorships. In the event that
external directorships were proposed to
be held, this would be discussed with the
Board Chair and disclosed to the Company
Secretary for consideration.
No Director had a material interest in any
contract of significance in relation to the
Group’s business at any time during the year
or at the date of this report.
Board changes and composition
In November 2023, we announced April
Talintyre’s retirement as CFO and she
subsequently stepped down on 9 May 2024
and was succeeded by Victoria Hyde as
CFO and Executive Director on 22 July 2024.
We also appointed Henry Daubeney as an
additional INED on 1 July 2024 and he will
succeed Rajan Kapoor as Chair of the Group
Audit Committee, during the course of 2025.
The Group Nomination and Governance
Committee regularly assesses Board and
Executive succession plans, ensuring we
maintain the appropriate skills, knowledge and
expertise and also consider diversity, equity
and inclusion principles which provide for richer
deliberation and better decision-making. Our
Board diversity is set out on pages 139-140.
Board evaluation
The effectiveness of the Board, its Committees
and individual Directors are reviewed annually,
with externally facilitated reviews undertaken
every three years, as required by the Code.
An externally facilitated Board evaluation
took place during the year and further details
can be found in the Group Nomination and
Governance Committee Chair’s Report on
pages 136-142.
In addition to the externally facilitated Board
evaluation, the Group Nomination and
Governance Committee has also evaluated the
structure, size and composition (including skills,
experience, knowledge and diversity) of the
Board and its Committees, the independence
of each INED (as part of the consideration of
whether each Director should be put forward
for election/re-election at the 2024 AGM) and
time commitment (ensuring that each INED has
sufficient time to devote totheir Board duties).
Corporate Governance Report continued
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Which stakeholders were considered?
The Board has identified the below as our key stakeholders, essential for ensuring
the continued success of the Group.
Colleagues
Our success is driven by the talented individuals we employ
Communities
We partner with national and local charities, offering opportunities
that truly make a difference
Customers
We are committed to delivering the best service to customers,
delivering good customer outcomes and building strong and
long-term relationships
Intermediaries
We use brokers’ insights to better service our customers,
engagewithinvestors and rating agencies
Investors and rating agencies
We engage in straightforward and open dialogue
Regulators and policy-makers
We continue to foster open and transparent dialogue with regulators
and participate in driving policy change
Suppliers
Support us in providing high standards of service to our customers
Corporate Governance Report continued
Managing our business responsibly
This section describes how the Directors’
considered matters set out in section 172(1) of
the Companies Act. It also forms part of the
Directors’ statement required under section
414CZA of the Companies Act.
The Board confirms that, for the year ended
31 December 2024, it has acted to promote
the success of the Group for the benefit of its
members as a whole and continues to have
due regard to the following matters laid out
in section 172(1) of the Companies Act:
a) The likely consequences of any decision
inthe long-term;
b) The interests of the
Company’semployees;
c) The need to foster the Company’s
business relationships with suppliers,
customers and others;
d) The impact of the Company’s operations
on the community and the environment;
e) The desirability of the Company
maintaining a reputation for high
standards of business conduct; and
f) The need to act fairly as between
members of the Company.
The Board is committed to maintaining
effective engagement and active dialogue
with its stakeholders. In this section, we
summarise how we have engaged with
our key stakeholders during the year and
how theDirectors have had regard to the
mattersset out above.
Full details can be found on pages 133-135.
We leverage the work of our Board
champions to ensure that employees,
customers and ESG are prioritised as part of
boardroom debate. We continue to focus on
transparency with our regulators in relation
to our strategy and risk management. The
Board continues to maintain an open and
transparent dialogue with stakeholders.
With the support of the Investor Relations
team, Group Executives and certain
Board members undertake roadshows for
investors and analysts, so they have a clear
understanding of our business proposition
and prospects.
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Section 172 statement:
Helping our stakeholders prosper: considering our stakeholders in key business decisions is fundamental to our ability to deliver the Group’s strategy
in line with our long-term values and operating the business in a sustainable way. Balancing the needs and expectations of our key stakeholders is
essential to achieving our purpose of helping our customers, colleagues and communities prosper.
Stakeholder (and other
stakeholders impacted) Board engagement and outcomes section 172(1) Companies Act
Customers
Board engagement:
• Board engagement with customers has been indirect; Directors are kept informed of customer-related matters through management
reporting, feedback and research, ensuring visibility into customer experiences (i.e. satisfaction scores, complaints and retention rates).
• The Board attended deep dives and workshops to further satisfy itself that the Group continues to deliver good customer outcomes, that
risks and mitigating actions are in place and that our approach aligns to business strategy. Sessions focused on customer profiles, service
levels, and support for vulnerable customers.
• Ahead of the Savings digital platform launch, Board members were invited to experience and feedback on the improved application process
and customer journey.
• The Board was frequently updated on the implementation and embedding of the FCA’s Consumer Duty Programme. Simon Walker, as our
Consumer Duty Champion, obtained assurances from the business on customer-related matters and ensured any impacts were considered
in the Boardroom.
Board outcomes following engagement with Customers:
• Approved its first Consumer Duty and Attestation Report. All colleagues also undertook Consumer Duty training.
• As part of the Transformation, the Board approved the launch of a new Savings digital platform.
• Elevation of the Customer and Product Committee to an Executive first-level committee to ensure customer outcomes remained at the heart
of the Group’s product proposition.
• Approved the approach to customer-related data migrations and the steps to mature the Group’s IT and data real estate.
• Simplified the scope of the Group’s brands, ensuring the underlying brands have distinct propositions tailored to customer needs.
section 172(1)c
See also:
• Board Chair’s statement
• CEO’s statement
• Segments review
• ESG overview
Environment
and
sustainability
Board engagement:
• The Board considers the impact of social and environmental change on the business and stakeholders, promoting awareness amongst
employees, driving our ‘green’ commitments and complying with enhanced regulation and disclosures.
• The Board is responsible for approving the Group’s ESG Strategy and ESG Operating Framework which sets out how the Group will monitor
ESG matters material to the Group’s Purpose, Vision, Values and stakeholder expectations.
• The Board oversees an environmentally friendly culture and ensures that the business is ready to respond to the growing impact of climate
change on the Group’s activities in line with its Stewardship value.
Board outcomes following engagement on the environment and sustainability:
• Considered the Group’s operational ESG roles and responsibilities and reviewed the ESG non-financial materiality assessment.
• The Group Remuneration and People Committee approved the DE&I action plan.
section 172(1)d
See also:
• Board Chair’s statement
• ESG overview
• Social matters
• TCFD matters
• Board Chair’s Report on
Corporate Governance
Corporate Governance Report continued
133OSB GROUP PLC | Annual Report and Accounts 2024 133
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Corporate Governance Report continued
Stakeholder (and other
stakeholders impacted) Board engagement and outcomes section 172(1) Companies Act
Colleagues
Board engagement:
• The views of colleagues are considered as part of strategic decisions. Board members are invited to attend the Workforce Advisory
Forum (Our Voice), which is one of the methods used to engage with the workforce. Sarah Hedger, our People Champion, is responsible
for representing the workforce at Board and Committee level, and as a member of Our Voice, she engages directly with colleague
representatives to gain insights into culture, concerns and initiatives.
• The Board Chair attended Our Voice sessions covering topics such as colleague morale, employee engagement and DE&I surveys,
sustainability and net zero commitments. Employees are also able to engage directly with the CEO through the ‘Ask Andy’ online portal.
• The Group Nomination and Governance Committee oversees the Group’s talent management initiatives and senior management
successionplanning.
Board outcomes following engagement with People and Culture:
• Insights from Our Voice provided the Board with additional points of reflection when determining metrics around strategic performance and
Executive Director remuneration, culture and governance.
• During 2024, the Board and its Committees received regular updates on matters impacting employees from senior management and the
Group’s HR function.
• The Board also approved the Group DE&I Policy, with a continued focus on improving diversity and inclusion in financial services.
section 172(1)b
See also:
• Board Chair’s statement
• Our culture
• ESG overview
• Board Chair’s Report on
Corporate Governance
Shareholders
Board engagement:
• The Board ensures that all shareholders have equal access to information through regulatory announcements, general meetings and
publications on our website.
• The Board’s primary engagement with investors comes through the Group’s CEO and CFO, who meet with investors and sell-side analysts
and present the Group’s results to the market. The Board Chair also met several shareholders during 2024 following the Effective Interest
Rate (EIR) adjustment which impacted the 2023 Annual Report and Accounts to understand their perspectives.
• The Board receives regular updates from the Investor Relations function, which includes investor feedback, analysts’ recommendations and
market views. The Board also receives investor feedback from the Group’s brokers and financial advisers.
• Engaged with shareholders in relation to the Remuneration Policy approved by shareholders at the 2024 AGM.
• The Board had due regard for shareholders and customers, when considering the £1.25bn deconsolidated securitisation transaction.
Board outcomes following engagement with shareholders:
• Approved two £50m share repurchase programmes.
• Recommended the payment of a final dividend to shareholders and approved an interim dividend.
section 172(1)a,f
See also:
• Board Chair’s statement
• Relationship with
stakeholders
• CEO’s statement
• Risk review
• Financial review
• Board Chair’s Report on
Corporate Governance
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Stakeholder (and other
stakeholders impacted) Board engagement and outcomes section 172(1) Companies Act
Suppliers
Board engagement:
• The Board does not interact directly with the Group’s suppliers; however, during the year the Board maintained oversight of key supplier
relationships, including engagement between the Group Audit Committee and the external auditor. The Board also considered the risks
associated with suppliers and the framework for assurance and oversight of key supplier relationships and customer impacts.
Board outcomes following engagement with suppliers:
• Continued engagement with suppliers to understand their aspirations and approach towards ESG and to ensure they are aligned with the
Group’s ESG strategy.
• Engagement with key suppliers as part of the Group’s Recovery Plan.
section 172(1)c
See also:
• Board Chair’s statement
• ESG overview
• Risk review
• Board Chair’s Report on
Corporate Governance
Intermediaries
Board engagement:
• Although the Board’s engagement with intermediaries is indirect, Directors receive updates on intermediary-related matters at Board
meetings. Broker and borrower satisfaction scores are monitored, along with service level performance and complaints.
• The Board received broker feedback at the two strategy days held during the year.
Board outcomes following engagement with Intermediaries:
• The Board reviewed the trends in Net Promoter Scores (NPS) for intermediary brokers and considered proposals to improve the broker
experience and engagement with the Group and our customers.
• Broker engagement extended beyond our propositions and enabled us to continuously enhance the service we provide. Our business
development managers work closely with intermediaries to discuss cases and help to obtain swift and reliable decisions.
section 172(1)c
See also:
• Board Chair’s statement
• CEO’s statement
• Segment review
• Environmental matters
• Board Chair’s Report on
Corporate Governance
Regulators
Board engagement:
• The Board and Executives maintain an open and transparent dialogue with the PRA and FCA. Engagement typically takes the form of
regular and ad hoc meetings attended by both members of the Board and Group Executives, as well as subject matter experts.
• The Board Chair and Group Executives work with the PRA and FCA to agree the regulatory agenda and the PRA are invited to present their
periodic summary on an annual basis.
• The Board and its Committees receive regular updates on broader regulatory developments and compliance considerations.
Board outcomes following engagement with regulators:
• Appointments of a new Chief Compliance Officer and Head of Regulatory Affairs to support the Board and regulators with their interactions.
• The Board received updates on macroeconomic, legal and regulatory developments and their impact on the Group’s capital and liquidity position.
section 172(1)e
See also:
• Board Chair’s statement
• CEO’s statement
• Governance matters
• Board Chair’s Report on
Corporate Governance
Corporate Governance Report continued
135OSB GROUP PLC | Annual Report and Accounts 2024 135
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65%21%
8%
5%
1%
Group Nomination and Governance Committee Report
Dear Shareholder,
On behalf of the Committee, I am pleased to present the
Group Nomination and Governance Committee Report.
Committee’s responsibilities
• Leads the process for the appointment of
new members of the Board.
• Ensures that the Board sets the tone from
the top in relation to values, ethics and
culture leading to a sustainable business.
• Ensures that the Board operates
effectively through monitoring the
appropriateness and balance of skills,
experience, availability, independence
and knowledge, applying the DE&I
principles of the Group.
• Ensures a robust and diverse succession
pipeline for the Group, including for senior
management positions.
• Oversees and guides the Board on all
matters of Corporate Governance.
The specific responsibilities and duties of
the Committee are set out in its Terms of
Reference and are available on our website,
www.osb.co.uk, which do not form part of
this Annual Report.
Following an annual review of the Terms
of Reference and the activities conducted
during the year, the Committee is satisfied
that it has appropriately discharged
itsresponsibilities.
Committee members
(at 31 December 2024
and12March 2025)
• David Weymouth (Committee Chair)
• Noël Harwerth
• Sarah Hedger
Time allocation
In 2024, the Committee held seven scheduled
meetings and one ad-hoc meeting. For
further detail of attendance during the
year, see the Board and Committee meeting
attendance table on page 128 of the
Corporate Governance Report.
Approximate allocation
of Committee timein 2024
Board composition and
succession planning
Board Effectiveness
Board Diversity
Conflicts of Interest
Corporate Governance
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Group Nomination and Governance Committee Report continued
Key activities in the year
In 2024, the Committee focused on the
following areas:
Board composition and
succession planning
The Committee is responsible for ensuring
that succession planning for Board members
and Executives is sufficiently robust and
diverse to serve the best interests of our
stakeholders and deliver the strategic
objectives of the Group.
Supported by the recently appointed Chief
People Officer (CPO), the Committee
has been heavily focused on succession
planning for senior leadership roles, including
reviews of emergency succession plans for
Executive Committee members, supported by
bespoke development plans in place for high
performing individuals. There is a continued
focus on encouraging diversity in its broadest
sense to senior roles.
Part of this process is to ensure there are
succession plans in place for Board, CEO,
CFO and senior management positions
encompassing internal and external
candidates, and that there is a skills,
experience and diversity matrix which maps
each Director’s attributes against those that
are most relevant for the Board, taking into
account the future strategic direction of the
Group and target operating model. As well
as tracking the Board’s strengths, this matrix
is used to identify gaps in the collective
skillsprofile.
While appointments are based on the
merits of an individual candidate and
objective criteria, we also aim to promote
diversity in its broadest sense. This
complements and strengthens the overall
Board and its Committees’ skills, knowledge
and experience. Any appointments
also take account of all legal and
regulatoryrequirements.
In 2024, a significant proportion of the
Committee’s time was devoted to search and
selection processes and the implementation
of our succession plans due to the:
• forthcoming retirement of Rajan Kapoor
(Group Audit Committee Chair) as he
approaches nine years on the Board;
• forthcoming retirement of Noël Harwerth
(SID), who will have served for nine years
in mid 2026;
• resignation of April Talintyre as CFO with
effect from May 2024; and
• creation of a new role on the Executive
Committee – Chief People Officer.
Per Ardua, Korn Ferry and Odgers Bernstein,
external search consultants, with whom the
Company and individual Directors have no
other relationship, were commissioned to
assist with the search and selection process
to identify one new INED who could serve
as the Group Audit Committee Chair, a new
CFO and a CPO respectively.
All members of the Board were invited
to participate in succession planning
discussions during the year.
For each appointment, the Committee
agreed a criteria, including personal
attributes such as cultural fit, skills and
experience. A longlist of potential candidates
was created in line with our Board DE&I
Policy, for consideration by the Committee
as a whole, before a shortlist was drawn
up with candidates invited to interview
with myself, the CEO and selected Board
members. Throughout the process, the
Board was regularly appraised on progress.
Following detailed feedback from these
interviews the Committee then selected which
individuals should progress to interviews with
further Board members.
Board appointments
During 2024, the Committee recommended
the appointment of (i) Victoria Hyde as
CFO and Executive Director, to replace April
Talintyre and (ii) Henry Daubeney as an INED,
to succeed Rajan Kapoor as the Group Audit
Committee Chair in 2025. Victoria Hyde and
Henry Daubeney joined the Board on 22 July
2024 and 1 July 2024 respectively.
Victoria joined the Group as Deputy Chief
Financial Officer in September 2022,
specifically as part of the Board’s Executive
succession planning.
During her 21 year career at Barclays,
Victoria undertook several complex roles
across product control, treasury finance
and financial planning and analysis. Most
recently, she served as Finance Director
of the Barclays Consumer, Cards and
Payments businesses. Victoria is a qualified
Chartered Management Accountant
and brings extensive experience in
financialservices.
Henry Daubeney has extensive experience
inthe financial services sector following a
38-year career with PwC. He was most
recently the Global Head of Corporate
Reporting Services – IFRS and Sustainability
Reporting. He is also a member of the
IFRS Advisory Council and member of the
Corporate Reporting Group of the GPPC and
Co-Chair of the GPPC Bank Working Group.
Management appointments
During the year, we were also joined by
Orlagh Hunt in a newly created role of
CPO. Prior to joining us, Orlagh was CPO
at Yorkshire Building Society and brings
a wealth of experience having previously
worked as Head of HR for AXA Sunlife and as
Group HR Director for both RSA Insurance
Group and Allied Irish Bank. In her role as
CPO, she is providing valuable support to
the Committee as it continues its focus on
Succession Planning.
We have been carefully focused on
succession planning, in order to secure
consistent oversight and execution of the
Group’s medium to longer term strategy
David Weymouth Chair of the Group Nomination and Governance Committee
137OSB GROUP PLC | Annual Report and Accounts 2024 137
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Group Nomination and Governance
Committee Report
continued
Board skills matrix
To ensure an appropriate balance of skills is
maintained, the knowledge and experience
of Board members are regularly reviewed.
Abalanced Board is essential for constructive
and open debate in the Boardroom.
TheGroup Nomination and Governance
Committee regularly reviews and updates
the Board’s skills and diversity matrix, which
reflects the balance of the knowledge, skills,
qualifications, diversity and experience
required to pursue our long-term strategy.
Throughout the year, the Committee has
remained focused on the skills and diversity
matrix, which was used to inform the
succession planning activity. The matrix is
used to monitor the Board’s strengths and
identify any areas of enhancement to the
Board’s collective skills. In addition, the
skills and diversity matrix also records tenure
and diversity; particular areas of focus for
theBoard.
On behalf of the Board, I would like to
welcome all those who joined us in the
year and thank those who left us for
theircontributions.
Director induction, training
anddevelopment
The Board has an annual training and
development programme to help Directors
continue to develop their skills, together
with their understanding of the Group and
our industry. The programme is designed
based on feedback from members, taking
into account their experience and expertise.
In2024, workshops were delivered on:
• Risk appetite and recovery.
• Senior Managers Certification Regime.
• Board workshops on business
transformation (regular series
throughout2024).
In addition, all Board members undertake
mandatory and personal training.
Following appointment to the Board,
Henry Daubeney received a tailored
induction plan to ensure he was able
to be effective in his role and obtained
a deep understanding of the Group’s
business model and structure, risk
profile and governance arrangements.
The induction is typically completed
within six months of appointment as a
new director. The induction is facilitated
through a variety of means including
document reviews, tailored meetings,
site visits and training sessions with
senior managers of the Group.
Henry’s induction included:
• An induction pack containing
key corporate documents and
information relating to the Group
covering aspects such as the role
of a director, Terms of Reference
for the Board and its Committees,
recent papers and minutes, details
of financial performance, risk
management and internal controls,
key policies and governance.
• Meetings with all Directors,
the Chair of CCFS, the Group
Executive Committee and other
senior management across
theorganisation.
• Meetings with other key stakeholders
including the external auditors
and external advisors to the Group
Remuneration and People Committee.
During 2025, Henry will continue his
programme of visits to develop his
knowledge and understanding of
the Group. He will also commence a
period of shadowing the Group Audit
Committee Chair in readiness to succeed
Rajan Kapoor as Chair of the Group
Audit Committee and Whistleblowing
Champion later in the year.
INED Induction
Henry Daubeney, Independent Non-Executive Director
My personalised induction
programme gave me a great
opportunity to get up to speed
quickly with OSB. I met many
employees and advisors,
and learned quickly about
the firm, its culture, values
andoperations.
Henry Daubeney Independent Non-Executive Director
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Individual Director biographies, including
details of their skills and experience, are
setout on pages 118-119.
Diversity
The Board recognises and embraces
the benefits that diverse and inclusive
representation can bring, and sees it as an
essential element for maintaining competitive
advantage. The Board has agreed to a
set of commitments (contained within the
Group’s DE&I Policy, approved in December
2024 and available on the website at
www.osb.co.uk) to address behavioural,
gender and ethnic bias, and to ensure
appointments are determined on merit
and objective criteria. Within this context,
we promote diversity of gender, social and
ethnic backgrounds, cognitive and personal
strengths. The Board’s adherence to the
FCA Listing Rule requirement demonstrates
the desire to achieve both a diverse Board
and workforce. These commitments are
monitored by the Committee alongside the
Group Remuneration and People Committee,
which considers the diversity of the wider
workforce. Both Committees continue to
drive the ambition of ensuring that the
Board and workforce is representative of the
communities in which the Group operates.
The Committee considers the benefits of
all aspects of diversity, including but not
limited to, the balance of skills necessary
for the Board to effectively discharge its
responsibilities and additional training or
development required for existing or newly
appointed Directors. These differences
help determine the optimum balance and
composition of the Board.
Skills Depth of experience
Banking Strong
Other financial services Strong
Accounting, auditing
and financial literacy
(inc. Investor Relations)
Strong
Risk management Good
Strategy Strong
Retail Low
Digital and IT Good
Responsible business
and sustainability
Low
HR, Culture, Talent
andRemuneration
Good
Legal Low
Governance
andControl
Strong
Regulatory, Government
and Public Policy
Low
In addition to the skills and experiences
outlined above, our skills and diversity
matrix included other competencies such
as top management experience, significant
Directorship tenure, education, together with
the Board’s diversity in the broadest sense.
In 2025, the Committee will review the skills
and diversity matrix further, to ensure that
the skills and experience monitored are
aligned to the strategic direction of the
Company, supports the transformation
journey and any behavioural competencies
are aligned to the priorities set out by the
FRC in their Guidance on Effective Boards.
Group Nomination and Governance Committee Report continued
The Group asks colleagues to complete
a diversity questionnaire to confirm
their gender and ethnicity as part of
the onboarding process, on a voluntary
self-reporting basis, based on the most
appropriate classification from a list
of categories used by the Office for
National Statistics. Data relating to senior
management gender and ethnicity was
sourced from this existing data. Data
relating to the gender and ethnicity of the
Board was collected by way of a year-
end questionnaire, on a voluntary self-
reporting basis. Further details of how the
Company met the Board targets specified
in the ListingRules of the FCA can be found
onpages 126 and 140.
As at 31 December 2024, we are pleased to
report the following:
• 44% female representation on the Board
(2023: 50%).
• Two senior Board positions are held
byfemales.
• Two members of the Board were from
ethnically diverse backgrounds.
• 36% of the Executive Management was
female (2023: 27%).
• 36% of our senior management across
the Group were female (comprising of
the Group Executive Committee and their
direct reports) (2023: 33%).
• No changes in Board composition have
occurred between year-end and the
date of approval of this Annual Report
andAccounts.
The tables on page 140 set out the required
information as at 31 December 2024.
Orlagh Hunt is the appointed DE&I
Champion. Her role is to promote diversity
initiatives such as our commitment to
those with a disability, mental health in the
workplace and unconscious bias training.
The Employee Engagement Network,
Our Diversity, consists of volunteers from
across the Group who are passionate
about progressing the DE&I agenda in
the context of the ‘Respect Others’ value.
The DE&I calendar for 2024 has enabled
the network to host a range of activities
aimed at raising awareness and providing
resources to support conversations relating
to gender, ethnicity, faith/religion, disability,
sexual orientation, identity, socio-economic
background, and health and wellbeing. The
Our Diversity network reports to the ESG
Technical Committee, which in turn provides
updates to the Committee and the Board on
all matters relating to DE&I.
Further details relating to DE&I are set out on
pages 89-91 and 182-183.
139OSB GROUP PLC | Annual Report and Accounts 2024 139
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Group Nomination and Governance Committee Report continued
External review of Board effectiveness
The Board, together with its Board
Committees, undergoes a yearly assessment
of its performance and effectiveness,
composition, the quality of its work and
individual performance of its members. Every
three years, the assessment is conducted by
an external consultant, whose independence
is validated by the Committee.
In 2024, the review was conducted by
an external independent expert. A robust
selection process was undertaken to identify
an external independent consultant with an
in-depth understanding of effective Boards.
As a result, Bvalco was appointed. Bvalco
have no other relationship with the Group
orindividual directors.
The review methodology agreed with
Bvalcocomprised:
• structured, detailed and confidential
interviews with individual Board members
and select members of the Executive team;
• observing Board and Board Committee
meetings (including one of the Board
strategy days) to assess the quality of
debate and challenge, dynamics and
culture; and
• Review of a selection of Board and
BoardCommittee papers and
desk-based research.
The review focused on Board and Committee
structures, composition, diversity of board
membership and competences and
behaviours,including:
• the quality of their functioning;
• their size, composition and diversity;
• the quality of individual Board meetings;
• the frequency and duration of meetings,
content of the agenda and time dedicated
to each item, quality of the information
received; and
• decision-making processes including
appropriate levels of challenge.
Number of
Board members
Percentage
of the Board
Number of senior positions on the
Board (CEO, CFO, SID and Board Chair)
Number in
Executive Management
1
Percentage of
Executive Management
1
2023 2024 2023 2024 2023 2024 2023 2024 2023 2024
Men 4 5 50% 56% 2 2 8 7 73% 64%
Women 4 4 50% 44% 2 2 3 4 27% 36%
Other 0 0 0% 0% 0 0 0 0 0% 0%
Not specified/prefer not to say 0 0 0% 0% 0 0 0 0 0% 0%
1. In accordance with the requirements of the FCA Listing Rules and for the purposes of this table only ‘Executive Management’ comprises the Group Executive Committee, which includes the Company Secretary.
Table for reporting on ethnic background
Number of
Board members
Percentage of
the Board
Number of senior
positions on the Board
(CEO, CFO, SID and
Chair)
Number in Executive
Management
1
Percentage of
Executive Management
1
White British or other White (including minority-white groups) 7 78% 4 10 91%
Mixed/Multiple Ethnic Groups 0 0% 0 0 0%
Asian/Asian British 2 22% 0 1 9%
Black/African/Caribbean/Black British 0 0% 0 0 0%
Other ethnic group, including Arab 0 0% 0 0 0%
Not specified/prefer not to say 0 0% 0 0 0%
1. In accordance with the requirements of the FCA Listing Rules and for the purposes of this table only ‘Executive Management’ comprises the Group Executive Committee, which includes the Company Secretary.
OSB GROUP PLC | Annual Report and Accounts 2024140
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Group Nomination and Governance Committee Report continued
In December 2024, the Board discussed
Bvalco’s findings and recommended actions,
with a consensus view that the results were
positive and that the Board and its Committees
continued to operate effectively. Specifically,
the review identified:
• The diverse nature of the Board in terms
ofgender, ethnicity and experience.
• The governance framework which
benefitted from a strong mix of skills.
• The Board’s sense of cohesion,
engagement and desire for information.
• The culture of openness, trust and respect
with members listening and taking turns
to speak and a strong inclusive and
collegiate feeling.
• That Board members and Executives felt
comfortable raising issues and concerns.
Agreed actions
Purpose and strategy • Devote time to focus on longer-term strategic issues, regularly reviewing Board and Board Committee agendas to ensure efficient and
timely scheduling of strategic items.
• Continued awareness by the Board of the changes and challenges in the external environment.
Board composition and succession • In addition to increased consideration of executive succession at the Group Nomination and Governance Committee, an annual review of
the talent management strategy/executive succession planning process to be provided to the Board.
• Continued focus to be placed on maintaining an appropriate balance of skills and experience, particularly in areas such as technology
and data, utilising the skills and diversity matrix.
Board operation and information • Ongoing development of agenda and papers to encourage broader challenge and debate, including a focus on key strategic items,
challenges and commercial opportunities.
• To consider further dedicated professional time together outside of Board meetings.
• Review the size of Board packs as part of overall governance improvements in 2025.
• Develop a schedule of pre-planned site visits for Board members in 2025.
The report identified some development
areas, categorised here as (i) Purpose
and Strategy (ii) Board composition
and succession planning and (iii) Board
operation and information. The main focus
ofimprovements to Board effectiveness relate
to creating more room for forward-looking
and strategic discussions on key matters at
Board and Committee meetings. The findings
of each Committee’s effectiveness is detailed
in the individual Committee reports, including
any associated actions.
As a result of the review, the Board
discussed potential areas for improvement
and approved an associated action plan.
The review findings and resulting actions
demonstrate the Board’s commitment to
effective governance. A summary of the
findings and recommended actions are
detailed in the table below. Completion of
these actions will be monitored by the Group
Nomination and Governance Committee.
141OSB GROUP PLC | Annual Report and Accounts 2024 141
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Group Nomination and Governance Committee Report continued
Promoting diversity and inclusion
In addition to succession, the Committee
regularly monitors the skills, experience and
diversity of the Board including those of
our key subsidiary undertakings. In my last
report, I mentioned our subscription to the
Women in Finance Charter and achieving
the recommended representation of females
in senior roles across the Group. We met
this target earlier than anticipated and I
am pleased to say that we have exceeded
our target for 2024 with 36% (2023: 33%) of
senior roles undertaken by females. We have
set an enhanced target of achieving 40%
by the end of 2026. Our diversity metrics
have already exceeded the Parker Review
and Hampton-Alexander guidelines with two
Directors from ethnically diverse backgrounds
and 44% female representation on the Board.
See pages 89-91 for more information on
DE&I within the Group.
Effectiveness of the Committee
As noted in the Corporate Governance
Report, the Committee’s performance was
assessed as part of the external review
of Board Effectiveness. The Committee
was rated well and continued to perform
effectively. Areas identified for potential
enhancement include the need to focus on
internal development of talent and keep
Board succession under review.
2025 priorities
The priorities for the Committee for 2025
were identified as:
• Maintain focus on Board succession
arrangements, recognising the importance
of ensuring that succession planning is
discharged in an effective manner.
• Continue to proactively focus on senior
executive succession planning based on
the Group’s strategic needs maintaining
our key focus on the continued development
of our internal succession pipeline.
• Monitor the effective implementation of
the action plan developed from the 2024
external Board effectiveness review, in
line with our commitment to continuous
governance improvements.
• Continue to remain focused on the
overall effectiveness of the Board and
its Committees, ensuring that their roles
are discharged in an effective manner,
recognising that this is essential to
ensureour continued success.
Additional information
The Committee has unrestricted access
to Executive Management and external
advisors to help discharge its duties. It is
satisfied that in 2024 it received sufficient,
reliable and timely information to perform
itsresponsibilities effectively.
The Board Chair reports on matters dealt
with at each Committee meeting to the
subsequent Board meeting.
The Board reviewed and approved this
reporton 12 March 2025.
David Weymouth
Chair of the Group Nomination
andGovernance Committee
12 March 2025
OSB GROUP PLC | Annual Report and Accounts 2024142
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Governance Financial StatementsOverview Appendices
Group Audit Committee Report
Dear Shareholder,
On behalf of the Committee, I am pleased to present the
Group Audit Committee Report. The Committee discharged
its responsibilities over the year by providing effective
independent oversight, overseeing the systems of internal
control and ensuring the integrity of the Group’s financial
statements with the support of management and the
external auditor.
Committee responsibilities:
Internal control and risk management
• Review the effectiveness of the systems
of internal control over financial reporting
to identify, assess and monitor financial
risks and other internal control and risk
management systems.
• Review and approve systems and
controls for the prevention of bribery and
procedures for detecting fraud including
conduct risk and related activities.
• Review the adequacy and effectiveness
of anti-money laundering systems
andcontrols.
• Review the adequacy of the Group’s
whistleblowing arrangements
andprocedures.
Financial and non-financial reporting
• Review and recommend to the Board,
the long-term viability statement and
the adoption of the going concern basis
for the preparation of the year-end and
interim financial statements.
• Monitor the integrity of the financial
statements, including the Annual Report
and Accounts and interim report, trading
updates, Pillar 3 disclosure requirements
and any other formal announcements
relating to financial performance.
• Reviewing and reporting to the Board
on significant financial reporting issues
and the judgements they contain having
regard to the matters communicated to it
by the internal and external auditors.
• Provide challenge and oversight on the
consistency, quality and appropriateness
of significant accounting policies
and judgements and on the methods
used to account for significant or
unusualtransactions.
• Ensure compliance with all appropriate
accounting standards and regulatory
reporting requirements.
• Consider and recommend changes to
accounting policies to the Board.
• Review and challenge, where appropriate,
all material information included in
the Annual Report and Accounts, such
as the business review, task force on
climate-related financial disclosures
(TCFD) and the corporate governance
statements relating to the audit and to
riskmanagement.
• Advise the Board whether the Annual
Report and Accounts is fair, balanced
andunderstandable.
Internal and External Audit
• Review and monitor the effectiveness
of the Group’s internal and external
auditarrangements.
• Review and approve the role and mandate
of internal audit and ensure the necessary
resources and access to information
is provided to enable internal audit to
fulfil its mandate in accordance with the
relevant professional standards released
by the Institute of Internal Auditors.
• Monitor and review the effectiveness of its
work and annually approve the Internal
Audit Charter and Internal Audit Plan,
ensuring it is appropriate for the current
needs of the Group.
The specific responsibilities and duties of
the Committee are set out in its Terms of
Reference, as reviewed annually, which are
available on our website, www.osb.co.uk
anddo not form part of this Annual Report.
143OSB GROUP PLC | Annual Report and Accounts 2024 143
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Approximate allocation
of Committee timein 2024
Financial and Non-Financial Reporting
Significant Accounting Policies
andJudgements
Compliance and Governance
External Audit
Internal Audit, including Internal
Controls and Risk Management
Other
Committee members
(at 31 December 2024
and12March 2025)
• Rajan Kapoor (Committee Chair)
• Noël Harwerth
• Sarah Hedger
• Simon Walker
• Henry Daubeney
1
1. Henry Daubeney joined the Board
and the Committee on 1 July 2024.
All members of the Committee are INEDs
who have significant senior management
and Board-level experience in the banking
and financial services sectors. Rajan Kapoor
is a Fellow of the Institute of Chartered
Accountants and a Fellow of the Chartered
Institute of Bankers in Scotland. Henry
Daubeney, Simon Walker and Sarah Hedger
are all chartered accountants. As such, the
Committee has an appropriate balance of
skills and competence relevant to the sector
in which the Group operates.
Standing invitations to Committee meetings
are extended to the Board Chair, Executive
Directors, the Group Chief Risk Officer, the
Group Chief Internal Auditor (GCIA) and the
external audit partner, all of whom attend
meetings as a matter of practice. Other non-
members may be invited to attend all or part
of any meeting, as and when appropriate.
Key activities in the year
In 2024, the Committee focused on the
following areas:
Financial and non-financial reporting
The Committee reviewed, and recommended
for Board approval, the Annual Report and
Accounts, the interim results, quarterly
trading updates and analysts’ presentations.
The Group’s Pillar 3 regulatory disclosures,
for publication on the Group’s website,
www.osb.co.uk, were also approved.
As part of its review, the Committee assessed
management’s application of principal
accounting policies, significant accounting
judgements and compliance with relevant
disclosure requirements. The Committee
carefully considered the presentation of results
on a statutory and underlying basis to ensure
transparency and consistency throughout.
Significant areas of judgement
andestimates
The Committee considered management’s
significant accounting judgements and
consistent application of accounting policies in
relation to the interim and full-year results of
the Group. In its assessment, the Committee
received reports from management and
provided challenge in relation to each area
of significant judgement and management’s
recommended approach. Views were sought
from the external auditor on the accounting
treatment and judgements underpinning the
financial statements.
Time allocation
In 2024, the Committee held seven scheduled
meetings. For further detail of attendance
during the year, see the Board and Committee
meeting attendance table on page 128 of the
Corporate GovernanceReport.
In addition to effective interest rate (EIR)
accounting, the Committee, in conjunction with
the Group Risk Committee, also challenged
management on the calculation of expected
credit losses (ECL) in accordancewith IFRS 9.
The Committee focused on model
enhancements and analysis, with management
judgements applied on historical data trends
to factor in the impact of the macroeconomic
outlook, including inflation and interest
rate movements, the House Price Index,
unemployment rates, post-model adjustments,
as well as longer-term climate factors.
The Committee reviewed the steps taken by
management to enhance the Group’s internal
control environment and monitored regulatory
and corporate governance developments.
The accounting treatment of the PMF
2024-2 securitisation was also reviewed
and challenged. The Committee was
satisfied that the analysis of the transfer
of risks and rewards of the sold mortgages
was appropriate; that the derecognition
criteria under IFRS 9 had been met; and
the transaction did not alter the Group’s
businessmodel.
Details of the significant areas of judgement
and estimates can be found on page 146.
Group Audit Committee Report continued
22%
25%
13%
14%
7%
19%
OSB GROUP PLC | Annual Report and Accounts 2024144
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Compliance and governance
The Committee noted the updated Code and
reporting requirements for 2025 and received
updates from management on the proposed
governance and workstream structure to
meet the new Provision 29 requirement in
preparation for reporting in subsequent years.
The Committee also fully complies with
the FRCs Minimum Standards for Audit
Committees and its Terms of Reference
havebeen updated accordingly.
Viability and going concern
The current position of the Group, along
with principal and emerging risks, were
reviewed by the Committee. They also
assessed the prospects of the Group before
recommending the Group’s long-term
viability statement for approval by the Board.
Upon review a recommendation was made
to the Board, that the going concern basis
should be adopted in preparing the annual
and interim financial statements. Further
details are set out on pages 70-71 and
184–185.
Alternative performance measures
The Committee provided oversight and
challenge in relation to the use of alternative
performance measures (APMs) in the interim
financial statements and Annual Report and
Accounts to ensure that these were applied
consistently and remained relevant. The
Group presents APMs on an underlying basis,
alongside the statutory basis, which helps
demonstrate the performance of the Group
on a consistent basis and enables meaningful
comparisons to prior years. See pages 40
and 272-274 for further details.
As APMs are important measures of how the
Group performed, the Committee asked the
external auditor to provide assurance on
their computation since it was considered
that they could perform the work efficiently
and economically. The Committee was
satisfied that this assignment did not affect
their independence as external auditor. The
independent assurance statement can be
found on pages 187–195.
Fair, balanced and understandable
The Committee considered, on behalf of the
Board, whether the 2024 Annual Report and
Accounts taken as a whole are fair, balanced
and understandable.
Regulatory and governance reporting
requirements were considered, as well as
the going concern and longer-term viability
statements and reports from management
on significant accounting judgements
andestimates.
Following its review, the Committee was
satisfied that the 2024 Annual Report and
Accounts taken as a whole are fair, balanced
and understandable, and accurately reflect
the information necessary for shareholders
and stakeholders to assess the Group’s
position and performance, business
model and strategy in line with section 172
requirements as outlined on pages 10 and
132-135. The Committee was also satisfied
that the non-financial information within the
Annual Report and Accounts is consistent
with the financial statements and with the
use of APMs and associated disclosures.
Group Audit Committee Report continued
The principal role of the Committee is to
supervise and challenge the approach to
the preparation of the financial results and
for compliance with financial reporting
standings and regulations.
Rajan Kapoor Chair of the Group Audit Committee
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Group Audit Committee Report continued
Significant issues considered How these were addressed by the Committee
Effective interest A number of assumptions are made when calculating the EIR for newly-originated loan assets. These include their expected redemption profiles, product switching rate
activity and the anticipated level of any early redemption charges (ERCs). Certain mortgage products offered by the Group include significant directly attributable
fee income; in particular, certain Buy-to-Let products and/or those that transfer to a higher reversion rate after an initial discount or fixed period. Judgement is used
in assessing the expected rate of prepayment during the discounted or fixed period and during the period post rate reversion. The Group uses historical experience of
customer behaviour in its assessment, along with the economic outlook and market conditions.
The Committee reviewed and challenged management’s assessment of the drivers of recent prepayment behaviour, in both the fixed and reversion periods, and
whether these were expected to be temporary or longer-term in nature. The assessment in relation to the fixed period considered the lower than expected early
repayments for the cohorts originated with product terms issued up to the end of 2022, identified as having been written in a low-rate environment, which slightly
decreased ERC income and concluded that for this cohort the behaviour was likely to continue whilst rates remained above prior levels. The assessment also included
refinancing behaviour in the reversion period which had accelerated slightly for the Precise book, and concluded that the observed level was likely to continue during
the higher base rate environment, due to the step up in rates in the reversion period, and the Group’s active retention programmes offering more favourable rates.
The Committee received and reviewed sensitivities illustrating the impact of extending or shortening the expected weighted average lives of organically originated
loan portfolios, which influence the expectation of income earned at higher reversion rates; the period over which fees are recognised; and the expectations of early
repayment income. The Committee noted that the portfolios were most sensitive to the assumption of time spent on higher reversion rates for Precise customers and
reviewed and challenged management’s proposed sensitivity disclosures. Having considered all the evidence, the Committee is satisfied that the approach taken and
judgements and estimates made were reasonable.
Further details of the above significant areas of judgement and estimation can be found in note 2 to the financial statements.
Business model As part of its twice-yearly review of the IFRS 9 accounting classification of the Group’s assets, the Committee considered the impact of the sale of mortgages in the
PMF 2024-2 securitisation and resulting notes acquired. The Committee reviewed management’s conclusion that such sales were infrequent in nature and did not alter
the Group’s business model for its originated mortgages as held-to-collect.
Loan book expected
credit losses (ECL)
The Committee, in conjunction with the Group Risk Committee, received reports from management and challenged the approach to provisioning for loan book ECLs.
The Committee provided oversight of the IFRS 9 framework, including the Group’s enhancements to models and application of post model adjustments for the
continued elevated levels of interest rate. The Committee consulted the Group’s economic advisers who provided their view and insight into macroeconomic scenarios.
The Committee focused on management’s proposals on the probabilities attached to the economic scenarios and approved the final weightings utilised within the
Group’s impairment calculations.
The Group continued to utilise four scenarios; an upside, base case and two downside scenarios. The Group undertakes regular industry benchmarking of
the economic scenarios, weightings and the resulting overall coverage. These benchmarks, in addition to insight from the Group’s economic advisers, support
management in the selection and weighting of economic scenarios.
The Committee reviewed the key assumptions and judgements to ensure that these appropriately reflect the economic environment. The Group has ensured that the
identification of Significant Increases in Credit Risk remains robust, in addition to making post-model adjustments for model limitations, including the impacts of cost
of living and cost of borrowing, as appropriate.
Tangibles, intangibles
and investments
insubsidiaries
The Committee reviewed management’s assessment of indications of impairment of the Group’s tangible and intangible assets and investments in subsidiaries at the
Company level. The Committee noted that the merger related intangibles (following the Combination with CCFS in October 2019) were fully amortised at the year-end
31 December 2024 and were satisfied that there was no impairment in tangibles, intangibles or investments in subsidiaries at the Company level.
Structural hedge The Committee, in conjunction with Group Risk Committee, reviewed management’s approach to the accounting for the structural hedge implemented in the year.
The Committee considered the impact of removing offsetting swaps from hedge accounting to mitigate profit and loss volatility and reviewed the resulting disclosures.
OSB GROUP PLC | Annual Report and Accounts 2024146
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Systems of internal control
andriskmanagement
The Committee reviewed and approved the
Compliance Assurance Plan and received
regular reports from the Group’s Compliance
function. The Internal Audit and Compliance
Reports were used to support the
Committee’s assessment of the effectiveness
of the Group’s system of internal controls
and risk management. The Committee also
received a report on the effectiveness of
the Group’s risk management and internal
control systems which was based on a self-
assessment process completed by senior
managers and Executives and recommended
by the CEO. The Committee continues to
review operational incidents and ensures
thatappropriate follow up action is taken.
Reports were received and reviewed
frommanagement on key controls over the
accuracy and completeness of the financial
statements, the status of the substantiation
of balance sheet and profit and loss account,
general ledger accounts at the reporting
date and judgements made in the calculation
of regulatory capital disclosures including the
interpretation of regulatory requirements and
the supporting external professional advice.
In addition, the Committee requested and
reviewed reports from management on the
Group’s Finance function. A number of the
planned enhancements to internal IT access
controls to address control deficiencies
identified by internal and external audit
were completed. Work continues in line with
the agreed plan. The Committee is satisfied
that any related risks were mitigated to a
sufficient level.
The systems of internal control and risk
management have been in place throughout
the year under review and up to the date of
approval of the Annual Report and Accounts.
The Committee reviewed and approved a
number of policies following their annual
update, including anti-bribery and
corruption, data protection, data retention
and record management, fraud, sanctions,
loan impairment provisioning, whistleblowing,
anti-money laundering and prevention of
terrorist financing. The Committee received
reports on fraud prevention arrangements,
fraud incidents, whistleblowing, financial
crime systems and controls and received an
annual report from the Money Laundering
Reporting Officer for the two banks.
Whistleblowing
The Committee is responsible for monitoring
the Group’s Whistleblowing Policy and
arrangements. Where concerns have been
raised, a detailed report is provided on the
investigation, actions taken, lessons learnt
and changes made as a result.
The Committee Chair has overall
responsibility for whistleblowing
arrangements with oversight from the Board
and acts as the Group’s Whistleblowers’
Champion. Training and periodic updates
are provided to all employees who are
encouraged to use the multiple channels
available to raise any concerns they
may have. Training is also provided to
line managers and those involved in any
investigations to ensure that they comply
with relevant regulations. No concerns were
raised that required a report to be made
either to the Board or the regulators.
Taxation
The Committee received an update on the
Group’s tax position and discussed matters
such as the relationship with HMRC and tax
compliance status. The Committee approved
the Group’s UK tax strategy, which is
available on our website, www.osb.co.uk.
External auditor
The Committee is responsible for overseeing
the Group’s relationship with its external
auditor. This includes the ongoing
assessment of the auditor’s independence
and the effectiveness of the external audit
process, the results of which inform the
Committee’s recommendation to the Board
relating to the auditor’s appointment (subject
to shareholder approval) or otherwise, and
monitoring the performance of the external
auditor. The Committee holds regular private
sessions with the external auditor.
External auditor independence,
objectivity and effectiveness
The Committee assesses the effectiveness
of the external audit function on an
annual basis.
The assessment focused on the effectiveness
of the lead partner and audit team, the
audit approach and execution, the role
of management in the audit process,
communication, reporting and support to
the Committee as well as the independence,
scepticism and objectivity of the external
auditor. The assessment concluded that the
external audit process was effective and
objective, and some areas for improvement
were suggested.
As part of the assessment, the auditor was
requested to explain the risks to audit quality
and how these have been addressed and to
detail any findings from internal and external
inspections of their audit.
The Committee also considered whether
the external auditor had met the agreed
audit plan and whether the management
letter was based on a good understanding
of the business. As part of the review, the
Committee took into account the non-audit
services provided during the year and
confirmations given by the external auditor
as to its continued independence.
Following this review, the Committee
is satisfied that the external auditor’s
independence, objectivity and
effectivenesshas been maintained.
Group Audit Committee Report continued
147OSB GROUP PLC | Annual Report and Accounts 2024 147
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Group
2024
£’000
Group
2023
£’000
Fees payable to the Company’s auditor for the audit of the
Company’s annual accounts
83 81
Fees payable to the Company’s auditor for the audit of the
accounts of subsidiaries
4,038 3,788
Total audit fees 4,121 3,869
Audit-related assurance services 391 487
Other assurance services 330 366
Other non-audit services 73 42
Total non-audit fees 794 895
Total fees payable to the Company’s auditor 4,915 4,764
External auditor appointment andtenure
The Group’s external audit contract was put
out for tender for the 2019 financial year and
the next external audit tender is expected to
be in 2028 for the financial year 2029. Ben
Jackson assumed the role of the statutory
auditor in 2024 following rotation of the
previous partner, and attends all meetings
ofthe Committee.
The Committee confirms that the Group
has complied with the Statutory Audit
Services for Large Companies Market
Investigation (Mandatory Use of Competitive
Tender Processes and Audit Committee
Responsibilities) Order 2014, which requires
FTSE 350 companies to put their statutory
audit services out to tender no less frequently
than every ten years. There are no restrictive
contractual provisions or third parties limiting
the Company’s choice of auditor and a
resolution to re-appoint Deloitte as external
auditor will be presented at the 2025 AGM.
External audit plan and reports
Upon reviewing the plan for the 2024
audit, the Committee was satisfied that
appropriate audit effort was being directed
at all significant areas. The external auditor
attended all meetings of the Committee and
presented detailed reports on their half-year
review and the year-end audit. This included
their view on accounting judgements made
by management, compliance with IFRS and
observations on controls. The Committee also
received helpful benchmark data from the
external auditor during the year.
Non-audit services
The Committee reviewed and approved the
policy governing the use of the external auditor
for non-audit services, which is designed to
ensure that any provision of non-audit services
to the Group by the external auditor does
not impact its independence and objectivity.
The Committee closely monitors and receives
regular reports on non-audit services.
The Group maintains active relationships
with several other large firms and any
decision to appoint the external auditor for
non-audit services is taken in the context
of its understanding of the Group, which
can place it in a better position than other
firms to undertake the work, and includes
an assessment of the cost-effectiveness and
practicality of using an alternative firm.
The EU statutory audit market reform
legislation adopted in the UK applies a cap
on permissible non-audit services of 70% of
the preceding three-year average of audit
fees for UK incorporated Public Interest
Entities (PIEs).
The Revised Ethical Standard issued by
the FRC in December 2019 contained a
‘whitelist’ of permitted non-audit services,
distinguishing between those which fall under
the cap, including extended assurance work,
and those not subject to the cap, being
services required by a competent authority
or regulator by law.
The Committee maintained a cap for non-
audit services in 2024 of 50% of audit services.
The Committee pre-approved a number
of non-audit services including in respect
of proposed Tier 2 and Senior Holdco debt
issuances, compliance tools in India, interim
profit verifications, the half-year review,
assurance review of APMs in the Annual Report
and Accounts, TCFD, and reporting on the
Inline Extensible Business Reporting Language
(iXBRL) tagging of financial statements.
The Committee also agreed mandates for
the CFO and Committee Chair to approve
additional permitted engagements, subject
to agreed thresholds.
The fees paid to the external auditor in
respect of non-audit services during 2024
totalled £793,523, representing 19% of the
2024 Group audit fee of £4,121,000 (2023:
£895,000, representing 23% of the 2023
Group audit fee of £3,869,000) and are
summarised in the table below. All non-
audit services provided by the external
auditor were assurance-related in nature
and consistent with the role of the external
auditor. No advisory or consulting services
were provided.
Audit-related assurance services include
the interim review and profit verifications
for regulatory purposes. Other assurance
services in 2024 include an assurance review
of APMs, iXBRL and ESG disclosures and
certain ESG metrics (2023: APMs, iXBRL and
ESG disclosures and certain ESG metrics).
Other non-audit services primarily comprise
work related to reporting accountant work
and the Euro Medium-Term Note comfort
letter (2023: reporting accountant work and
the Euro Medium-Term Note comfort letter).
Internal Audit
The Committee is responsible for approving
the mandate of Group Internal Audit (GIA),
together with the annual Internal Audit Plan
and ensuring that it has adequate resources
and appropriate access to information to
enable it to perform its function effectively and
in accordance with the relevant professional
standards. The Committee approved
the GIA Charter in October 2024 which
formally establishes the function’s mandate
that specifies the purpose, authority and
responsibilities of GIA. It can be found on
ourwebsite, www.osb.co.uk.
GIA strengthens the Group’s ability to create,
protect, and sustain value by providing the
Board and management with independent,
risk-based and objective assurance, advice,
insight and foresight. The team assists
the Group in accomplishing its objectives
by bringing a systematic and disciplined
approach to evaluating and improving
the effectiveness of the governance, risk
management and internal controls.
Group Audit Committee Report continued
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The function is resourced with an experienced
in-house team with diverse backgrounds,
skills and experiences to ensure a variety of
perspectives. They are supported by third-
party consultancy firms that provide expert
advice (on a co-source basis) for specific
technical/specialist audits. The team has been
restructured this year to better support the
technical and growth ambitions of theGroup.
The Committee holds private sessions with
the GCIA and ensures that GIA has adequate
standing and is free from management,
or other restrictions, which may impair
its independence and objectivity. On an
annual basis, the Committee assesses the
effectiveness of the function. In 2024, this
was facilitated by a survey completed by
Committee members, the Group Executive
Committee and the external auditor,
who maintains a close relationship with
GIA. The respondents affirmed that the
function consistently demonstrated the
necessary independence and objectivity. Its
effectiveness was evidenced by the value and
impact it brought to the Group, particularly
through the team’s ability to balance both
strategic oversight and attention to detail,
communicating these insights with clarity.
The Chartered Institute of Internal Auditor’s
Code of Practice recommends that where the
tenure of the chief audit executive exceeds
seven years, the Committee should explicitly
discuss the assessment of their independence
and objectivity annually.
In February 2024, the Committee met
to assess these requirements. As part of
the review, the Committee considered
the continued exercising of professional
scepticism; ethical conduct; compliance with
relevant regulations, and the effectiveness of
the GCIA’s leadership.
The Committee were satisfied that the GCIA
remains independent, despite exceeding a
seven-year tenure, and that the objectivity,
quality, experience and expertise of the
internal audit function was appropriate for
the business.
The ongoing adherence to professional
standards by the internal audit team was
confirmed to the Committee by regular
internal quality assurance reporting, together
with a status update on the Continuous
Improvement Plan which is aligned to the
GIA Strategy. In addition, an external review
of a gap analysis against the new Global
Internal Audit Standards confirmed that,
with only minor enhancements, the function
would conform to each of the standards by
31 December 2024.
The Committee regularly received updates
from the GCIA on the 2024 Internal Audit
Plan’s progress, including audit results,
key findings, emerging themes, and any
outstanding audit action points. This is
a dynamic plan, which was updated on
a quarterly basis to capture any emerging
risksthat required assurance.
In addition, the Committee, together with
the Group Executive Committee and external
auditor, received individual audit reports
following the conclusion of each Internal Audit
engagement. Material management actions
were tracked and reported to the Committee.
In addition to monitoring the 2024 plan, the
Committee approved the 2025 plan, which
was based on an assessment of the Group’s
key risks.
Effectiveness of the Committee
As noted in the Corporate Governance
Report, the Committee’s performance was
assessed as part of the external review
of Board Effectiveness. The Committee
was rated highly, as executive decisions
are challenged, and it continues to
performeffectively.
Based on observations, Bvalco concluded
that there was a good level of debate at
meetings with the Committee Chair leading
on questioning and the direction of the
conversation. The meetings are considered to
be well chaired, and all Committee members
contribute well to the conversation.
Priorities for 2025
The priorities for the Committee for 2025
have been identified as being:
• To continue to challenge the accounting
judgements and estimates, as presented
by management, and engage with
the external auditor on their opinion of
theassumptions.
• To ensure a seamless succession for the
Group Audit Committee Chair.
• Consider the provisions of the updated
Code coming into effect on 1 January
2025, where applicable to the Group and
relevant to the Committee’s activities,
including consideration of management’s
proposals for identifying material controls,
ahead of implementation of Provision 29
and reporting in subsequent years.
• Ensuring that the Group’s financial
reporting complies with all legislative
requirements and accounting standards.
• Oversight and review of the 2025 Internal
Audit Plan.
Additional information
The Committee has unrestricted access
to Executive Management and external
advisors to help discharge its duties. It is
satisfied that in 2024 it received sufficient,
reliable and timely information to perform its
responsibilities effectively.
The Committee Chair reports on matters
dealt with at each Committee meeting to the
subsequent Board meeting.
Concluding remarks
I will be stepping down from the Board at the
conclusion of the AGM, Henry Daubeney will,
subject to regulatory approval, succeed me
as Chair of this Committee and also as the
Group’s Whistleblowing Champion. Henry
has served as a member of the Committee
since his appointment to the Board on 1 July
2024, and has significant experience in
the financial services sector. Ahead of my
stepping down from the Board, I will continue
to work closely with Henry to ensure a smooth
transition of my role as Committee Chair.
Finally, I would like to formally record my
thanks to my fellow Committee members,
members of senior management, our Internal
Audit team and our external auditor for their
support and diligent contribution during 2024.
The Board reviewed and approved this report
on 12 March 2025.
Rajan Kapoor
Chair of the Group Audit Committee
12 March 2025
Group Audit Committee Report continued
149OSB GROUP PLC | Annual Report and Accounts 2024 149
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Dear Shareholder,
On behalf of the Committee, I am pleased to present the
Group Risk Committee Report. The Committee has continued
to discharge its risk oversight, review and challenge
responsibilities effectively during a period of continuing
uncertainty and change.
Committee responsibilities
• Set a clear tone from the top in relation
to a risk-based culture to foster individual
and collective accountability for
riskmanagement.
• Ensure the Group organises and resources
its risk management and oversight functions
across the first and second line effectively.
• Provide oversight of key
regulatoryinitiatives.
Risk appetite and assessment
• Actively assess performance against risk
appetite and challenge management to
ensure that the Board’s strategic, business
and regulatory objectives are not put at
unacceptable levels of risk.
• Advise the Board on overall risk appetite,
tolerance and strategy.
• Review risk assessment processes that
inform the Board’s decision-making.
• Consider the Group’s capability to
identify and manage new risks.
• Advise the Board on proposed strategic
transactions, including acquisitions
or disposals, ensuring risk aspects
and implications for risk appetite
andtolerance are considered.
Risk monitoring and framework
• Review risks associated with credit,
interest rate, liquidity, macroeconomic,
compliance and regulatory landscape,
solvency, conduct, reputation, financial
crime and operational risk exposures by
reference to risk appetite.
• Continuously review, challenge and
recommend enhancements to the
Group’sEnterprise Risk Management
Framework (ERMF).
• Challenge and oversee the Internal
Capital Adequacy Assessment Process
(ICAAP) and Internal Liquidity Adequacy
Assessment Process (ILAAP) frameworks.
• Monitor actual and forecast risk and
regulatory capital positions.
• Recommend changes to capital utilisation.
• Monitor the actual and forecast
liquidityposition.
• Review reports on risk appetite thresholds,
identify where a risk of a material breach
of risk limits exists and ensure proposed
actions are adequate.
• Provide challenge and oversight to the
Recovery Plan framework.
• Monitor risks arising from Climate Change.
Internal controls and risk management
• The Group is organised along the ‘three
lines of defence’ model to ensure at least
three stages of independent oversight to
protect the customer and the Group from
undue influence, conflicts of interest and
ineffective controls.
• The first line of defence is provided by
the operational business functions which
identify, measure, assess and control risks
through the day-to-day activities of the
business within the frameworks set by
the second line of defence. The second
line of defence is provided by the Risk,
Compliance and Governance functions
which include the Board and Group
Executive Committee.
• The third line of defence is the Internal
Audit function.
Group Risk Committee Report
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Governance Financial StatementsOverview Appendices
Approximate allocation
of Committee time in 2024
Risk appetite
IRB
Credit risk
Market and liquidity risk
Solvency risk and ICAAP
Operational risk
Conduct, regulatory and financial
crime risks
Enterprise Risk Management Framework
Other
Group Risk Committee and risk
governance structure
• Considers and approves the remit
oftheRisk function.
• Recommends to the Board the
appointment and removal of the
GroupChief Risk Officer (CRO).
• Reviews all reports from the Group
CRO and monitors management’s
responsiveness to the Group
CRO’sfindings.
• Receives summary reports from senior
riskmanagement committees.
The specific responsibilities and duties of
the Committee are set out in its Terms of
Reference which are available on our website,
www.osb.co.uk and do not form part of this
Annual Report.
Committee Members
(at 31 December 2024
and 12 March 2025)
• Simon Walker (Committee Chair)
• Henry Daubeney
• Rajan Kapoor
• Noël Harwerth
In addition to the members of the Committee,
the Board Chair has a standing invitation
to the Committee, along with the Chair of
CCFS, the CEO, CFO, Group CRO, Group
Chief Credit Officer and MRLO, and CCFS
CRO, unless the Committee Chair informs
any of them that they should not attend a
particular meeting or discussion.
Group Risk Committee Report continued
Time allocation
In 2024, the Committee held six scheduled
meetings. For further detail of attendance
during the year, see the Board and Committee
meeting attendance table on page 128 of the
Corporate Governance Report.
Key activities in the year
In 2024, the Committee focused on the
following areas:
Risk appetite
The Committee played an active role
in shaping and assessing the design of
the Group’s risk appetite in the context
of the economic and business outlook
and uncertainties, the strategic growth
agenda and regulatory developments. The
Committee reviewed and recommended
to the Board for approval, the Group’s risk
appetite metrics and thresholds, noting
the need for the Group to tighten its
appetite across a number of risk types to
reflect heightened levels of external and
internal risks, ensuring that they remained
appropriate and aligned to the Group’s
strategic agenda, business plans and
stress testing capabilities. Members of the
Committee attended dedicated workshops
run by management, which focused on the
risk appetite methodologies and details of
how the supporting analysis was conducted.
Risk appetites are set at both Group and solo
bank entity levels. The Committee reviewed
the Group’s position against risk appetite
across all principal risks and escalated
issues to the Board, where appropriate,
and endorsed the risk appetite statements,
metrics and limits for Board approval for
theGroup’s Transformation programme.
Internal Ratings-Based (IRB) Programme
The Committee oversees the performance
and regulatory compliance of the Group’s IRB
rating systems through regular updates from
management at each Committee meeting
regarding the Group’s IRB programme,
including progress made against key
milestones in model development, model
governance and technical enhancements. The
Committee has an established sub-committee
(Group Models and Ratings Committee) to
ensure effective governance of all IRB-related
and other relevant models. The Committee
is well positioned to provide oversight and
approval of relevant supervisory submissions
relating to the IRBapproval process.
Credit risk
The Committee has monitored the
performance of the Group’s loan book
on both aggregated and asset class
sub-segment bases by assessing the key
indicators of credit quality, security coverage,
affordability and borrower risk profile. The
Committee also assessed forward-looking
credit risk indicators in the form of customer
arrears, bureau data on customer credit
scores, mover alerts and indebtedness,
business and economic early warning
indicators (EWIs) and climate change.
Following challenge by the Committee,
further metrics are being added to control for
wider credit-related risks and further EWIs
are being considered for higher-risk cohorts.
16%
6%
7%
15%
23%
2%
27%
4%
1%
151OSB GROUP PLC | Annual Report and Accounts 2024 151
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Market risk and liquidity risk
Market risk and liquidity risk are continually
monitored by the Group Assets and
Liabilities Committee (ALCO), which provides
reports to the Committee. The Committee
reviewed ALCO’s regular assessments of
the UK macroeconomic environment and
potential impacts on the Group’s assets
and liquidity. The Committee reviewed
the updates to market and liquidity risks
in the ILAAP as well as updates relating to
the Resolvability Assessment Framework
and the Group’s response to the volatile
macroeconomicenvironment.
The Committee also reviewed and
recommended the market and liquidity
riskappetite to the Board for approval. The
Committee oversaw the Group’s liquidity
management plans during the year in order
to ensure that liquidity positions remained
appropriate against the uncertain economic
backdrop coupled with cost of living and cost
of borrowing challenges in the UK.
Solvency risk and ICAAP
The Committee reviewed the ICAAP, which
demonstrates how the Group would manage
its capital resources and requirements
during a plausible but severe period of stress.
The Committee also reviewed the bespoke
macroeconomic stress scenarios produced
by an independent third party engaged by
the Group to support ICAAP Pillar 2B stress
testing activity.
The Committee reviewed and challenged
the Group Capital Plan and monitored total
capital and Common Equity Tier 1 forecasts
throughout the year, ensuring that risks were
understood and managed appropriately.
The solvency risk appetite was reviewed and
recommended to the Board for approval and
the Committee also approved the Group
Recovery and Restructuring Plan.
Operational risk
The Committee received reports on
operational risks at each of its meetings.
The reports covered risk incidents that had
arisen to allow the Committee to assess
management’s response and remedial action
proposed. The reports also covered key risk
indicators (KRIs), which can be quantitative
or qualitative and provide insights regarding
changes in the Group’s operational risk
profile. The Committee also reviewed and
recommended the operational risk appetite
to the Board for approval.
The Committee also provided oversight and
guidance in relation to the programme of
activities focused on enhancing the Group’s
systems and procedures for the assessment
of operational risks and controls as well as
the management of operational risk events.
Conduct, regulatory and
financialcrimerisks
The Committee received reports covering
conduct, regulatory and financial crime KRIs
on a quantitative and qualitative basis, which
provided insight into changes in the Group’s
conduct, regulatory and financial crime risk
profiles. The Committee also reviewed the
conduct, regulatory and financial crime risk
appetites before recommending them for
approval by the Board.
The ongoing implementation of Consumer
Duty was reviewed and provided continuous
oversight ensuring alignment with regulatory
expectation and the Group’s commitment
to ensuring that customers receive
goodoutcomes.
Strategic projects
The Committee has also continued to
progress its oversight responsibilities over
some key strategic programmes of the
Group including Transformation, IRB project,
Consumer Duty compliance by July 2024
and UK General Data Protection Regulation.
Enterprise Risk Management Framework
The Committee reviewed the ERMF in line
with its annual review cycle to ensure it
remains fit for purpose in the context of the
Group’s strategic objectives, business model,
risk profile and industry practice. Following
feedback received from a review carried out
by PwC, the ERMF has been streamlined to
better align with latest industry practice.
Effectiveness of the Committee
As noted in the Corporate Governance
Report, the Committee’s performance was
assessed as part of the external review
of Board Effectiveness. Observations
included good commitment from Committee
members and strong debate, and that the
Committee continued to perform effectively.
Recommended actions for enhancement
centre around planning, quality of
management information and reducing
anyoverlap with other committees.
Priorities for 2025
The priorities for the Committee for 2025
have been identified as being:
• Credit risk
• Conduct, regulatory and financial
crimerisks
• Market risk and liquidity risk including
theILAAP
• Operational Risk
• Solvency Risk, the ICAAP and Recovery
and Restructuring Plan
• Increased representation at Committee
meetings from first line to articulate the
risk impacts on business performance
Additional information
The Committee has unrestricted access
to Executive Management and external
advisors to help discharge its duties. It is
satisfied that in 2024 it received sufficient,
reliable and timely information to perform
itsresponsibilities effectively.
The Committee Chair reports on matters
dealt with at each Committee meeting to
thesubsequent Board meeting.
The Board reviewed and approved this report
on 12 March 2025.
Simon Walker
Chair of the Group Risk Committee
12 March 2025
Group Risk Committee Report continued
OSB GROUP PLC | Annual Report and Accounts 2024152
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Governance Financial StatementsOverview Appendices
Group Risk Committee Report continued
Other Committees
Group Models and Ratings Committee
The Group Models and Ratings Committee
is a sub-committee of the Group Risk
Committee and met six times during the
yearincluding one ad-hoc meeting.
The primary purpose of the Committee is
to act as the Designated Committee for the
purposes of material aspects of the rating
and estimation processes (as articulated in
Article 189 of the EU Capital Requirements
Regulation) and provide assurance of the
Company’s models and rating systems and
as such, the Committee has delegation
from the Group Risk Committee to authorise
implementation of and changes to material
models. It also monitors and oversees
the Group’s model risk profile in line with
the Group’s risk appetite thresholds and
regulatory objectives.
The Committee is chaired by the Group
Risk Committee Chair, Simon Walker. Other
members of the Committee are Rajan
Kapoor, Henry Daubeney and Victoria Hyde,
the latter two being appointed following their
appointments to the Group Board on 1 July
and 22 July 2024 respectively. April Talintyre
ceased to be a member on 9 May 2024.
Board Capital and Funding Committee
The Board Capital and Funding Committee
is a Committee of the Board. Its primary
objective is to approve capital, funding and
equity activities of the Group consistent with
Board approved plans.
The Committee met two times during the
year. Current members are David Weymouth
as Chair, Simon Walker, Rajan Kapoor, Andy
Golding and Victoria Hyde.
153OSB GROUP PLC | Annual Report and Accounts 2024 153
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Dear Shareholder,
On behalf of the Committee, I am pleased to present my final
Group Remuneration and People Committee Report ahead
of stepping down from the Board at the AGM on 8 May 2025.
This report sets out details of Directors’ remuneration in
respect of 2024 and how we intend to operate the Directors’
Remuneration Policy in 2025. The Directors’ Remuneration
Policy was approved by shareholders at the 2024 AGM
with over 98% support and is included within this report
forreference.
Committee responsibilities
• Review the Group Remuneration Policy
and recommend for Board approval.
• Review the ongoing appropriateness
andalignment of the Group Remuneration
Policy to the Group’s strategy (including
ESG) and its alignment with key
stakeholder expectations.
• Review workforce remuneration and
related implementation policies and note,
annually, the remuneration trends across
the Group.
• Review and recommend for Board
approval, the Directors’ Remuneration
Policy (the Policy), including pension
rights and any compensation payments.
• Review and approve the Remuneration
Policy for senior management and the
Company Secretary and all employees
who are identified as Material Risk
Takers for the purposes of the PRA’s
Remuneration Code (the Remuneration
Code) including pension rights and any
compensation payments.
• Review and approve the total individual
remuneration package of the Board Chair,
each Executive Director, the Company
Secretary and other designated senior
managers
1
including bonuses, any
otherincentive payments and
share-based awards.
• Ensure that workforce remuneration
practices and culture are taken into
account when determining individual
remuneration packages.
• Approve the appointment of
remunerationconsultants.
• Approve the design of, and determine
targets for, any performance-related
pay schemes operated by the Group and
approve the total annual payments made
under such schemes.
• Provide oversight of people matters
within the Group (in conjunction with
the Group Nomination and Governance
Committee), including targets set by the
Women in Finance Charter, Gender Pay
Gap reporting, Culture, updates from Our
Voice and outputs from surveys relating to
employee engagement.
• Review and approve the Group’s
DE&IPolicy.
The specific responsibilities and duties of
the Committee are set out in its Terms of
Reference which are available on our website,
www.osb.co.uk, and do not form part of this
Annual Report.
Committee members
(at 31 December 2024
and12March 2025)
• Sarah Hedger (Committee Chair)
• Kal Atwal
• Noël Harwerth
• Rajan Kapoor
• David Weymouth
1. Designated senior managers include all members of
the Group Executive Committee and any other senior
employees in independent control functions.
Group Remuneration and People Committee Report
Annual Statement by the Chair of the Group Remuneration and People Committee
OSB GROUP PLC | Annual Report and Accounts 2024154
Strategic Report
Governance Financial StatementsOverview Appendices
37%
37%
18%
9%
Group Remuneration and People Committee Report continued
Annual Statement by the Chair of the Group Remuneration and People Committee continued
Progress has been made on our strategic
objectives this year and Executive
Directors’ remuneration continues to
be aligned with our key strategic aims,
performance and risk going forward.
Sarah Hedger Chair of the Group Remuneration and People Committee
Time allocation
In 2024, the Committee held six scheduled
meetings and one ad-hoc meeting.
Forfurther details of attendance during
the year, see the Board and Committee
meetingattendance table on page 128 of
theCorporate Governance Report.
Key activities in the year
In 2024, the Committee focused on the
following areas:
Overview of 2024 performance
andincentive outcomes
In challenging market conditions, the
Group delivered solid performance across
the Balanced Business Scorecard (the
Scorecard), with performance close to target
for the Financial segment and generally
exceeding the top-end of the performance
ranges for the Customer and Quality
segments, recognising our consistent sector
leading performance in these latter two areas.
As an underpin, the Committee also
considered whether the Scorecard’s
formulaic outcome reflected the Group’s risk
appetite and profile and considered current
and potential future risks.
The bonus payout under the Scorecard
is 53.79%. For the CEO the Scorecard
represents 95% of his total bonus outcome,
for the CFO 90% and for the former CFO 85%.
The remaining 5%, 10% and 15% respectively
is based on the achievement of stretching
personal objectives. Performance against
personal objectives was considered by the
Board and Committee to be strong. This
resulted in a payout of 2.5% out of 5% for the
CEO, 6.5% out of 10% for the CFO and 7.5%
out of 15% for the former CFO.
Total payouts, combining the outcomes
from the Scorecard and personal objectives,
under the 2024 Executive Directors’ Bonus
Scheme are therefore 53.60% of maximum
opportunity for the CEO, 54.91% for the
CFO (since her appointment as a Director)
and 53.22% for the former CFO. Thebonus
is paid half in cash and half in shares, with
the shares held for three years, in line with
regulatory requirements.
Full details of the performance conditions
and bonus payments are provided on page
164 of this report. The targets for each
measure were set at the start of the year and
assessed by the Committee following the end
of the financial year, liaising as necessary
with the Group Audit Committee and Group
Risk Committee Chairs.
The Committee considered these outcomes
and does not believe that discretion is
required. Although the outcome achieved
for the Financial segment was lower than
for the Customer and Quality segments,
management made appropriate operational
decisions that reduced the outcome from
the Financial segment, for example to focus
on disciplined lending rather than growth,
support the transformation programme and
incur additional costs in December 2024
forredundancies.
The 2022 Awards under the PSP were
based on performance over the three-year
period which ended on 31 December 2024.
Performance was based 35% on Earnings
Per Share (EPS) growth; 35% on Total
Shareholder Return (TSR) versus companies
in the FTSE 250 Index (excluding Investment
Trusts); and 15% each on Return on Equity
(RoE) and an assessment of the Group’s
overall risk performance.
Performance against the EPS target range
was below the threshold for payment. The
Group’s TSR over the performance period
placed the Group above the median of the
FTSE 250 peer group and therefore 45.4% of
the TSR element was earned. The average
RoE over the performance period was 18.4%
resulting in 42.9% of the RoE element being
earned. As prescribed by the performance
conditions, the Committee undertook a
qualitative assessment of the Group’s risk
performance over the period using an overall
assessment prepared by the Group CRO
and endorsed by the Chair of the Group Risk
Committee. The Committee concluded that
80% of this element had been achieved. Full
details of the PSP assessment are included
on page 164.
Approximate allocation
ofCommittee timein 2024
Remuneration policy and related
Performance related-pay
People related
Market, regulatory and investor updates
155OSB GROUP PLC | Annual Report and Accounts 2024 155
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Group Remuneration and People Committee Report continued
Annual Statement by the Chair of the Group Remuneration and People Committee continued
As a result, 34.3% of the maximum
PSP Awards have been earned. This is
considerably lower than recent awards,
reflecting the more challenging market
environment over the performance period.
The Committee is comfortable there has
been an appropriate link between reward,
performance and the broader stakeholder
experience over the three-year performance
period (including the experience of
customers) and therefore discretion was
notused to adjust the incentive outcome.
These PSP Awards will vest in five equal
tranches between 2025 and 2029, with the
shares being subject to a further one-year
holding period post-vesting and malus and
clawback provisions.
In line with the Code, the Remuneration
Policy operated as intended during the year
under review.
CFO succession
On 2 November 2023, we announced that
April Talintyre, our CFO, would be retiring
after more than 11 years with the Group. April
stepped down at the Group’s AGM on 9 May
2024. Full details of the amounts payable to
April were provided in the Section 430(2b)
statement available on the OSB website,
www.osb.co.uk and have also been included
on page 170 of this report.
On 5 April 2024, we announced that Victoria
Hyde would be appointed to the Board as CFO
and Executive Director. Following regulatory
approval, Victoria took up the role on 22 July
2024. She was appointed on a salary of
£550,000, below the £573,628 salary April
would have received had a 3% increase been
applied to her previous year’s salary, in line
with the increase received by the CEO.
Victoria’s salary is positioned at mid-market
compared to our peer group of quoted UK
banks and the total package is in line with
UK-listed companies with a similar market
capitalisation. As an Executive Director, her
FY24 bonus and 2024 PSP opportunities were
each 110% of salary, in line with the CEO and
below the maximum of 135% allowed under
the Policy. Her FY24 bonus was pro-rated
to reflect the time served as an Executive
Director in the year.
Implementation of the Policy in 2025
The Policy will be implemented as follows:
• Salary: The CEO and CFO will not receive
a salary increase from 1 April 2025. This
is in the context of the Board’s decision to
hold the aggregate salary increase for UK
employees to 2% and the redundancies
implemented in December 2024.
• Pension: The pension contribution
remains at 8% of salary, which is
alignedto the rate for the majority
oftheworkforce.
• Annual bonus: The 2025 Scorecard will
continue to be based 65% on financial
measures and 35% on non-financial
measures. Within the financial element
themeasures and weightings have
changed slightly, in line with operational
and strategic priorities. Profit before Tax
(PBT) and Return on Tangible Equity
(RoTE) measures have an equal weighting
of 22.5% (previously 30% and 15%).
The cost to income measure has been
replaced by a cost delivery measure
with a 12.5% weighting (previously 10%)
and net loan book growth has a 7.5%
weighting(previously 10%).
• The non-financial element will be based
on a range of KPIs, including our strategic
priorities of Transformation, Data and
People, with a qualitative Committee
assessment at the year end based on
measurable progress made against these
priorities. The Scorecard is marked out
of 100%. Total bonus is calculated by
combining each individual’s Scorecard
and personal performance based on the
relevant percentage each represents of
their total bonus opportunity. Objectives
for the personal performance element
have been set based on a range of robust
strategic and individual priorities for the
CEO and for the CFO (see page 163 for
further details). Half of any bonus will be
paid in shares, which may not be sold for
at least three years.
• PSP Awards: A PSP award of 110% of
annual salary will be made to the CEO
and CFO. A discount will be applied to
the share price used to calculate the
number of shares granted to reflect the
expected dividend yield on the shares
over the performance period (see page
173 for more details), an approach which
is typical for Financial Services firms.
Performance will be measured over the
three-year period to 31 December 2027.
The PSP performance metrics and
weightings are: EPS in 2027 (30%
weighting), relative TSR versus the FTSE
250 Index (excluding Investment Trusts)
(30% weighting), average RoTE (15%
weighting), Non-financial/Risk (15%
weighting) and ESG (10% weighting).
The targets for each measure are set
out on page 173 of this report together
with their supporting rationale and the
Committee is satisfied that these provide
the appropriate amount of stretch,
taking into account the business plan,
external operating environment and
market expectations. Furthermore, when
assessing the performance outcome,
the Committee may use discretion to
adjust the formulaic vesting outcome to
ensure that it is aligned with underlying
performance, risk appetite and individual
conduct over theperiod.
• Use of RoTE versus ROE: The Committee
reviewed the historical use of RoE as a
metric for both the annual bonus and
PSP and, in line with recent market
practice in Banks and our own reporting,
changed the measure to RoTE. RoE
includes Intangible Assets/Goodwill,
which serves to inflate the equity base
without contributing tangible value or
loss-absorbing capacity. RoTE therefore
shows the return on the actual capital
atrisk, giving a more transparent view
ofhow efficiently shareholders’ funds
aredeployed.
Review of Board Chair and INED fees
The fees for the Board Chair and INEDs were
reviewed by the Committee for the Board
Chair and by the Board (minus the INEDs) for
the INEDs. As the Executive Directors will not
receive an increase to their annual salary,
the Board Chair and INEDs will also receive
no increase to their fees from 1 April 2025.
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Group Remuneration and People Committee Report continued
Annual Statement by the Chair of the Group Remuneration and People Committee continued
Consideration of shareholder views
We undertook a detailed shareholder
consultation ahead of the approval of the
current Policy at the AGM in May 2024.
Shareholders were generally supportive of
the proposed changes to the Policy, with
feedback centring around the desire for
effective, transparent disclosure and a
strongrationale for the implementation of
thePolicy. We have taken this into account
when determining the operation of the
Policyand its disclosure going forwards.
Consideration of employee
policiesandviews
As the INED responsible for representing the
workforce on the Board, I regularly meet with
employees, individually and through forums
such as Our Voice, to understand their views,
including those on remuneration, and report
these views to the Board. During 2024, the
Policy was discussed with Our Voice, setting
out how Executive Directors’ remuneration
is governed and how the Policy is aligned
with wider workforce remuneration policies.
Views were sought on the approach to senior
management remuneration. Further details
on the activities of Our Voice can be found on
pages 88 and 183.
Upcoming regulatory changes
OSB Group is subject to PRA and FCA
remuneration rules and associated guidance.
The PRA and FCA are currently consulting
on proposed changes to their remuneration
rules. The consultation includes potential
changes, amongst other areas to the
required deferral and retention periods that
would apply to the CEO and CFO, and
to the payment of dividends during the
unvestedperiod.
Overall, we believe the proposed changes
are positive. Our Policy is sufficiently flexible
to accommodate the proposed changes,
although actual points of implementation
will be considered in detail once the final
regulations are known, whilst also ensuring
implementation aligns with market best
practice and investor expectations for FTSE-
listed companies. We will continue to operate
within UK corporate governance and investor
minimum expectations, including in respect
of having an overall five-year vesting and
holding period for long-term awards.
Effectiveness of the Committee
As noted in the External Review of Board
Effectiveness section within the Corporate
Governance Report on page 131, the
Committee’s performance was assessed as
part of the annual review. The Committee was
rated well and continued to perform effectively.
One area identified for focus related to
ensuring that any changes to the role of the
Committee are carefully coordinated with the
work and support of the CPO.
Priorities for 2025
The priorities for the Committee for 2025
have been identified as being:
• Review and approval of 2025
salaryincreases;
• Review of 2024 bonus awards;
• Determining the 2024 grants under the PSP;
• Updates on the performance of the 2025
Bonus Scorecard and in-flight PSPawards;
• Review of pay and performance
arrangements across the Group, in
particular on how to better promote a
performance-based culture aligned to
thesuccess of the Group;
• Considering and recommending the 2024
Directors’ Remuneration Report to the
Board for approval;
• Approval of the 2025 personal
objectives for the CEO, CFO and
GroupExecutiveCommittee;
• Annual review of the costs and
performance of the Committee’s
independent remuneration adviser,
andwhether to tender the role;
• Considering and recommending the
People and Culture Strategy and the
DE&IStrategy; and
• Other business as usual matters for
employees under the Committee’s scope.
Additional information
The Committee has unrestricted access
to Executive Management and its external
advisors, Korn Ferry, to help discharge its
duties. It is satisfied that in 2024 it received
sufficient, reliable and timely information
toperform its responsibilities effectively.
TheChair reports on matters dealt with at
each Committee meeting to the subsequent
Board meeting.
Concluding remarks
The Annual Report on Remuneration
including this Chair’s Statement will be
presented to shareholders for an advisory
vote at the 2025 AGM.
I will be stepping down from the Board
with effect from the conclusion of the
2025 AGM for personal reasons. Ahead
of that, Sally Jones-Evans will, subject
to regulatory approval, succeed me
as Chair of this Committee and as the
GroupPeopleChampion.
Sally will join the Board on 1April2025
and has significant non-executive Board
experience, having served asa Board
member and chaired audit, risk and
remuneration committees.
I would like to formally record my thanks to
my fellow Committee members, members of
senior management and our advisers, Korn
Ferry, for their support during 2024.
The Board reviewed and approved this report
on 12 March 2025.
Sarah Hedger
Chair of the Group Remuneration and People
Committee
12 March 2025
157OSB GROUP PLC | Annual Report and Accounts 2024 157
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Directors’ Remuneration Report
Directors’ Remuneration at a glance
Salary Pension/benefits Executive Director Bonus Scheme
Feature
To reward for the role and
duties required, recognising
experience, responsibility
and performance
Alignment with workforce policies
Executive Directors salary increases
are normally in line with or lower
than the average of the workforce
Performance metrics (weighting)
N/A
How we implemented the
Policy in FY24
CEO
Former CFO
CFO
£916,679 (+3%)
£556,920 (0%)
£550,000 (N/A)
How we intend to implement the
Policy in FY25
CEO
CFO
£916,679 (+0%)
£550,000 (+0%)
Feature
Contributes to retirement
planning and market
competitive benefits to
ensure the wellbeing
ofemployees
Alignment with workforce policies
Pension contribution rates for
Executive Directors are the same
asfor most of the workforce
Benefits are structured generally in
line with the wider workforce and
are market competitive
Performance metrics (weighting)
N/A
How we implemented the Policy in
FY24 and how we intend to implement
the Policy in FY25
Pension:
8%
of salary
Benefits:
Standard benefits
provided toboth
Executive Directors
Feature
To incentivise and reward the achievement of pre-defined annual financial, operational
and individual objectives which are closely linked to the corporate strategy
Maximum opportunity
135%
of salary
Deferral of 50% of value earned into shares for at
least three years, aligning payout with shareholders’
interests over the longer term
Alignment with workforce policies
The majority of our workforce participate in an annual
bonus plan, with performance metrics aligned to
business performance and individual KPIs
Senior employees are required to defer a portion of
their bonus into shares
Performance metrics
% weighting
FY24 FY25
Scorecard:
Financial 65 65
Non-Financial 35 35
Total 100 100
Individual:
CEO 5 10
CFO 10 10
Former CFO 15 N/A
The Scorecard represents that portion of the overall
bonus opportunity not represented by individual
performance objectives. It is nevertheless marked out
of 100%. For existing Executive Directors, the maximum
bonus opportunity is 110% of salary. The individual
element may vary between 0-20% of the overall
bonusopportunity.
How we implemented the Policy in FY24
CEO:
110%
of salary
CFO:
110%
of salary
Former CFO:
110%
of salary
Performance assessment set out onpage 162
How we intend to implement the Policy in FY25
Maximum opportunity
110%
of salary
The 2025 Scorecard will continue to be based 65%
on financial measures and 35% on non-financial
measures. Within the financial element the measures
and weightings have changed slightly, in line with
our operational and strategic priorities. PBT and RoTE
(previously ROE) measures have an equal weighting of
22.5% (previously 30% and 15%). The cost to income
measure has been replaced by a cost delivery measure
with a 12.5% weighting (previously 10%) and net loan
book growth has a 7.5% weighting (previously 10%). The
non-financial element will be based on a range of KPIs,
including our strategic priorities of Transformation, Data
and People with a qualitative Committee assessment
at the year end based on measurable progress made
against these priorities. Total bonus is calculated by
combining each individual’s Scorecard and personal
performance based on the relevant percentage each
represents of their total bonus opportunity.
Targets disclosed retrospectively together with
performance assessment
An overview of the Directors’ Remuneration Policy and its implementation in FY24
OSB GROUP PLC | Annual Report and Accounts 2024158
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Directors’ Remuneration Report continued
Directors’ Remuneration at a glance continued
Performance
Share Plan
Shareholding
requirements
Feature
To incentivise and recognise execution of the
business strategy over the longer term
Payable in shares, three-year
performance period, with
vesting in five annual tranches
Maximum opportunity
135%
of salary
Alignment with workforce
policies
Only the most senior individuals
participate in the PSP
In FY24, around 122 employees
participated in the scheme
thereby promoting longer-term
performance and aligning them
to shareholders’ interests
Performance metrics
(weighting)
2022 Award vesting:
Relative TSR (35%)
EPS (35%)
ROE (15%)
Non-financial – Risk (15%)
2024 Award granted:
Relative TSR (30%)
EPS (30%)
ROE (15%)
Non-financial – Risk (15%)
ESG (10%)
How we implemented the
Policy in FY24
2022 Award:
34.3%
of the maximum award vested
based on performance over the
three years to FY24
Performance assessment set out
onpage 165
2024 Award:
Awards granted at
110%
of salary
Targets set out onpage 173
How we intend to implement
the Policy in FY25
FY25 Awards made over a
maximum of 110% of salary for
the CEO and CFO. A discount
will be applied to the share
price used to calculate the
number of shares granted to
reflect the expected dividend
yield on the shares over the
performance period.
Measures in line with the
2024 Award, with the
exception of the change
fromROE to RoTE.
Feature
To increase alignment between
Executive Directors and
shareholders during employment
and following cessation
Alignment with workforce policies
Shareholding requirements are only in
place for the most senior employees
to strengthen the alignment of their
interestswith those of our shareholders
Performance metrics (weighting)
Executive Directors are required to build
upand maintain a shareholding worth
at least 250% of salary for the CEO
and200%of salary for the CFO
How we implemented the Policy in FY24
See page 169 for details on CEO and
CFOshareholdings
How we intend to implement the Policy
inFY25
No change
The link between pay and the Group’s
performance, strategy, culture and
ESG commitments
Financial Quality
Strategy
and Culture
Purpose ESG
Sustainable
financial growth
through attractive
margins and
exceptional
returns.
Strong
governance
and quality of
the business
underpins
ouroperations
Tailored
individual
objectives
in line with
our strategic
priorities
andvalues
Helping our
customers
prosper in
line with
ourPurpose
To support our
Purpose to help
our customers,
colleagues and
communities
prosper
Executive Director Bonus Scheme FY24
110% of salary opportunity with at least 50% deferred
into shares for 3 years
Financial
(65%)
Customer
(20%)
Quality
(15%)
Personal
(0-20%)
• Underlying PBT
1
• All-in RoE
1
• Cost to
incomeratio
1
• Net loan
bookgrowth
• Customer
satisfaction
1
• Broker
satisfaction
• Complaints
• Overdue
management
actions
• Arrears
• High-severity
incidents
• 5% for CEO
• 10% for CFO
• 15% for former
CFO
The Scorecard, being the Financial, Customer and Quality elements, is marked out of 100%.
Total bonus is calculated by combining each individual’s Scorecard and personal performance
based on the relevant percentage each represents of their total bonus opportunity.
Performance Share Plan FY24
110% of salary opportunity, with performance assessed over 3 years
and any shares delivered over extended time-horizons
Financial
(45%)
Non-financial
(15%)
TSR
(30%)
ESG
(10%)
• EPS
1
(30% )
• ROE
1
(15%)
• Non-financial/
Risk (15%)
• Total Shareholder
Return vs FTSE
250 (30% )
• ESG (10%)
1. Key performance indicators (see pages 2-3 and 37-39).
159OSB GROUP PLC | Annual Report and Accounts 2024 159
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Governance Financial StatementsOverview Appendices
Directors’ Remuneration Report continued
Introduction
This section outlines details of the remuneration
received by Executive Directors and INEDs
in respect of the financial year ended
31 December 2024. This annual Directors’
Remuneration Report (the Report) will, in
conjunction with the Annual Statement of
the Committee Chair on pages 154-157, be
proposed for an advisory vote by shareholders
at the forthcoming AGM to be held on
8 May2025.
Where required, data provided has
been audited by Deloitte, as indicated
throughoutthe Report.
Membership and meetings
The Committee met six times during 2024.
Membership and attendance of individual
Committee members is set out in the
Corporate Governance Report.
The Board considers each of the members
of the Committee to be independent
in accordance with the UK Corporate
Governance Code.
Key matters considered by
theCommittee in 2024
Key issues reviewed and discussed by the
Committee during the year included:
• Continued work on the review of the
Directors’ Remuneration Policy for
presentation to shareholders at the
2024AGM
• Remuneration arrangements for the
newCFO
• Remuneration arrangements for the
retiring CFO
• Review and approval of 2024
salaryincreases
• Review of 2023 bonus awards
• Determining the 2024 grants under the
PSP, in particular in light of the share price
at the time of grant and whether to use a
discounted share price at grant to reflect
the lack of dividend accruing on the award
• Remuneration arrangements for the
newCPO
• Updates on the performance of the 2024
Bonus Scorecard and in-flight PSP awards
• Review of pay arrangements across
theGroup
• Considering and recommending the
Directors’ Remuneration Report to the
Board for approval
• Approval of the 2024 personal
objectives for the CEO, CFO and
GroupExecutiveCommittee
• Annual review of the costs and
performance of the Committee’s
independent remuneration adviser
• Considering and recommending the
People and Culture Strategy; and the
DE&I Strategy
• Other business as usual matters for
employees under the Committee’s scope
Advisers to the Committee
Korn Ferry provided independent advice to
the Committee during 2024, having been
appointed following a competitive tender
process in 2017. The total fees paid to Korn
Ferry in 2024 were £170,838 (inclusive
of VAT) and were charged on a time and
materialsbasis.
Korn Ferry has no other connection with
the Company or any individual Director.
Korn Ferry is a member of the Remuneration
Consultants’ Group and abides by the
voluntary code of conduct of that body,
which is designed to ensure that objective
and independent advice is given to
remuneration committees. The Committee
issatisfied that Korn Ferry provides objective
and independent advice.
The Committee consults with the CEO (as
appropriate) and seeks input from the Chair
of the Group Risk Committee to ensure that
any remuneration or pay scheme reflects
the Company’s risk appetite and profile and
considers current and potential future risks.
The Committee also receives input on senior
management remuneration from the CEO,
CFO and CPO. The Company Secretary
(or their nominee) acts as Secretary to
the Committee and advises on regulatory
and technical matters, ensuring that
the Committee fulfils its duties under its
termsofreference.
No individual is present in discussions directly
relating to their own pay.
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Directors’ pay outcomes for 2024
Remuneration and fees payable for 2024 – (audited)
The table below sets out the total remuneration received by each Executive Director and INED for the years ending 31 December 2024 and 31 December 2023.
Executive Directors Year
Basic
salary
£’000
Taxable
benefits
3
£’000
Pension
4
£’000
Annual bonus
paid
5
£’000
Amount bonus
deferred
5
£’000
PSP
6, 7
£’000
Total
fixed pay
£’000
Total
variable pay
£’000
Total
£’000
Andy Golding 2024 910 22 73 270 270 222 1,005 762 1,767
2023 879 22 70 217 217 488 971 922 1,893
Victoria Hyde
1
2024 244 7 13 64 64 0 264 128 392
2023 n/a n/a n/a n/a n/a n/a n/a n/a n/a
April Talintyre
2
2024 201 6 16 59 59 131 223 249 472
2023 550 16 44 130 130 305 610 565 1,175
1. Victoria Hyde was appointed on 22 July 2024. Remuneration shown is from date of appointment for services as a Director. The pension contribution paid was based on her previous salary before her appointment as a Director in 2024 for the entirety
of 2024. An additional remedying pension payment to make her good for the underpayment since her appointment as a Director is due to be made in March 2025 and will therefore be included in next year’s Directors’ Remuneration Report.
2. April Talintyre retired on 9 May 2024 and ceased employment on 2 November 2024. Salary, benefits, pension and bonus are shown to the date she resigned as a Director. Fixed pay after April Talintyre stepped down amount to £267,128 salary,
£7,741benefits and £21,370 pension. The Annual bonus is pro-rated from 1 January 2024 until the date of retirement. The PSP value is pro-rated until 2 November 2024.
3. Taxable benefits received include car allowance (CEO: £20,000; CFO: £6,654 and Former CFO: £5,404) and private medical cover.
4. Executive Directors currently receive pension contributions (or cash in lieu thereof) of 8% of salary, which is in line with the majority of the workforce.
5. 50% of the bonus is payable in cash and 50% in shares deferred for three years in line with regulatory requirements.
6. The PSP figure for the year ended 31 December 2023 has been restated based on the share price on vesting of £3.79 for the 2021 PSP.
7. The PSP figure for the year ended 31 December 2024 has been valued using the fourth quarter average share price of £3.88. The value will be restated in next year’s report based on the actual share price on vesting for the 2022 PSP.
Total fees £’000 2024 2023
Chair
David Weymouth
356.9 346.5
Independent Non-Executive Directors
Kal Atwal
1
102.7 87.7
Henry Daubeney
2
55.9 –
Noël Harwerth
3
137.9 133.9
Sarah Hedger
4
132.5 122.1
Rajan Kapoor
5
140.6 136.5
Simon Walker
6
137.9 129.1
Total 1,064.4 1,049.4
7
INEDs cannot participate in any of the Company’s share schemes and are not eligible to join the Company pension scheme.
1. Kal Atwal received £0 (2023 £787.97) for taxable travel expenses; total payments received £102,742 (2023: £88,523).
2. Henry Daubeney was appointed on 1 July 2024. He received £0 for taxable travel expenses; total payments received £55,875.
3. Noël Harwerth received £1,838.52 (2023: £961.76) for taxable travel expenses; total payments received £139,730 (2023: £134,834).
4. Sarah Hedger received £149.00 (2023: £365.94) for taxable travel expenses; total payments received £132,633 (2023: £122,489).
5. Rajan Kapoor received £632.15 (2023: £523.80) for taxable travel expenses; total payments received £141.277 (2023: £137,024).
6. Simon Walker received £0 (2023 £0) for taxable travel expenses; total payments received £137,891 (2023: £129,175).
7. Total fees shown include certain retrospective payments made in February and March 2024 for services undertaken during 2023.
161OSB GROUP PLC | Annual Report and Accounts 2024 161
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Directors’ Remuneration Report continued
Executive Director bonus scheme
In challenging market conditions the Group delivered solid performance across the Scorecard, with performance close to the target range for the Financial segment and generally exceeding
thetop end of the performance ranges for the Customer and Quality segments, recognising our consistent sector-leading performance in these latter two categories.
As an underpin, the Committee also considers whether the Scorecard’s formulaic outcome reflects the Group’s risk appetite and profile and considers current and potential future risks.
The bonus payout under the Scorecard is 53.79%. For the CEO the Scorecard represents 95% of his total bonus outcome, for the CFO 90% and for the former CFO 85%.
The remaining 5%, 10% and 15% respectively is based on the achievement of stretching personal objectives. Performance against personal objectives were considered by the Board and
Committee to be strong. This resulted in a payout of 2.5% out of 5% for the CEO, 6.5% out of 10% for the CFO and 7.5% out of 15% for the former CFO.
Total payouts under the 2024 Executive Directors’ Bonus Scheme are therefore 53.60% of maximum opportunity for the CEO, 54.91% of maximum opportunity for the CFO (since her appointment
as a Director) and 53.22% of maximum opportunity for the former CFO. Thebonus is paid half in cash and half in shares, with the shares held for three years in line with regulatory requirements.
The Committee considered these outcomes and does not believe that discretion is required. Although the outcome achieved for the Financial segment was lower than for the Customer and
Quality segments, management made appropriate operational decisions that reduced the outcome from the Financial segment, for example to focus on disciplined lending rather than growth,
support the transformation programme and incur additional costs in December 2024 for redundancies.
Performance against the 2024 Scorecard is set out below.
Category Key performance indicator Weighting
Targets
1
Actual
FY24
Outcome for
CEO
Outcome for
CFO
Outcome for
former CFO
Threshold
(25%)
Budget
(50%)
Stretch
(100%)
Financial Underlying PBT (£m) 30% £427m £474m £549m £443m 10.04% 10.04% 10.04%
All-in RoE (%) 15% 14.3% 16.0% 18.6% 15.6% 6.71% 6.71% 6.71%
Underlying cost to income ratio (%) 10% 37.8% 34.4% 30.0% 37.3% 2.87% 2.87% 2.87%
Net loan book growth (%) 10% 3.1% 4.6% 6.1% 2.5% 0% 0% 0%
Customer Customer satisfaction – Lending 5% 40 45 50 53 5% 5% 5%
Customer satisfaction – Saving 5% 60 65 70 70.1 5% 5% 5%
Broker satisfaction 5% 30 35 40 53.6 5% 5% 5%
Complaints (%) 5% 27.0% 25.0% 23.0% 17. 3 % 5% 5% 5%
Quality Overdue actions (#) 5% 5 3 2 2.33 4.18% 4.18% 4.18%
Arrears (%) 5% 3.5% 2.9% 2.3% 1.91% 5% 5% 5%
High-severity incidents (#) 5% 3 2 1 0 5% 5% 5%
Sub-total for Scorecard only 100% 53.79% 53.79% 53.79%
Scorecard contribution to bonus outcome 85–95%
2
51.10% 48.41% 45.72%
Personal contribution to bonus outcome 5–15%
2
2.50% 6.50% 7.50 %
Total payout as a % of maximum opportunity 53.60% 54.91% 53.22%
1. Targets – based on a sliding scale between Threshold (25% of maximum) and Stretch (100% of maximum).
2. The personal objectives percentage is 5% for the CEO, 10% for the CFO and 15% for the former CFO. The Scorecard percentage is 95% for the CEO, 90% for the CFO and 85% for the former CFO.
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Directors’ Remuneration Report continued
2024 personal performance
The Executive Directors could earn up to a maximum of 5% for the CEO, 10% for the CFO and 15% for the former CFO of their bonus based on their performance against agreed personal objectives.
The objectives for 2024 were built around strategic priorities (as identified in our 2023 Annual Report) and cultural indicators. Performance against these objectives for the Executive Directors was
considered to be strong, with the delivery of key objectives in a challenging and uncertain year.
The objectives set at the start of the year and the Committee’s assessment of performance against them are set out below:
Objectives Key achievements
CEO Lead the transformation programme to ensure delivery of the annual
key milestones as agreed by the Board and embedded into the OSB
Group Business Plan
• Successful launch of: online broker registration capability; mobile app for intermediaries for the Precise
brand; and first product launch on new savings platform for Kent Reliance
• Established our core banking system on the Cloud
• Strengthened the Executive team with the appointment of the CPO and interim CIO
CFO Take the lead in external messaging preparation in relation to the
Annual Report and Accounts, preliminary and interim announcements
• Successfully brought sell-side analysts consensus in line with guidance expectations
• Delivered improved understanding of EIR volatility movements and reduction
Deliver against the Board-approved Capital and Strategy Plan, including:
• Delivering further clarity to the market on our capital management
plans at preliminary results
• Leading the Group’s efforts on regulatory consultations and
othermatters
• Announced further share repurchase programme to return excess capital
• Gained PRA approval for Core UK Group (CUG)
Delivery of planned Finance system upgrades and alignment
of the Finance functions to support delivery of the
Transformationprogramme
• Implemented Anaplan
• Key hires and transfers into the team
Former
CFO
Orderly handover of responsibilities, including in respect of Senior
Manger Functions (SMF) roles
• Smooth handover delivered to incoming CFO
Deliver against the Board-approved Capital and Strategy Plan, including:
• Delivering further clarity to the market on our capital management
plans at preliminary results
• Leading the Group’s efforts on regulatory consultations and
othermatters
• Announced £50m share repurchase at 2023 preliminary results to return excess capital
• Achieved interim MREL compliance ahead of schedule
Delivery of planned Finance system upgrades and alignment
of the Finance functions to support delivery of the
Transformationprogramme
• Progress made on planned Finance system upgrades and development of Finance function before
progressing handover to incoming CFO
163OSB GROUP PLC | Annual Report and Accounts 2024 163
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2024 bonus scheme payout
Based on performance against the Scorecard
and individual objectives, the CEO earned
53.60% of his maximum bonus, the CFO
earned 54.91% of her maximum opportunity
(since her appointment as Director) and
the former CFO earned 53.22% of her
maximum opportunity. The Committee
believes that these payouts are appropriate,
reflecting the underlying performance of
the Group. Although the outcome achieved
for the Financial segment was lower than
for the Customer and Quality segments,
management made appropriate operational
decisions that reduced the outcome from
the Financial segment, for example to focus
on disciplined lending rather than growth,
support the transformation programme
andincur additional costs in December 2024
forredundancies.
In line with regulatory requirements, half of the
bonus will be paid in cash with the remainder
deferred into shares released after three years.
Long-term incentive plan (audited)
The 2022 Awards under the PSP were
based on performance over the three-year
period which ended on 31 December 2024.
Performance was based 35% on EPS growth;
35% on TSR versus companies in the FTSE
250 Index (excluding Investment Trusts); and
15% each on RoE and an assessment of the
Group’s overall risk performance.
Performance against the EPS target range
was below the threshold for payment, so
there was a zero payout under this element.
The Group’s TSR over the performance period
placed the Group just above the median of
the FTSE 250 peer group and therefore 45.4%
of the TSR part of the Award was earned.
The average RoE over the performance
period was 18.4% resulting in 42.5% of the
RoE part of the Award being earned.
In relation to the 15% Risk element, there was
a robust process to support the Committee’s
assessment of this measure. Papers were
prepared for each year of the performance
period by the Group CRO, together with
an overall assessment for the three-year
performance period, with each endorsed
by the Chair of the Group Risk Committee.
These papers allowed the Committee to
assess the Group’s risk performance under
six categories: Culture, Credit, Solvency
and Liquidity, Conduct and Compliance,
Operational and Reputational risk.
The Committee concluded that a score of
11% was appropriate for 2024. Together
with the scores of 13% and 12% given to the
risk elements of the 2022 PSP in 2022 and
2023, this led to an overall rating of 12% (out
of a maximum 15%) for the three years to
31 December 2024.
In total, 34.27% of the maximum PSP Awards
have been earned. This is considerably
lower than recent awards, reflecting the
more challenging market environment over
the period. The Committee is comfortable
there has been an appropriate link between
reward, performance and the broader
stakeholder experience over the three-year
performance period (including the experience
of customers) and discretion was not used to
adjust the incentive outcome.
Weighting
Threshold
(25% vesting)
Stretch
(100% vesting)
Actual
FY24
Vesting of
portion
EPS growth 35% 3% CAGR 10% CAGR -1.8% CAGR 0% out of 35%
94.7p 115.4p 82.2p
Relative TSR 35% Median Upper quartile Above Median
(68 out of 156)
15.89% out of 35%
Average RoE
1
15% 17% 23% 18.4% 6.4% out of 15%
Non-financial/Risk 15% Assessed by the
Committee
12% out of 15%
1. RoE targets were set in 2022 based on achieving an average RoE for the three years to 31 December 2024. The RoE portion is subject to an underpin requiring that the CET1 ratio is not below the Board-approved minimum requirement,
which has been met.
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Discretionary assessment
The Committee is comfortable that the level of vesting is in line with underlying performance and reflects the impact of risk appetite, individual conduct and shareholder experience over the performance
period. As such, the 2022 Awards will vest in five equal tranches between 2025 and 2029, with the shares delivered being subject to a further one-year holding period post-vesting in each case.
The 2022 PSP awards will therefore vest as follows:
Executive Directors
Number of
shares granted
Number of
shares due tovest
Number of
shares lapsed
Value from
share price
increase/decrease
1
Total value
vesting
2
Andy Golding 166,991 57, 278 109,713 (£97,562) £222,239
April Talintyre 104,497 33,833 70,664 (£57,628) £131,272
1. Value of share price increase/(decrease) based on a £5.5833 share price at the time of grant of the award compared to the three-month average share price of £3.88 to 31 December 2024.
2. Value of shares based on a three-month average share price of £3.88 to 31 December 2024.
3. April Talintyre retired on 9 May 2024 and ceased employment on 2 November 2024. The PSP total value vesting is pro-rated until 2 November 2024.
Directors’ Remuneration Report continued
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Directors’ Remuneration Report continued
Executive pay outcomes in context
Percentage change in the remuneration of the Directors
The table below sets out the percentage change in base salary, value of taxable benefits and bonus for all the Directors compared with the average percentage change for employees. For these purposes,
UK employees who have been employed for over a year (and therefore eligible for a salary increase) have been used as a comparator group as they are the analogous population (based on service
and location). The percentage change for Executive Directors and INEDs is calculated based on the remuneration disclosed in the single figure tables on page 161. The percentage is not included for
Directors who joined the Board in the year as the disclosure would not be meaningful.
The increase in annual bonus between this year and the previous year reflects the improved outturn on business performance compared to the previous year. There have been no material
changes to benefits over the period shown. The increases to INED fees in 2024 compared to prior years were based on a market assessment of fee levels, together with changes in Board
Committee membership.
% change in salary/INED fees % change in taxable benefits % change in annual bonus
2019/20 2020/21 2021/22 2022/23 2023/24 2019/20 2020/21 2021/22 2022/23 2023/24 2019/20 2020/21 2021/22 2022/23 2023/24
UK employees 5.5% 5.1% 11.4% 9% 7.4% 0% 21.9%
6
0% 0% 0% (27.5)% 34% 24.8% (13.0)% 14.2%
Andy Golding 42.4% 10.9% 3.0% 5% 4% 0% 0.6% 0% 0% 0% (71.9)% 366.1% 1.54% (45.0)% 24%
Victoria Hyde n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a
April Talintyre 44.1% 1.6% 3.5% 5% 1% 0% 0% 0% 0% (69%) (71.5)% 330.1% 1.23% (47.5 )% (55%)
Kal Atwal
4
n/a n/a n/a n/a 17% n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a
Henry Daubeney
10
n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a
Noël Harwerth
1
n/a 0.9% 15.9% 4.6% 3% n/a 285% (168)% 277%
7
91%
7
n/a n/a n/a n/a n/a
Sarah Hedger
2
n/a (1.2%) 23.5% 19.1% 9% n/a n/a 198% (23.6)%
8
(59)%
8
n/a n/a n/a n/a n/a
Rajan Kapoor
1
n/a (1.7%) 10.2% 4.8% 3% n/a n/a n/a n/a
9
21%
9
n/a n/a n/a n/a n/a
Simon Walker
3
n/a n/a n/a 23.0% 7% n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a
David Weymouth 16.7% 2.7% 10.0% 5% 3% 0% n/a n/a n/a n/a n/a n/a n/a n/a n/a
1. Noël Harwerth and Rajan Kapoor joined the Board in October 2019.
2. Sarah Hedger joined the Board in February 2019.
3. Simon Walker joined the Board in January 2022.
4. Kal Atwal joined the Board in February 2023.
5. This relates to taxable travel expenses of £0 (2023: 787.97).
6. Relates to the broader provision of our medical cash plan and the revision of car allowances following the harmonisation of benefits post-Combination.
7. This relates to taxable travel expenses of £1,838.52 (2023: £961.76).
8. This relates to taxable travel expenses of £149.00 (2023: £365.95).
9. This relates to taxable travel expenses of £632.15 (2023: £523.80).
10. Henry Daubeney and Victoria Hyde joined the Board in July 2024.
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Directors’ Remuneration Report continued
Comparison of Company performance and CEO remuneration
The following table summarises the CEO single figure for total remuneration, annual bonus and LTIP payout as a percentage of maximum opportunity for the ten years to 31 December 2024.
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Annual bonus
(% of maximum opportunity)
93.00% 88.75% 85.00% 91.75% 75.89% 20.60% 86.83% 84.67% 44.33% 53.60%
LTIP vesting
(% of maximum opportunity)
— — 100.00% 50.00% 75.1% 62.74% 87.16% 92.56% 70.98% 34.27%
CEO single figure of remuneration
(£’000)
848 910 1,614 1,602 1,382 1,510 2,587 3,058 1,893 1,767
1. The cash portion of the 2020 bonus was waived by the Executive Directors before they became entitled to it. As such, only the share portion of the 2020 bonus was payable (i.e. half of the bonus of 41.2% of maximum).
Total shareholder return
This graph shows the value, at 31 December 2024, of £100 invested in OneSavings Bank plc on 1 January 2015, and following the insertion of a new holding company in November 2020, the
shares of OSB GROUP PLC, compared with the value of £100 invested in the FTSE All Share Index on the same date. The other points plotted are the values at intervening financial year ends.
The FTSE All Share Index is considered to be the most appropriate index against which to measure performance as the Group has been a member of this index since Admission of OneSavings
Bank plc to the London Stock Exchange.
Total shareholder return
450
250
300
350
400
200
100
150
50
31 December
2014
Value (£) (Rebased)
31 December
2015
31 December
2016
31 December
2017
31 December
2018
31 December
2019
31 December
2020
31 December
2021
31 December
2022
31 December
2024
31 December
2023
OSB GROUP PLC FTSE All Share Index
Source: Datastream (Refinitiv).
167OSB GROUP PLC | Annual Report and Accounts 2024 167
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Directors’ Remuneration Report continued
CEO pay ratios
The ratio of the CEO’s single figure of total
pay to median UK employee pay is set
out in the table below. The ratio has been
calculated in accordance with methodology
B as it is the same pay data for employees
as is used for the gender pay gap analysis
and is based on pay and benefits as at
5 April each year. Full-time equivalent pay
for individuals that do not work full-time
has been calculated by increasing their pay
pro-rata to that of a full-time individual.
No further estimates or adjustments have
been made. The employees identified are
considered to be representative of the
quartile positions as their total pay is in line
with expected positioning and the proportion
of fixed pay to variable pay is also in line with
other individuals at those levels.
The median ratio decreased in the period
between 2017 and 2019 as a result of a
combination of factors which resulted in the
total pay for the median individual within
the workforce increasing, including positive
changes to the Group’s pay policy and
changes in the employee population between
2018 and 2019. The decrease in the ratio
between 2018 and 2019 was also due to the
decrease in total pay for the CEO.
The median ratio increased between 2019
and 2020 largely as a result of the decrease
in the total pay for the median employee.
This was primarily as a result of OSB’s
Combination with CCFS in October 2019.
The increase in the ratio between 2020 and
2021 is primarily due to changes in the CEO’s
pay, which was increased as a result of the
staged salary increase upon Combination
with CCFS; and due to higher incentive
payouts than 2020, which were adversely
impacted by COVID-19. The increase in ratio
between 2021 and 2022 is primarily due to
the increase in CEO pay caused by higher
incentive payments and, in particular, the
PSP award which benefitted from strong
share price growth, reflecting the excellent
recent performance of the business.
The reduction to the ratios in 2024 and
2023 compared to previous years reflect a
reduction to the level of CEO pay caused by
relatively lower annual bonuses and lower
value payouts of PSP awards in those years.
There has been no change to the Group’s
employment models during this period and
the median ratio is consistent with the pay,
reward and progression policies within the
Group. The Executive Directors pay is set
by the Committee with reference to both
the internal relativities across the Group
and external market benchmarks. As such,
the pay ratio is considered appropriate and
is not considered excessive, particularly
when compared to other listed financial
servicescompanies.
CEO pay ratio 2017 2018 2019 2020 2021 2022 2023 2024
Method B B B B B B B B
CEO single figure 1,614 1,602 1,382 1,510 2,571 3,058 1,893 1,767
Upper quartile 24.8 22.3 22.5 28.1 35.9 45.1 26.4 20.4
Median 46.1 40.1 32.0 42.1 56.1 70.1 39.1 36.6
Lower quartile 62.1 59.5 54.6 51.6 82.2 86.3 57.9 56.5
2024
Basic salary
(£’000)
Total pay
(£’000)
CEO 910 1,767
Lower quartile – Employee A 26.7 31.3
Median – Employee B 42.0 48.3
Upper quartile – Employee C 74.0 86.5
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Directors’ Remuneration Report continued
Relative importance of the spend on employee pay (audited)
The table below shows the Group’s total employee remuneration (including the Directors) compared to distributions to shareholders and underlying profit before tax for 2024 and 2023.
Inaddition to the required disclosures showing total employee costs and distributions to shareholders, the table also shows PBT and headcount to provide a fuller picture.
2024 2023
Total employee costs £143.9m £122.2m
Distributions to shareholders
1
£126.4m £185.0m
Underlying profit before tax (PBT) £442.9m £426.0m
Total employee costs vs PBT 32.5% 28.7%
Average headcount 2,559 2,272
Average underlying PBT per employee £173,075 £187,50 0
1. See note 13 to the financial statements. In addition to dividends, the Company repurchased a total of 22,710,094 (2023: 38,243,031) ordinary shares as part of its £100m (2023: £150m) share repurchase programmes (14 March and 5 September 2024)
(2023: 16 March 2023).
Other disclosures relating to 2024 Executive remuneration
Scheme interests awarded during the financial year (audited)
The table below shows the conditional share awards made to Executive Directors on 21 March 2024 under the 2024 PSP and the performance conditions attached to these awards.
TheCommittee has discretion to adjust the vesting level to ensure that the reward level reflects underlying performance, risk and individual conduct. There will be full disclosure of the
Committee’s deliberations on these matters in the 2026 Directors’ Remuneration Report. The Awards will vest 20% each year between three and seven years after grant, with each vested
tranchesubject to a one-year holding period.
Executive
Face value of award
(percentage ofsalary)
Face value
ofaward
4
Number of
shares
1
Percentage of awards
released for achieving
threshold targets
End of
performance period
Andy Golding 110% £1,008,348 261,142 25% 31 December 2026
Victoria Hyde 110% £605,000 156,683 25% 31 December 2026
1. Victoria Hyde was awarded an additional 58,177 conditional share awards on 13 May 2024 in respect of her proposed appointment as CFO and Executive Director. This is included in the figure above in the table.
2. The number of shares awarded was calculated using a share price of £3.8613 (the average closing price over the three Dealing Days prior to 21 March 2024).
3. Performance conditions are: (i) 30% TSR versus the FTSE 250 (25% vesting for median performance increasing to 100% vesting for upper quartile performance); (ii) 30% EPS (25% vesting for FY26 EPS of 92.0p increasing to 100% vesting for 107.0p);
(iii)15% RoE (25% vesting for average RoE of 15% increasing to 100% vesting for an average of 19%); (iv) 15% non-financial/risk Scorecard, and (v) 10% ESG.
4. The share price used was not discounted to reflect the expected dividend yield.
169OSB GROUP PLC | Annual Report and Accounts 2024 169
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Governance Financial StatementsOverview Appendices
Directors’ Remuneration Report continued
Payments to past Directors
Details were contained in last year’s report relating to the remuneration arrangements for our former CFO, April Talintyre, in connection with her retirement on 9 May 2024. April Talintyre was
determined to be a ‘good leaver’ for the purpose of the annual bonus and her PSPs and has received, or will receive, the following remuneration:
• Salary, benefits and pension were payable from the date of stepping down from the Board on 9 May 2024 for the remainder of her 12-month notice period ending on 2 November 2024.
• FY24 annual bonus was be payable pro rata for her period of active service up to 9 May 2024, with 50% deferred in shares for three years.
• Previous Deferred Bonus Plan Awards relating to the FY22 and FY23 annual bonuses will vest in line with their original terms, after three years.
• The 2022 PSP award is pro rated for the proportion of the three-year performance period elapsed on 2 November 2024. The 2023 PSP award will be similarly pro rated.
• PSP awards will be subject to regulatory vesting and holding periods.
• Outstanding SAYE options are exercisable within six months of cessation of employment.
• Outstanding and previously paid incentive awards remain subject to clawback and malus provisions.
• April is required to hold shares worth equivalent to 200% of her base salary for at least two years after ceasing employment.
• April is entitled to a capped contribution of up to £7,000 (excluding VAT) towards legal fees incurred in connection with her retirement from the Company. The Company contributed legal fees
of £6,500 in 2023.
Payments for loss of office
There were no payments for loss of office in the year under review.
All-employee share plans (audited)
Executive Directors Date of grant Exercise price
Market price
31 December 2024 Exercisable from Exercisable to
Number of
optionsgranted
Number of options as at
31 December 2024
April Talintyre (former CFO) 29 September 2023 £2.715733 £4.044 1 December 2026 1 June 2027 6,819 6,819
Victoria Hyde 29 September 2023 £2.715733 £4.044 1 December 2026 1 June 2027 6,819 6.819
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Directors’ Remuneration Report continued
Statement of Directors’ shareholdings and share interests (audited)
Total shares owned by Directors and connected persons and share ownership guidelines
The CEO and the CFO are required to accumulate and maintain a holding of ordinary shares in the Company equivalent to no less than 250% and 200% of salary, respectively. This is calculated
using the value of beneficially owned shares plus the net of tax value of deferred bonus shares or any other unvested share awards which are not subject to performance conditions. Half of any
vested share awards must be retained until the guideline is achieved. Based on the current share price, the CEO and former CFO hold shares in excess of these levels. As the guidelines apply
for two years following cessation of employment, the former CFO will continue to hold her shares until 2 November 2026. The CFO has not yet reached the required level of 200% of salary.
Untilsuch time as the required shareholding level is achieved, the CFO must retain at least 50% of share awards which have reached the end of the vesting or holding period.
Interest in shares Interest in share awards Shareholding requirements
Beneficially
owned at
1 January
2024
Beneficially
owned at
31 December
2024
Without performance
conditions at
31 December
2024
2
Subject to performance
conditions as at
31 December
2024
Shareholding
requirement
(percentage
of basic salary)
Current shareholding
(percentage
of basic salary)
3
Executive Directors
Andy Golding
4
761,291 831,168 539,189 457,776 250% 496% (Met)
April Talintyre 330,854 380,161 343,365 75,445 200% N/A
Victoria Hyde 686 7,04 9 50,585 230,498 200% 25% (Not met)
Non-Executive Directors
Kal Atwal — — — — — —
Henry Daubeney — 20,000 — — — —
Noël Harwerth — — — — — —
Sarah Hedger — — — — — —
Rajan Kapoor 19,970 19,970 — — — —
Simon Walker 25,000 25,000 — — — —
David Weymouth 22,414 22,414 — — — —
1. Vested shares are held in a corporate nominee account and are subject to the relevant retention periods. This account is also used to monitor current and post-employment shareholding guidelines. The details of share options relating to the Executive
Directors are set out above. The Executive Directors hold vested but unexercised share options and the CEO and former CFO both exercised their 7,859 SAYE share options, each, during 2024.
2. Includes DSBP awards and PSP awards to the extent that performance targets have been met. Awards calculated at net of tax value for the shareholding requirements calculation.
3. Shareholding based on the closing share price on 31 December 2024 of £4.044 and year-end salaries.
4. Includes 518,184 shares that are owned by spouse.
The Company operates an anti-hedging policy under which individuals are not permitted to use any personal hedging strategies in relation to shares subject to a vesting and/or retention period.
171OSB GROUP PLC | Annual Report and Accounts 2024 171
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Governance Financial StatementsOverview Appendices
Directors’ Remuneration Report continued
External appointments
Andy Golding is a Director/Trustee of the
Building Societies Trust Limited. He receives
no remuneration for this position.
How we will implement the
Remuneration Policy for
Directorsin 2025
The proposed operation is summarised below.
Salary
The CEO and CFO will not receive a salary
increase from 1 April 2025. This is in the
context of the Board’s decision to hold the
aggregate salary increase for UK employees
to 2% and the redundancies implemented in
December 2024.
Annual Bonus
The 2025 annual bonus will be subject to a
maximum limit of 110% of salary.
The 2025 Scorecard will continue to be based
65% on financial measures and 35% on non-
financial measures. For the reasons outlined
in the Committee Chair’s statement ROE has
been replaced by RoTE. Within the financial
element, the measures and weightings have
changed slightly, in line with our operational
and strategic priorities. PBT and RoTE measures
have an equal weighting of 22.5% (previously
30% and 15% respectively). The cost to income
measure has been replaced by a cost delivery
measure with a 12.5% weighting (previously
10%) and net loan book growth has a 7.5%
weighting (previously 10%). The non-financial
element will remain based on a range of KPIs,
with a qualitative Committee assessment at the
year end based on measurable progress made
against these priorities.
In addition to Customer and Quality,
the 2025 Scorecard will now include an
assessment of the Group’s performance
against its four key strategic priorities.
As RoTE is already assessed under the
Financial element, Transformation, Data
andPeople will be added and represent
20%of the Scorecard.
The Scorecard is marked out of 100%.
Total bonus is calculated by combining
each individual’s Scorecard and personal
performance based on the relevant
percentage each represents of their
totalbonusopportunity.
For FY25, the CEO and CFO will each have
10% of their maximum bonus allocated to
individual objectives.
Objectives have been set based on a set of
robust strategic and individual priorities for
the Executive Directors. Both the CEO and
CFO will be measured on (i) developing and
nurturing the Group’s reputation with key
external stakeholders; and (ii) role-modelling
the shifts identified in culture to drive the
Group forward. For the CEO, he will also be
measured on (i) leading a high-performing
leadership team with credible succession
in place; and (ii) ensuring that the Board
and all colleagues are clear and confident
on strategic priorities. For the CFO, she will
also be measured on (i) transforming the
Finance function and delivering excellence;
(ii) supporting the Group’s data and
transformation agendas from a Finance
perspective; and (iii) leading successful
Treasury and Investor Relations functions.
Balanced Business Scorecard
Performance Area Primary Stakeholders KPI/Measure Weighting
Financial Profitability Shareholders RoTE
22.5%
Profitability Shareholders Underlying Profit Before Tax
22.5%
Cost Management Shareholders Cost Delivery
12.5%
Growth Shareholders Net Loan Book Growth
7.5%
Total Financial 65%
Customer Customer Satisfaction Customers, intermediaries and Regulators Consumer Duty assessment, Customer and Broker Satisfaction Outcomes
7.5%
Quality Risk, Quality and Control Regulator and Shareholder Risk, Quality, Control and Audit Outcomes
7.5%
Transformation Operational Efficiency Shareholder, Customer and Broker New platform and product roll-out
10%
Data Operational Efficiency, Risk Customer and Regulator Migrating accounts to new platforms
5%
People Performance Culture Employees Enhance skills/ capability model, evolve performance culture
5%
Total Non-Financial
35%
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Directors’ Remuneration Report continued
Performance Share Plan
A PSP award of 110% of salary will
be madetothe CEO and CFO with
performancebeing measured over the
three-year period to31 December 2027.
The number of shares will be determined
based on the average closing price over
the three dealing days prior to the date of
grant, with the share price derived being
discounted for the expected dividend yield
over the performance period. The PRA
prohibits dividend equivalents from being
paid on unvested shares and this adjustment
is in line with normal practice at other listed
banks where dividend equivalents are also
not permitted. The Committee will use an
expected dividend yield of 5% to adjust the
share price used to calculate the number of
shares granted. This will result in a discount
of 22.4% to the undiscounted grant price,
with both the expected dividend yield and
discount derived broadly comparable to
those of other UK banks. There will be further
disclosure in next year’s report.
Awards will vest in line with regulatory
requirements, with 20% each year between
three and seven years after grant, with
eachvested tranche subject to a one-year
holding period.
The performance metrics and weightings
are unchanged from the FY24 award, other
than, for the same reasons described in the
Committee Chair’s statement above, RoE has
been replaced by RoTE. The performance
metrics and weightings are therefore EPS
(30% weighting), relative TSR versus the
FTSE 250 (excluding Investment Trusts)
(30% weighting), RoTE (15% weighting),
Non-financial/Risk (15% weighting) and ESG
(10% weighting). The metrics and weightings
provide a balanced assessment of corporate
performance over the three-year period
taking into account financial, share price
and non-financial metrics. A discretionary
assessment at the time of vesting ensures
that awards are granted in line with
underlying performance, risk appetite and
individual conduct over the period.
The target ranges for EPS and RoTE have
been carefully set by the Committee taking
into account a number of factors, including
those set out below, which will influence
the outlook for business performance over
the three years to 31 December 2027. In
particular, the Committee has noted the
significant factors impacting the approach
totarget-setting this year:
• The continuation of a subdued
mortgagemarket
• The Group’s focus on disciplined lending
versus loan book growth
• The investment planned to support
transformation programme
The Committee is therefore satisfied
thatthese are appropriately stretching.
Overall, the Committee is comfortable that
these targets provide a strong link between
reward and performance delivered and are
atleast as stretching as target ranges in
prioryears.
Metrics Weighting
Threshold
(25% of maximum)
Stretch
(100% of maximum) Rationale
EPS in 2027
1
30% 85p 100p Measures the sustainable profitability of the business
Relative TSR versus FTSE 250 30% Median Upper quartile Measures the success of the Company versus other listed companies
Average RoTE
1
15% 13% 14.5% Measures the sustainable financial performance and financial efficiency of the business
Non-financial/Risk 15% See below Strong governance around risk and quality underpins our business operations
ESG 10% See below Measures the progress against the ESG strategy
1. Key performance indicators (see pages 2-3 and 37-39). No vesting below Threshold and pro-rata vesting between Threshold and Stretch.
173OSB GROUP PLC | Annual Report and Accounts 2024 173
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Governance Financial StatementsOverview Appendices
Directors’ Remuneration Report continued
Non-financial/Risk metric (15% weighting)
For the risk-based measure, the Committee will assess the risk management performance with regard to all relevant risks including, but not limited to: Conduct, Credit, Solvency and Liquidity,
Conduct and Compliance, Operational and Reputational risks. There will be a full retrospective disclosure of the Committee’s assessment. To support this assessment, the Group CRO will
prepare an annual report for each year of the performance period, together with and a summary report after year three, with each report endorsed by the Chair of the Group Risk Committee.
ESG metric (10% weighting)
The ESG performance will be determined based on the Committee’s assessment of progress against the ESG strategy which will be informed by performance against key employees and
environmental metrics. The metrics and the 2027 targets are summarised below.
ESG metric 2027 target
Scope 1 and 2 emissions 57% reduction from the Group’s 2022 baseline, in line with our 2030 external emissions reduction target
Scope 3 financed emissions 17% reduction in Scope 3 Category 15 carbon intensity (tCO
2
e/M
2
) from the mortgage loan book versus the Group’s 2022 baseline, in line with our 2030
external emissions reduction target
Gender diversity 40% of senior roles who identify as female
Ethnicity diversity 14% of senior roles who identify as being from an ethnically diverse background
Employee engagement score 696.5 score in our annual ‘Best Companies Survey’ for UK employees (equivalent to an ‘Outstanding’ rating) and a score of 83 in our annual ‘Great Place to
Work’ Survey for employees of OSB India (or a similarly stretching score if an alternative method is used to assess employee engagement over the period)
Board Chair and Independent Non-Executive Director fees
The fees for the Board Chair and INEDs were reviewed by the Committee for the Board Chair and by the Board (minus the INEDs) for the INEDs. As the Executive Directors will not receive an
increase to their annual salary, the Board Chair and INEDs will also receive no increase to their fees from 1 April 2025.
Base fees £’000
Chair
1
356.9
Independent Non-Executive Director 86.5
Senior Independent Director 21.6
ESG Champion 8.1
Additional Board Committee fees
Chair
£’000
Member
£’000
Group Nomination and Governance Committee 5.4
Group Audit Committee 32.4 8.1
Group Remuneration and People Committee 32.4 8.1
Group Risk Committee 32.4 8.1
Group Models and Ratings Committee 10.8 5.4
1. The Board Chair’s fee is inclusive of all duties; no additional Chair or Member fees are paid in relation to Board Committees.
OSB GROUP PLC | Annual Report and Accounts 2024174
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Directors’ Remuneration Report continued
Statement of voting at the Annual General Meeting
Shareholders were asked to approve the 2023 Annual Report on Remuneration and the Directors’ Remuneration Policy at the 2024 AGM. The votes received are set out below:
Resolution Votes for % of votes cast Votes against % of votes cast Total votes cast Votes withheld
To approve the 2023 Remuneration Report (2024 AGM) 294,633,422 94.22 18,062,700 5.78 312,696,122 5,745,090
To approve the Remuneration Policy (2024 AGM) 301,192,571 98.01 6,100,599 1.99 307,293,170 11,148,042
Remuneration Policy
This section describes the Directors’ Remuneration Policy (the Policy) for which shareholder approval was sought at the AGM on 9 May 2024 and which formally came into effect from that date.
It is intended that this Policy will last for three years from the 2024 AGM date.
There are no changes to the Policy that was approved at the 2024 AGM. Certain factual data has been updated where applicable (e.g. page references and illustration of remuneration policy);
the original version approved by shareholders can be found on pages 169-177 of the 2023 Annual Report.
The table below summarises the Policy for Executive Directors.
Element Purpose and link to strategy Operation and performance conditions Maximum
Salary To reward Executive
Directors for their role
andduties required
Recognises an individual’s
experience, responsibility
and performance
Paid monthly
Base salaries are usually reviewed annually, with any changes usually effective from 1 April
No performance conditions apply to the payment of salary. However, when setting salaries,
account is taken of an individual’s specific role, duties, experience and contribution to
theCompany
As part of the salary review process, the Committee takes account of individual and corporate
performance, increases provided to the wider workforce and the external market for UK listed
companies both in the financial services sector and across all sectors
Increases will generally be broadly in
line with or below the average of the UK
workforce (as a percentage of salary).
Higher increases may be awarded in
exceptional circumstances such as a
material increase in the scope of the role,
following the appointment of a new Executive
Director (which could also include internal
promotions), to bring an initially below-
market package in line with the market
overtime or in response to marketfactors
Benefits To provide market
competitive benefits
toensure the wellbeing
ofemployees
The Company currently provides:
• car allowance
• life assurance
• income protection
• private medical insurance
• other benefits as appropriate for the role
There is no maximum cap on benefits, as
the cost of benefits may vary according
tothe external market
Pension To provide a contribution to
retirement planning
Executive Directors may participate in a defined contribution plan or, if they are in excess of the
HMRC annual or lifetime allowances for contributions, may elect to receive cash in lieu of all or
some of such benefit
In line with the rate received by the majority
of the workforce, which is currently 8%
ofsalary
175OSB GROUP PLC | Annual Report and Accounts 2024 175
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Remuneration Policy continued
Element Purpose and link to strategy Operation and performance conditions Maximum
Bonus To incentivise and
reward individuals for
the achievement of
pre-defined, Committee-
approved, annual
financial, operational and
individual objectives which
are closely linked to the
corporate strategy
Between 80-100% of the Bonus outcome is based on performance measured in line with
an agreed Scorecard, with at least 50% of the bonus based on financial performance. The
remaining 0-20% of the Bonus outcome is based on personal/strategic performance targets
The objectives in the Scorecard, and the weightings on each element, will be set annually and
may be flexed according to individual roles. Each element will be assessed independently, but
with Committee discretion to vary the payout (including to zero) to ensure there is a strong link
between payout and performance
The Bonus outcome also has a risk underpin if the Committee believes an adjustment of the
outcome is appropriate. There is also a general discretion to adjust the outcome to reflect other
exceptional factors at the discretion of the Committee
Normally at least 50% of any bonus earned will be delivered in shares, subject to a three-year
holding period
In circumstances of a high bonus payout there may be a regulatory requirement to defer a
proportion of the bonus payout, with vesting staggered over three to seven years, in line with
the deferral arrangements for the PSP described below
Malus and clawback provisions apply, as described in note 1 on page 177
The maximum bonus opportunity for
incumbent Executive Directors in any
financial year will remain at 110% of salary
Under the new Policy, the maximum bonus
opportunity for new Executive Directors (i.e.
not Andy Golding or Victoria Hyde) may be
up to 135% of salary
The threshold level for payment is 25% of
maximum for any quantitative measure
Performance
Share Plan
To incentivise and
recognise execution of
thebusiness strategy
overthe longer-term
Rewards strong financial,
share, risk and ESG
performance over a
sustained period
PSP awards will typically be made annually at the discretion of the Committee, usually following
the announcement of full-year results
Usually, awards will be based on a mixture of internal financial performance targets, risk-based
measures, ESG measures and relative TSR. At least 50% of the total PSP award will ordinarily be
based on financial and relative TSR metrics
The performance targets will usually be measured over three years
Any vesting will be subject to an underpin, whereby the Committee must be satisfied that:
(i) the vesting reflects the underlying performance of the Company
(ii) the business has operated within the Board’s risk appetite framework
(iii) individual conduct has been satisfactory
There is also a general discretion to adjust the outcome to reflect other exceptional factors at
the discretion of the Committee
Awards vest in line with regulatory requirements. Awards granted since 1 January 2020 vest
in five equal tranches of 20%, following the Committee’s determination of the extent to which
performance conditions have been met. At the time each tranche vests, a one-year holding
period will apply
Malus and clawback provisions apply as described in note 1 on page 177
The maximum PSP opportunity for
incumbent Executive Directors will
remainat110% of salary in respect of
grants in any financial year
Under the new Policy, the maximum PSP
opportunity for new Executive Directors
(i.e. not Andy Golding or Victoria Hyde)
may be up to 135% of salary in respect
ofgrants in any financial year
The threshold level for payment is 25% of
maximum for any quantitative measure
Where relevant regulations do not permit
dividend equivalent payments until after
vesting, the number of shares granted
may be uplifted to reflect the absence of
dividends or dividend equivalents during
the vesting period (e.g. to broadly reflect
the expected dividend yield on the shares)
OSB GROUP PLC | Annual Report and Accounts 2024176
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Directors’ Remuneration Report continued
Remuneration Policy continued
Choice of performance measures
for Executive Directors’ awards
The Group uses a Scorecard to support
its annual bonus which incorporates both
financial and non-financial business
drivers across the Group. The combination
of performance measures ties the Bonus
outcome to the balanced delivery of corporate
targets, risk measures and personal/strategic
objectives. The Committee sets the threshold,
target and stretch limits and reviews the
measures used in the Scorecard annually,
to ensure they continue to be relevant and
remain anchored to the corporate plan.
The PSP incorporates measures of
shareholder, financial and non-financial
performance, in line with our key objectives
of sustained growth in earnings leading to
the creation of shareholder value over the
long-term with appropriate consideration
of risk and ESG performance.
Relative TSR provides close alignment
between the relative returns experienced
by our shareholders and the rewards to
Executive Directors.
There is an underpin for the PSP to ensure
payouts are aligned with underlying
performance, financial and non-financial
riskand individual conduct.
Bonus and PSP targets are set taking into
account the business plan, shareholders’
expectations, the external market and
regulatory requirements.
In line with HMRC regulations for such
schemes, the Sharesave Plan does not
operate performance conditions.
Remuneration Policy for
otheremployees
The Committee has regard to pay structures
across the Group when setting the Policy
for Executive Directors and ensures that
policies at and below the Executive Director
level are coherent. There are no significant
differences in the overall remuneration
philosophy, although pay is generally more
variable and linked more to the long-term for
those at more senior levels. The Committee’s
primary reference point for the salary reviews
for the Executive Directors is the average
salary increase for the UK workforce, with
the expectation that increases for Executive
Directors will, other than in exceptional
circumstances, be at or below the increase
for the UK workforce (as a percentage
ofsalary).
A Scorecard is used to assess Bonus outcomes
throughout the Group, with measures
weighted according to role, where relevant.
Overall, the Policy for the Executive
Directors is more heavily weighted towards
performance-related pay than for other
employees. In particular, performance-
related long-term incentives are not provided
outside the most senior management
population as they are reserved for those
considered to have the greatest potential to
influence overall performance.
Although PSPs are awarded only to the most
senior managers in the Group, the Group is
committed to widespread equity ownership
and a Sharesave Plan is available to all
employees in the UK. Executive Directors are
eligible to participate in this plan on the same
basis as other employees.
Element Purpose and link to strategy Operation and performance conditions Maximum
All-employee
share plan
(e.g. Sharesave
Plan)
All employees, including
Executive Directors, are
encouraged to become
shareholders through an
all-employee share plan
A tax-favoured plan under which regular monthly savings may be made over a three-year
period. These savings can then be used to fund the exercise of an option at the end of the
three- year period, where the exercise price is discounted by up to 20%
Executive Directors may also participate in other all-employee HMRC-approved share plans
should they be introduced by OSB Group in the future
Maximum permitted savings based on
HMRC limits
Share
ownership
guidelines
To increase alignment
between Executive
Directors and shareholders
Executive Directors are expected to build and maintain a minimum holding of OSB Group shares
Executive Directors must retain at least 50% of the shares acquired on vesting of any share
awards (net of tax) until the required holding is attained
On cessation of employment, Executive Directors must retain the lower of the in-service
shareholding requirement, or the Executive Directors’ actual shareholding, for two years
At least 250% of salary for the CEO and
at least 200% of salary for the CFO,
or such higher level as the Committee
maydetermine from time to time
The net of tax value of any unvested
deferred awards (which are not subject
to any future performance condition)
may count towards the definition of a
shareholding for this purpose
1. Malus and clawback provisions apply to both the annual bonus, including amounts deferred into shares, and PSP awards. These provide for the recovery of incentive payments within seven years in the event of: (i) a material misstatement of results;
(ii) an error; (iii) a significant failure of risk management; (iv) regulatory censure; (v) in instances of individual gross misconduct; (vi) corporate failure; (vii) reputational damage; or (viii) any other exceptional circumstance as determined by the Board.
A further three years may be applied following such a discovery in order to allow for the investigation of any such event. In order to affect any such clawback, the Committee may use a variety of methods: withhold deferred bonus shares, future PSP
awards or cash bonuses, or seek to recoup cash or shares already paid.
177OSB GROUP PLC | Annual Report and Accounts 2024 177
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Governance Financial StatementsOverview Appendices
Directors’ Remuneration Report continued
Remuneration Policy continued
Illustration of application of Remuneration Policy
The chart below illustrates how the composition of the Executive Directors’ remuneration packages would vary under various performance scenarios, based on the intended implementation in 2025.
£4,000k
£500k
£1,000k
£1,500k
£2,500k
£3,000k
£3,500k
£2,000k
£0k
CEO CFO
Fixed Pay Annual Bonus LTIPs
£1,012k
£1,768k
£3,029k
£3,533k
100% 57.2% 33.4% 28.6%
28.5%
33.3% 28.5%
14.3%
33.3%
49.9%
£610k
£1,064k
£1,820k
£2,123k
100% 57.2% 33.6% 28.7%
28.5%
33.2% 28.5%
14.2%
33.2%
42.8%
1. Minimum performance assumes no award is earned under the bonus and no vesting is achieved under the PSP – only fixed pay (salary, benefits and pension are payable).
2. Half of the bonus is earned (i.e. 55% of salary) and 25% of maximum is achieved under the PSP (i.e. 27.5% of salary).
3. At maximum, full vesting is achieved under both the bonus and PSP (i.e. 110% of salary under the bonus and PSP for current Executive Directors).
4. At maximum, but illustrating the effect of a 50% increase in the share price on PSP awards.
Other than as noted in the chart above, share price growth and all-employee share plan participation are not considered in these scenarios.
The terms and provisions that relate to remuneration in the Executive Directors’ service agreements are set out below. Service contracts are available for inspection at the Company’s registered office.
Provision Policy
Notice period 12 months on either side
Termination payments A payment in lieu of notice may be made on termination to the value of the Executive Director’s basic salary at the time of termination. Such payments may be
made in instalments and in such circumstances can be reduced to the extent that the Executive Director mitigates their loss. Rights to Deferred Share Bonus
Plan and PSP awards on termination are shown below. The employment of each Executive Director is terminable with immediate effect without notice in certain
circumstances, including gross misconduct, fraud or financial dishonesty, bankruptcy or material breach of obligations under their service agreements
Remuneration Salary, pension and core benefits are specified in the agreements. There is no contractual right to participate in the bonus or to receive long-term incentive awards
Post-termination These include six months’ post-termination restrictive covenants against competing with the Group; nine months’ restrictive covenants against dealing with clients
or suppliers of the Group; and nine months’ restrictive covenants against soliciting clients, suppliers and key employees
Contract date Andy Golding, 12 February 2020, Victoria Hyde 22 July 2024
OSB GROUP PLC | Annual Report and Accounts 2024178
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Governance Financial StatementsOverview Appendices
Directors’ Remuneration Report continued
Remuneration Policy continued
The Remuneration Policy for the Board Chair and Independent Non-Executive Directors
Element Purpose and link to strategy Operation and performance conditions Maximum
Fees To attract and retain a high-
calibre Board Chair and
INEDs by offering a market
competitive fee
The Board Chair and INEDs are entitled to an annual fee, with supplementary fees payable for additional
responsibilities including being the Chair or member of the Group Audit, Group Nomination and Governance,
Group Remuneration and People, and Group Risk Committees and for acting as the SID
Fees are reviewed periodically and there are no performance conditions
The Board Chair and INEDs are entitled to reimbursement of travel and other reasonable expenses incurred
in the performance of their duties
There is no prescribed maximum
annual increase. The Committee is
guided by the general increase in
the non-executive market but on
occasion may need to recognise, for
example, change in responsibility
and/or time commitments
Letters of appointment
Letters of appointment set out the duties and responsibilities of INEDs. The key terms are:
Provision Policy
Period of appointment Initial three-year term, subject to annual re-election by shareholders. On expiry of the initial term and subject to the needs of the Board, INEDs may be invited
to serve a further three years. Beyond nine years, INEDs will be appointed at the discretion of the Group Nomination and Governance Committee
Notice periods Three months on either side. Terminable with immediate effect and without compensation or payment in lieu of notice if the Board Chair or INEDs are not
elected or re-elected to their position as a Director of the Company by shareholders
Payment in lieu of notice The Company is entitled to make a payment in lieu of notice on termination
Letters of appointment are available for inspection at the Company’s registered office. The effective dates of the current INEDs’ appointments are shown in the table below.
Independent Non-Executive Director Date of appointment
Kal Atwal 7 February 2023
Henry Daubeney 1 July 2024
Noël Harwerth 4 October 2019 (appointed to the CCFS Board in June 2017)
1
Sarah Hedger 1 February 2019
1
Rajan Kapoor 4 October 2019 (appointed to the CCFS Board in September 2016)
Simon Walker 4 January 2022
David Weymouth 1 September 2017
1
1. These dates reflect the date that each INED joined OneSavings Bank plc (prior to the insertion of OSB GROUP PLC as the holding company and listed entity).
Approval
This report was approved by the Board of Directors (on the recommendation of the Group Remuneration and People Committee) and signed on its behalf by:
Sarah Hedger
Chair of the Group Remuneration and People Committee
12 March 2025
179OSB GROUP PLC | Annual Report and Accounts 2024 179
Strategic Report
Governance Financial StatementsOverview Appendices
Statement of Directors’ Responsibilities
in respect of the Annual Report and the financial statements
The Directors are responsible for preparing
the Annual Report and Company financial
statements in accordance with applicable
law and regulations.
Company law requires the Directors to
prepare Group and parent Company
financial statements for each financial
year. Under that law, they are required to
prepare the Group financial statements in
accordance with UK-adopted International
Financial Reporting Standards (IFRS) and
applicable law and have elected to prepare
the parent Company financial statements
onthe same basis.
Under company law, the Directors must not
approve the financial statements unless they
are satisfied that they give a true and fair
view of the state of affairs of the Group and
parent Company and of their profit or loss
for the year.
In preparing each of the Group and parent
Company financial statements, the Directors
are required to:
• select suitable accounting policies and
then apply them consistently;
• make judgements and estimates that are
reasonable, relevant and reliable;
• state whether they have been prepared
in accordance with IFRSs as adopted by
the UK;
• assess the Group and parent Company’s
ability to continue as a going concern,
disclosing, as applicable, matters related
to going concern;
• use the going concern basis of accounting
unless they either intend to liquidate the
Group or the parent Company or to cease
operations or have no realistic alternative
but to do so;
• present information, including accounting
policies, in a manner that provides
relevant, reliable, comparable and
understandable information; and
• provide additional disclosures when
compliance with the specific requirements
of the financial reporting framework are
insufficient to enable users to understand
the impact of particular transactions,
other events and conditions on the Group
and parent Company’s financial position
and financial performance.
The Directors are responsible for keeping
adequate accounting records that are
sufficient to show and explain the parent
Company’s transactions and disclose
with reasonable accuracy at any time the
financial position of the parent Company
and the Group, to ensure that the financial
statements comply with the Companies Act.
They are also responsible for establishing a
suitable internal control framework to enable
the preparation of financial statements that
are free from material misstatement, whether
due to fraud or error, and have general
responsibility for taking all reasonable steps
to safeguard the Group’s assets and prevent
and detect fraud and other irregularities.
Under applicable law and regulations, the
Directors are also responsible for preparing a
Strategic Report, Directors’ Report, Directors’
Remuneration Report and Corporate
Governance Statement that complies
withthat law and those regulations.
The Directors are responsible for maintaining
the integrity of the corporate and financial
information included on the Company’s
website. UK legislation governing the
preparation and dissemination of financial
statements may differ from legislation in
other jurisdictions.
Responsibility statement of the
Directors in respect of the annual
financial report
Each of the persons who is a Director at the
date of approval of this report confirms, to
the best of their knowledge, that:
• the financial statements, prepared in
accordance with the applicable set of
accounting standards, give a true and
fair view of the assets, liabilities, financial
position and profit or loss of the Company
and the undertakings included in the
consolidation taken as a whole; and
• the Strategic Report/Directors’ Report
includes a fair review of the development
and performance of the business and
the position of the Company and the
undertakings included in the consolidation
taken as a whole, together with a
description of the principal risks and
uncertainties that they face.
Each of the persons who is a Director at the
date of approval of this report confirms that:
• so far as the Director is aware, there is no
relevant audit information of which the
Company’s auditor is unaware; and
• they have taken all the steps they ought
to have taken as a Director in order to
make themselves aware of any relevant
audit information and to establish that
the Company’s auditors are aware of
thatinformation.
Approved by the Board and signed on its
behalf by:
Jason Elphick
Group General Counsel and Company
Secretary
12 March 2025
OSB GROUP PLC | Annual Report and Accounts 2024180
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Governance Financial StatementsOverview Appendices
Directors’ Report: other information
In accordance with the Companies Act, the Directors present their report for the year ended 31 December 2024. Relevant information required to be included in the Directors’ Report including
disclosures required by the FCAs Disclosure and Transparency Rules and UK Listing Rule UKLR 6.1.1, are deemed to be incorporated by reference in this report and detailed in the table below.
Certain matters required to be disclosed in the Directors’ Report have been included in the Strategic Report.
Business activities and future development 8-116
Corporate Governance Report 117-185
Dividend 182
Employees 87-91
Engagement with stakeholders and section 172 132-135
Environmental matters 72-115
Events after the reporting period 256
Internal controls and financial risk management 46-69
Key performance indicators 2, 37-39
Policies 96-99
Principal risks and uncertainties 54-69
Social and community issues 92-94
Share capital and rights attaching to shares
As at 31 December 2024, the Company’s issued share capital comprised of:
Number of shares % of total capital Type of shares Nominal value
372,145,792 100% Ordinary £0.01
Further details relating to share capital can be found in note 38.
Without prejudice to any special rights previously conferred on the holders of any existing shares or class of shares, any share in the Company may be issued with such rights
(includingpreferred, deferred or other special rights) or such restrictions, whether in regard to dividend, voting, return of capital or otherwise as the Company may from time to time by
ordinaryresolution determine (or, in the absence of any such determination, as the Directors may determine).
181OSB GROUP PLC | Annual Report and Accounts 2024 181
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Governance Financial StatementsOverview Appendices
Directors’ Report: other information continued
Authorities to allot and
pre-emption rights
On 9 May 2024, shareholders re-established
the general authority for the Directors to
allot up to £1,311,944.39 of the nominal
value of ordinary shares of £0.01 each. In
addition, shareholders gave authority for the
Directors to grant rights to subscribe for, or to
convert any security into, regulatory capital
convertible instruments up to £472,299.72
of the nominal value of ordinary shares
equivalent to approximately 12% of issued
share capital.
Repurchase of shares
The Company has an unexpired authority
to repurchase ordinary shares up to a
maximum of 39,358,310 ordinary shares.
During the year, the Company repurchased
11,988,623 ordinary shares (each with a
nominal value of £0.01) as part of its £50m
share repurchase programme announced
to the market on 14 March 2024 (2023:
£150m). Following successful completion, the
Company announced an additional £50m
share repurchase programme to the market
on 5 September 2024 and repurchased a
further 10,721,471 shares (each with a nominal
value of £0.01).
Employee share schemes
The details of the Company’s employee
share schemes are set out on page 177 inthe
Directors’ Remuneration Report.
Results, dividends and
dividend waiver
The results for the year are set out in the
Statement of Comprehensive Income on
page 196. The Group’s dividend policy for
2024 remains a payout ratio of at least
25% of underlying profit after taxation
attributable to ordinary shareholders.
During the year under review, the Company
paid an interim dividend of 10.7 pence per
share (2023: 10.2 pence). The Directors
recommend payment of a final dividend
of 22.9 pence per share (2023: 21.8
pence), subject to approval at the AGM
on 8May2025, making a total ordinary
dividend for 2024 of 33.6 pence per share
(2023: 32.0 pence).
The OSB GROUP PLC Employee Benefit Trust,
which holds 134,349 shares in the Company
in connection with the operation of the
Group’s share plans, has lodged standing
instructions to waive dividends on shares
held by it that have not been allocated to
employees. The total amount of dividends
waived during 2024 was £43,542.
Directors and Directors’ interests
The names of the Directors who served during
the year can be found in the Board and
Board Committee meeting attendance table
on page 128.
Directors’ interests in the shares of the
Company are set out on page 171 in the
Directors’ Remuneration Report. None of
the Directors had interests in shares of the
Company greater than 0.22% of the ordinary
shares in issue. There have been nochanges
to Directors’ interests in shares since
31 December 2024.
Directors’ indemnities
The Company maintains Directors’ and
Officers’ Liability Insurance which provides
appropriate cover for legal action brought
against its Directors and Officers. Since the
end of the 2024 financial year, the Company
has also granted indemnities to each of
its Directors and Officers, and to Directors
and Officers of its subsidiary companies,
including Officers who are appointed by the
FCA or PRA to carry out senior managerial
functions or other similar functions, on terms
consistent with the applicable statutory
provisions. Qualifying third-party indemnity
provisions (as defined by Section 234 of the
Companies Act) have therefore been in force
since February 2025 and remain in force as
at the date of this report in relation to certain
losses and liabilities which those Directors
and Officers may incur to third parties in
the course of action as a director, officer
or employee of the Company or of any
associated companies.
Equal opportunities
The Group is committed to applying its
DE&I Policy at all stages of recruitment and
selection. Short-listing, interviewing and
selection will always be conducted without
regard to gender, gender reassignment,
sexual orientation, marital or civil partnership
status, colour, race, nationality, ethnicity
or national origins, religion or belief, age,
pregnancy or maternity leave or trade union
membership. Any candidate with a disability
will not be excluded unless it is clear that
the candidate is unable to perform a duty
that is intrinsic to the role, having considered
reasonable adjustments. Reasonable
adjustments to the recruitment process
will be made to ensure that no applicant is
disadvantaged because of disability. The
recruitment interview process ensures line
managers ask candidates questions that are
not discriminatory or unnecessarily intrusive.
This commitment also applies to existing
employees, with the necessary adjustments
and training made, where there is a change
in circumstances.
Interim dividend Final dividend
Ordinary 10.7 pence per share 22.9 pence per share
Ex-dividend date 22 August 2024 27 March 2025
Record date 23 August 2024 28 March 2025
Payment date 20 September 2024 13 May 2025
OSB GROUP PLC | Annual Report and Accounts 2024182
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Governance Financial StatementsOverview Appendices
Employee engagement
Employees are kept informed of
developments within the business and
in respect of their employment through
a variety of means, such as employee
meetings, briefings and the intranet.
Employee involvement is encouraged, and
views and suggestions are taken into account
when planning new products and projects.
The Sharesave ‘save as you earn’ Scheme
is an all-employee share option scheme
which is open to all UK-based employees.
The Sharesave Scheme allows employees to
purchase options by saving a fixed amount
of between £10 and £500 per month over a
period of three years, at the end of which,
the options, subject to leaver provisions, are
usually exercisable (options granted prior to
2021 have a lower limit of £5 and only three-
year schemes have been offered to employees
from 2021 onwards). The Sharesave Scheme
has been in operation since June 2014 and
options are granted annually, with the
exercise price set at a 20% discount of the
share price on the date of grant.
Our Voice is a forum established to enhance
the level of engagement between the Board
and Group Executive Committee and the
wider workforce. Our Voice consists of
employee representatives from all core
geographical locations, as well as Sarah
Hedger as the designated INED and
representatives from the Group Executive
Committee and HR Management. Other
Board members and members of the Group
Executive Committee are invited to attend
meetings throughout the year.
Employee representatives are encouraged to
engage with their colleagues to identify topics
impacting the workforce or matters that it is
felt should be brought to the attention of the
Board and Group ExecutiveCommittee.
During the year, employee representatives
undertook training to assist them with
collating and representing views of
their fellow colleagues. See page 88
forfurtherinformation.
Board members are keen to engage with
employees across all locations and find the
experience of visiting our branches and offices
within the UK and India valuable.
Further information in relation to the Board’s
engagement with the Group’s stakeholders
including customers, intermediaries,
shareholders, suppliers, regulators and
communities, can be found on pages 132-135.
The Board recognises the benefits that
diversity brings to the business, and actively
promotes and encourages a culture and
environment that values and celebrates our
differences. In 2024, the Group continued its
journey to become a truly diverse and inclusive
organisation which is committed to providing
equal opportunities through the recruitment,
training and development of its employees.
Further information on Diversity, Equity and
Inclusion can be found on pages 89-91.
Greenhouse gas emissions
Information relating to greenhouse gas
emissions, energy consumption and actions
towards energy efficiency can be found
within the Sustainability Report on pages
72-85 and 100-115.
Political donations
Shareholder authority to make aggregate
political donations not exceeding £50,000
was obtained at the AGM on 9 May 2024.
Neither the Company nor any of its
subsidiaries made any political donations
during the year and no positive expenditure
was incurred by the Company.
Research and development
Information relating to research and
development of new products can be found
within the Strategic Report on pages 8-116.
Supervision and regulation
The Company is authorised by the PRA, part
of the Bank of England, and regulated by the
FCA and PRA. Some of its subsidiaries are
also authorised by the FCA and PRA.
Annual General Meeting
Accompanying this report is the Notice of
the AGM which sets out the resolutions to
be proposed to the meeting, together with
an explanation of each. This year’s AGM will
be held at our offices at 90 Whitfield Street,
Fitzrovia, London W1T 4EZ on 8 May 2025 at
11.00 am.
Shareholders may require the Directors to
call a general meeting other than an AGM as
provided by the Companies Act.
Requests to call a general meeting may be
made by members representing at least
5% of the paid-up capital of the Company
as carries the right of voting at general
meetings of the Company (excluding any
paid-up capital held as treasury shares).
A request must state the general nature of
the business to be dealt with at the meeting
and may include the text of a resolution that
may properly be moved and is intended to
be moved at the meeting. A request may
be in hard copy form or in electronic form
and must be authenticated by the person or
persons making it. A request may be made
in writing to the Company Secretary to the
registered office or by sending an email to
ShareholderServices@osb.co.uk. At any
general meeting convened on such request,
no business shall be transacted, except that
stated by the requisition or proposed by
theBoard.
Notifiable interests in share capital
As at 31 December 2024, the Company had received the following notifications of major
holdings of voting rights pursuant to the requirements of Rule 5 of the Disclosure Guidance
andTransparency Rules:
No. of
ordinary
shares
% of issued
share capital
Jupiter Fund Management PLC
1
21,407,948 4.98
GLG Partners LP
2
21,159,035 5.68
BlackRock, Inc. 20,850,903 5.11
Norges Bank 15,267,616 4.10
1. Includes up to 0.03% of financial instruments.
2. Includes 0.5% of financial instruments.
No further notifications have been received since 31 December 2024.
Directors’ Report: other information continued
183OSB GROUP PLC | Annual Report and Accounts 2024 183
Strategic Report
Governance Financial StatementsOverview Appendices
Directors’ Report: other information continued
Modern Slavery and Human
Trafficking Statements
The Group’s Modern Slavery and Human
Trafficking Statements are reviewed and
approved on an annual basis by the
Boardand can be found on our website
at www.osb.co.uk.
The Group is committed to complying
with the law and best practice in respect
of modern slavery, workforce rights and
the environment. We expect suppliers
to share our commitment by complying
with our Vendor Code of Conduct and
Ethics. The Group has taken steps towards
understanding suppliers’ attitudes towards
ESG to ensure that their values and
aspirations are aligned to the Group’s.
TheGroup’s suppliers and business partners
are asked to complete a questionnaire to
provide an insight into how they address
topics such as climate change, diversity,
equality and inclusion and modern slavery,
and to identify areas of focus in the future.
We understand that organisations will be
at various stages of their own ESG and
sustainability journey and we continue to
encourage and support our suppliers with
their transition to an ESG strategy that
alignswith the Group’s ambitions.
Payment practice reporting
Our business is supported by many suppliers,
allowing us to provide a high standard of
service to our customers.
Supplier payment practice reports are
published on a six-monthly basis and
approved and signed by the CFO and Group
Chief Operating Officer on behalf of the
main operating entities. The Group enters
into standard terms with suppliers, which
include terms requiring payment within 30
days of the invoice date following receipt of
a valid invoice. Over 98% of all invoices are
paid within 30 days in line with the standard
payment period for qualifying contracts. The
average time taken to pay invoices ranges
from 4 to 11 days across the Group. The
maximum contractual payment period agreed
varies between 30 to 45 days. There were no
changes to the standard payment terms in
the reporting period. Any complaints received
in respect of invoice payments are considered
aspart of the dispute resolution process.
During the year, the Group did not deduct
any sums from payments under qualifying
contracts as a charge for remaining on a
supplier list. The Group also engages with
key suppliers as part of the Group’s Recovery
Plan which is reviewed by the Board.
Other information
Corporate sustainability
The Board has considered climate-related
matters including the risks of climate change
when preparing this Annual Report. 100%
of the carbon dioxide equivalent emissions
and energy consumption figures within this
Annual Report relate to emissions in the UK
and details can be found on pages 76-85.
Events after the reporting period
Details relating to post-balance sheet events
are set out in note 51.
Financial Instruments
Information on financial instruments
including financial risk management
objectives and policies including the policy
for hedging the exposure of the Group to
price risk, credit risk, liquidity risk and cash
flow risk can be found in the Risk review on
pages 46-69.
Section 172
Details on how the Company has complied
with section 172 can be found throughout
the Strategic and Directors’ Reports and on
pages 10 and 132-135.
Going concern statement
The Board undertakes regular rigorous
assessments of whether the Group is
a going concern in light of current and
potential future economic conditions and
allavailable information about future risks
and uncertainties.
In assessing whether the going concern basis
is appropriate, projections for the Group
have been prepared, covering its future
performance, capital and liquidity for a
period in excess of 12 months from the date
of approval of these Financial Statements.
These forecasts have been subject to
sensitivity tests utilising a range of stress
scenarios, which have been compared to the
latest economic scenarios provided by the
Group’s external economic advisors, as well
as reverse stress tests.
The assessments include the following:
• Financial and capital forecasts were
prepared utilising the latest economic
forecasts provided by the Group’s external
economic advisors. Reverse stress tests
were run to identify combinations of
adverse movements in house prices and
unemployment levels which would result
in the Group breaching its minimum
regulatory and total loss absorbing capital
requirements. The reverse stress testing also
considered what macroeconomic scenarios
would be required for the Group to breach
its interim 18% Minimum Requirement for
own funds and Eligible Liabilities (MREL) as
of these dates. The Directors assessed the
likelihood of those reverse stress scenarios
occurring within the next 12 months and
concluded that the likelihood is remote.
OSB GROUP PLC | Annual Report and Accounts 2024184
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Governance Financial StatementsOverview Appendices
Directors’ Report: other information continued
• The latest liquidity and contingent
liquidity positions and forecasts were
assessed against internal combined stress
scenarios with the Group maintaining
sufficient liquidity throughout the going
concern assessment period.
• The Group continues to assess and mature
the resilience of its business operating
model and supporting infrastructure in the
context of the emerging economic, business
and regulatory environment. The Group’s
Operational Resilience Self-Assessment
Report for 2023 was reviewed and endorsed
by the Group Risk Committee and, approved
by the Board in June 2024. The Group is
in the process of updating this for 2025
and had identified no material changes to
its conclusions. Key areas of focus include
the provision of the Group’s Important
Business Services (IBS) to minimise the
impact of any service disruptions on the
firm’s customers or the wider financial
services industry, and validating the
levels of resilience of the third parties that
the Group depends upon for delivery
of its IBS. There were no items identified
that could threaten the Group’s viability
over the going concern assessment
timehorizon.
The Group’s financial projections
demonstrate that the Group has sufficient
capital and liquidity to continue to meet its
regulatory capital requirements as set out by
the PRA.
The Board has therefore concluded that the
Group has sufficient financial resources
to continue in operational existence for a
period in excess of 12 months from the date
of approval of these Financial Statements
and as a result, it is appropriate to prepare
these consolidated Financial Statements on a
going concern basis.
Key information in respect of the Group’s
ERMF and objectives and processes for
mitigating risks, including liquidity risk, are
set out in detail on pages 46-69.
Approved by the Board and signed on its
behalf by:
Jason Elphick
Group General Counsel and Company
Secretary OSB GROUP PLC
Registered number: 11976839
12 March 2025
185OSB GROUP PLC | Annual Report and Accounts 2024 185
Strategic Report
Governance Financial StatementsOverview Appendices
Financial
Statements
187 Independent Auditor’s Report
197 Consolidated Statement of
Comprehensive Income
198 Consolidated Statement of
FinancialPosition
199 Consolidated Statement of
ChangesinEquity
200 Consolidated Statement of Cash Flows
201 Notes to the Consolidated
FinancialStatements
257 Company Statement of Financial Position
258 Company Statement of
ChangesinEquity
259 Company Statement of Cash Flows
260 Notes to the Company
FinancialStatements
Strategic Report
Governance Financial StatementsOverview Appendices
OSB GROUP PLC  Annual Report and Accounts 2024
186
Independent Auditor’s Report
to the members of OSB Group plc
Report on the audit of the financial statements
1. Opinion
In our opinion:
• the financial statements of OSB GROUP PLC (the ‘parent Company’) and its subsidiaries
(the ‘Group’) give a true and fair view of the state of the Group’s and of the parent
Company’s affairs as at 31 December 2024 and of the Group’s profit for the year
thenended;
• the Group financial statements have been properly prepared in accordance with United
Kingdom adopted international accounting standards;
• the parent company financial statements have been properly prepared in accordance
withUnited Kingdom adopted international accounting standards and as applied in
accordance with the provisions of the Companies Act 2006; and
• the financial statements have been prepared in accordance with the requirements of the
Companies Act 2006.
We have audited the financial statements which comprise:
• the consolidated statement of comprehensive income;
• the consolidated statement of financial position;
• the consolidated statement of changes in equity;
• the consolidated statement of cash flows;
• the related notes to the consolidated financial statements 1 to 51;
• the company statement of financial position;
• the company statement of changes in equity;
• the company statement of cash flows; and
• the related notes to the company financial statements 1 to 9.
The financial reporting framework that has been applied in their preparation is applicable law
and United Kingdom adopted international accounting standards and, as regards the parent
Company financial statements, as applied in accordance with the provisions of the Companies
Act 2006.
2. Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs
(UK)) and applicable law. Our responsibilities under those standards are further described in
the auditor’s responsibilities for the audit of the financial statements section of our report.
We are independent of the Group and the parent Company in accordance with the ethical
requirements that are relevant to our audit of the financial statements in the UK, including
the Financial Reporting Council’s (the ‘FRC’s’) Ethical Standard as applied to listed public
interest entities, and we have fulfilled our other ethical responsibilities in accordance with
theserequirements. The non-audit services provided to the Group and parent Company for
the year are disclosed in note 8 to the financial statements. We confirm that we have not
provided any non-audit services prohibited by the FRC’s Ethical Standard to the Group or
theparent Company.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.
3. Summary of our audit approach
Key audit
matters
The key audit matters that we identified in the current year were:
• loan impairment provisions; and
• effective interest rate income recognition.
Within this report, key audit matters are identified as follows:
Newly identified Increased level of risk
Similar level of risk Decreased level of risk
Materiality The materiality that we used for the Group financial statements was £22.1m,
which was determined by reference to profit before tax.
Scoping Our Group audit scoping accounted for 97.5% of the Group’s interest receivable
and similar income, 97.0% of the Group’s profit before tax, 97.5% of the Group’s
total assets and 99.4% of the Group’s total liabilities. All audit work was
performed by the Group engagement team.
Significant
changes
in our
approach
The primary benchmark for determining materiality in 2023 was net assets
however, for 2024, following a stabilisation of profitability, we have determined
materiality based on profit before tax. As a listed business, profit before tax is
typically a primary measure of performance for key stakeholders.
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4. Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors’ use of the going
concern basis of accounting in the preparation of the financial statements is appropriate.
Our evaluation of the directors’ assessment of the Group’s and parent Company’s ability to
continue to adopt the going concern basis of accounting included:
• We obtained and read management’s going concern assessment, which included
consideration of the Group’s operational resilience, in order to understand, challenge and
evidence the key judgements made by management;
• We obtained an understanding of relevant controls around management’s going
concernassessment;
• We obtained management’s income statement, balance sheet and capital and liquidity
forecasts and assessed key assumptions for reasonableness and their projected impact
on capital and liquidity ratios, particularly with respect to loan book growth and potential
credit losses;
• Supported by our in-house prudential risk specialists, we read the most recent ICAAP and
ILAAP submissions, assessed management’s capital and liquidity projections, assessed
the results of management’s capital reverse stress testing, evaluated key assumptions
and methods used in the capital reverse stress testing model and tested the mechanical
accuracy of the capital reverse stress testing model;
• We read correspondence with regulators to understand the capital and liquidity
requirements imposed by the Group’s regulators, and evidence any changes to those
requirements;
• We met with the Group’s lead regulator, the Prudential Regulation Authority, and discussed
their views on existing and emerging risks to the Group and considered whether these were
reflected appropriately in management’s forecasts and stress tests;
• We assessed the historical accuracy of forecasts prepared by management;
• We assessed the impact of the ongoing economic uncertainty, including how further rises in
living and borrowing costs may impact potential credit losses; and
• We evaluated the Group’s disclosures on going concern against the requirements of IFRS
and in view of the latest FRC guidance.
Based on the work we have performed, we have not identified any material uncertainties
relating to events or conditions that, individually or collectively, may cast significant doubt on
the Group’s and parent Company’s ability to continue as a going concern for a period of at
least twelve months from when the financial statements are authorised for issue.
In relation to the reporting on how the Group has applied the UK Corporate Governance Code,
we have nothing material to add or draw attention to in relation to the directors’ statement in
the financial statements about whether the directors considered it appropriate to adopt the
going concern basis of accounting.
Our responsibilities and the responsibilities of the directors with respect to going concern are
described in the relevant sections of this report.
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5. Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current period and include the most significant
assessed risks of material misstatement (whether or not due to fraud) that we identified. These matters included those which had the greatest effect on: the overall audit strategy; the allocation
of resources in the audit; and directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
5.1.Loan impairment provisions
Refer to Risk profile performance overview on page 64, judgements in applying accounting policies and critical accounting estimates on page 209 and Note 20 on page 223.
Key audit matter
description
IFRS 9 requires loan impairment provisions to be recognised on an expected credit loss (ECL) basis. The estimation of ECL provisions in the Group’s loan portfolios is
inherently uncertain and requires significant judgements and estimates. We therefore consider this to be a key audit matter due to the risk of fraud or error in respect
of the Group’s ECL provisions. ECL provisions as at 31 December 2024 were £126.9m (2023: £145.8m), which represented 0.50% (2023: 0.57%) of loans and advances
to customers. ECL provisions are calculated both for individually assessed loans and collectively on a portfolio basis which require the use of statistical models
incorporating forward looking macroeconomic scenarios, probabilities of default (PD), exposures at default and assumptions on the recoverability of customers’
outstanding balances.
The uncertain economic environment continues to increase the complexity in estimating ECL, particularly with regards to determining appropriate forward looking
macroeconomic scenarios and identifying customers who have experienced significant increases in credit risk. Additionally, higher costs of living, high borrowing costs
and increasing arrears continue to result in an elevated degree of subjectivity in estimating PDs.
We identified three specific areas in relation to ECL that require significant judgement or relate to assumptions to which the overall ECL provision is particularly sensitive.
• Significant increase in credit risk (SICR): The assessment of whether there has been a significant increase in credit risk between the date of initial recognition of
the exposure and 31 December 2024. There is a risk that the Group’s staging criteria does not capture SICR.
• Macroeconomic scenarios: As set out on page 66, the Group sources economic forecasts from a third-party economics expert and then applies judgement to
determine which scenarios to select and the probability weightings to assign. The Group considered four probability weighted scenarios, including base, upside,
downside, and severe downside scenarios. The key economic variables used within the macroeconomics model were determined to be the house price index (HPI)
and unemployment rate. The estimation of these variables involves a high degree of subjectivity and estimation uncertainty.
• Propensity to go into possession following default (PPD) and forced sale discount (FSD) assumptions: PPD measures the likelihood that a defaulted loan will
progress into repossession. FSD measures the difference in sale proceeds between a sale under normal conditions and sale at auction. The loss given default
(LGD) by loan assumed in the ECL provision calculation is sensitive to the PPD and FSD assumptions.
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Independent Auditor’s Report continued
How the scope of our
audit responded to the
key audit matter
We obtained an understanding of the relevant financial controls over the ECL provision with particular focus on controls over significant assumptions and
judgements used in the ECL determination.
To challenge the Group’s SICR criteria, we:
• Supported by our credit risk specialists, evaluated the Group’s SICR policy and assessed whether it complies with IFRS 9;
• Supported by our credit risk specialists, assessed the Group’s quantitative and qualitative thresholds used in the SICR assessment by analysing loan
transfersfrom stage one to stage two driven solely by the Group’s relative and absolute thresholds compared to the 30 days past due “backstop” and other
qualitative factors;
• On a sample basis, tested the completeness and accuracy of the data used in applying the quantitative and qualitative criteria in the SICR assessment to assess
whether loans were assigned to the correct stage;
• As part of our testing of the application of the SICR criteria within the ECL model and with support from our credit risk specialists, we independently reperformed
the Group’s staging assessment across all three stages using our in-house analytics tool and compared this to the Group’s staging assessment; and
• Performed an independent assessment for a sample of loan accounts which exited forbearance, to determine whether they had been appropriately allocated to
the correct stage.
To challenge the Group’s macroeconomic scenarios and the probability weightings applied, we:
• Agreed the macroeconomics scenarios used in the ECL model to reports prepared by the third-party economics expert;
• Assessed the competence, capability and objectivity of the third-party economics expert;
• Supported by our economic specialists, assessed and challenged the scenarios considered and the probability weightings assigned to them in light of the
economic environment as at 31 December 2024;
• With the involvement of our economic specialists challenged the Group’s economic outlook by reference to other available economic outlook data;
• Compared the appropriateness of selected macroeconomic variables (HPI and unemployment) and the four probability weightings used in the macroeconomics
model to those used by peer lenders;
• Supported by our credit risk specialists, assessed the performance of the macroeconomic model to assess whether the economic variables previously selected
were still appropriate through considering the modelled macroeconomic results relative to those observed in historical recessions.
To challenge the Group’s PPD and FSD assumptions, we:
• Supported by our credit risk specialists, reviewed and challenged the methodology of estimating PPD and FSD assumptions;
• Considered the findings raised in the Group’s model monitoring and validation exercise and assessed the impact on the year-end provision; and
• Performed a stand back test to consider potential contradictory evidence and assessed the appropriateness of PPD and FSD assumptions by comparison to
industry peers.
Key observations We are satisfied that the SICR criteria and PPD and FSD assumptions in determining the ECL provision were reasonable. We observed that the macroeconomic
scenarios selected by the directors and the probability weightings applied generate an appropriate portfolio loss distribution.
Overall, we determined that the loan impairment provisions were appropriately stated as at 31 December 2024.
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5.2.Effective interest rate income recognition
Refer to the significant issues considered by the Group Audit Committee on page 146, judgements in applying accounting policies and critical accounting estimates on page 211, the
accounting policy on pages 202 and Note 3 on page 212.
Key audit
matterdescription
In accordance with the requirements of IFRS 9, directly attributable fees, discounts, incentives and commissions on a constant yield basis (effective interest
rate, EIR) are required to be spread over the expected life of the loan assets. EIR is complex and the Group’s approach to determining the EIR involves the use of
models and significant estimation in determining the behavioural life of loan assets. Given the complexity and judgement involved in accounting for EIR and given
that revenue recognition is an area susceptible to fraud, there is an opportunity for management to manipulate the amount of interest income reported in the
financialstatements.
The Group’s net interest income for the year ended 31 December 2024 was £666.4m (2023: £658.6m).
EIR adjustments arise from revisions to estimated cash receipts or payments for loan assets that occur for reasons other than a movement in market interest rates
or credit losses. They result in an adjustment to the carrying amount of the loan asset, with the adjustment recognised in the income statement in interest receivable
and similar income. As the EIR adjustments reflect changes to the timing and volume of forecast customer redemptions, they are inherently judgemental.
The level of judgement exercised is increased where there is limited availability of historical repayment information. For the Precise loan portfolios, the EIR
adjustments are sensitive to changes in the behavioural life curves. Changes in the modelled behavioural life across the Group’s portfolios during the year resulted
in an interest income loss of £15.9m (2023: £210.7m loss) the majority of which relates to the Precise loan portfolios. The current economic environment and expected
future decreases in interest rates continues to increase uncertainty with regards to forecasting expected behavioural lives and prepayment rates.
How the scope of our
audit responded to
thekey audit matter
We obtained an understanding of the relevant controls over EIR, focusing on the calculation and review of EIR adjustments and the determination of customer
redemption profiles and weighted average life curves.
For the Precise portfolio, where the EIR adjustments were most significant and sensitive to changes in behavioural life, with the involvement of our analytics and
modelling specialists, we ran the loan data for all products through our own independent EIR model, using the behavioural life curves derived by the Group.
Wecompared our calculation of the EIR adjustment required to the amount recorded by the Group.
A number of key assumptions are made to estimate the expected future behaviour of customers including consideration of recently observed behaviour. For these
assumptions, we independently challenged the appropriateness of the assumptions considering the interest rate environment that has been experienced in the UK
over the last year, economic forecasts of future interest rates and trends in customer behaviour observed in recent months. With the involvement of our analytics
and modelling specialists, we independently derived behavioural life curves using the Group’s actual loan data over recent years, incorporating those assumptions
that we considered reasonable. We used these curves in our own independent EIR model to calculate the EIR adjustments. We compared this output to the amounts
recorded by the Group.
We also tested the completeness and accuracy of a sample of inputs into the EIR model for originated loans.
Key observations We determined that the EIR models and assumptions used were appropriate and that net interest income for the period is appropriately stated.
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6. Our application of materiality
6.1.Materiality
We define materiality as the magnitude of misstatement in the financial statements that makes
it probable that the economic decisions of a reasonably knowledgeable person would be
changed or influenced. We use materiality both in planning the scope of our audit work and in
evaluating the results of our work.
Based on our professional judgement, we determined materiality for the financial statements
as a whole as follows:
Group
financial statements
Parent Company
financialstatements
Materiality £22.1m (2023: £20.3m) £15.5m (2023: £17.9m)
Basis for
determining
materiality
We determined materiality for the
Group to be 5.3% of profit before tax
of £418.1m (2023: approximately 1.0%
of net assets, which equated to 5.8%
of profit before tax).
We determined materiality for the
parent Company by reference to 1%
of net assets. This is consistent with
prior year.
Rationale for
the benchmark
applied
Following a stabilisation of
profitability for the current year we
have determined materiality based
on 5.0% of forecast profit before tax
(5.3% of final profit before tax), which
equates to 1.0% of net assets. For the
prior year the basis of materiality was
approximately 1.0% of net assets.
Asa listed business, profit before
tax is typically a primary measure of
performance for key stakeholders.
The parent Company is principally
a holding company and we have
therefore determined net assets to
be the most relevant benchmark to
determine materiality.
6.2.Performance materiality
We set performance materiality at a level lower than materiality to reduce the probability
that, in aggregate, uncorrected and undetected misstatements exceed the materiality for the
financial statements as a whole.
Group
financial statements
Parent Company
financial statements
Performance
materiality
60% (2023: 60%) of Group materiality 60% (2023: 60%) of parent
Company materiality
Basis and
rationale for
determining
performance
materiality
Group performance materiality was set at 60% of Group materiality
(2023: 60%). In determining performance materiality, we considered a
number of factors, including: our understanding of the control environment;
our understanding of the business; and the low number of uncorrected
misstatements identified in the prior year
6.3.Error reporting threshold
We agreed with the Audit Committee that we would report to the Committee all audit differences
in excess of £1.1m (2023: £1.0m), as well as differences below that threshold that, in our view,
warranted reporting on qualitative grounds. We also report to the Audit Committee on disclosure
matters that we identified when assessing the overall presentation of the financial statements.
7. An overview of the scope of our audit
7.1.Identification and scoping of components
Our Group audit was scoped by obtaining an understanding of the Group and its environment,
including Group-wide controls and assessing the risks of material misstatement at the Group
level. We structured our approach to the audit to reflect how the Group is organised as well as
ensuring our audit was both effective and risk focused.
Due to the centralised nature of the Group, which includes its operations and service centres
as well as central management of financial reporting for components, all of our testing was
performed centrally by the Group audit team. Consistent with the prior year we identified
OneSavings Bank plc and Charter Court Financial Services Limited, the two main banking
entities of the Group, as well as Interbay ML Ltd, another significant lending subsidiary, as
components where an audit of the entire financial information was required.
Our audits of the entire financial information of the above components accounted for 97.5%
(2023: 98%) of the Group’s interest receivable and similar income, 97.0% (2023: 95%) of the
Group’s profit before tax, 97.5% (2023: 97%) of the Group’s total assets and 99.4% (2023: 99%)
of the Group’s total liabilities.
At a group level we also tested the group’s consolidation process.
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7.2.Our consideration of the control environment
We identified the key IT systems relevant to the audit to be those used in financial reporting,
lending and savings areas. For these systems, with the involvement of our IT specialists, we
obtained an understanding of relevant general IT controls.
Where deficiencies were identified in the control environment, including deficiencies in IT
controls, our risk assessment procedures included an assessment of those deficiencies to
determine the impact on our audit plan. Where we were unable to identify or test mitigating
controls, we adopted a non-controls reliance approach and performed additional substantive
procedures. As a result of deficiencies identified in internal IT access controls across the Group,
we amended our planned audit procedures to adopt a non-controls reliance approach over
all financial statement lines for all entities with the exception of retail deposits balances and
associated interest expense for Charter Court Financial Services Limited. As the operational
management of retail deposits for Charter Court Financial Services Limited is outsourced to
athird-party provider we have relied on the service organisation controls in place and were
able to adopt a control reliant approach.
7.3.Our consideration of climate-related risks
In planning our audit, we have considered the impact of climate change on the Group’s
operations and impact on its financial statements. The Group has set out its commitments,
aligned with the goals of the Paris Climate Accord, to be a net zero bank by 2050. Further
information is provided in the Group’s Strategic Report and Task Force on Climate-Related
Financial Disclosures (“TCFD”) on pages 100 and 115. The Group sets out its assessment of the
potential impact of climate change on ECL on page 52 of the Risk review section of the Annual
Report and the potential impact on the financial statements in note 20 on page 223.
In conjunction with our climate risk specialists, we have held discussions with the Group
tounderstand:
• the process for identifying affected operations, including the governance and controls over
this process, and the subsequent effect on the financial reporting for the Group; and
• the long-term strategy to respond to climate change risks as they evolve.
Our audit work has involved:
• challenging the completeness of the physical and transition risks identified and considered
in the Group’s climate risk assessment and the conclusion that there is no material impact
of climate change risk on current year financial reporting; and
• assessing disclosures in the Annual Report and challenging the consistency between the
financial statements and the remainder of the Annual Report.
We have been engaged to provide limited assurance on the description of activities undertaken
to meet the Recommendations of the Task Force on Climate-Related Financial Disclosures
(“TCFD”) and selected Environmental, Social and Governance metrics (“Selected ESG Metrics”)
(together the “Assured ESG Information”) in the Annual Report for the year ended 31 December
2024. Please refer to pages 268 to 270 for our separate assurance report.
8. Other information
The other information comprises the information included in the annual report, other than the
financial statements and our auditor’s report thereon. The directors are responsible for the
other information contained within the annual report.
Our opinion on the financial statements does not cover the other information and, except to
the extent otherwise explicitly stated in our report, we do not express any form of assurance
conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other
information is materially inconsistent with the financial statements or our knowledge obtained
in the course of the audit, or otherwise appears to be materially misstated.
If we identify such material inconsistencies or apparent material misstatements, we are
required to determine whether this gives rise to a material misstatement in the financial
statements themselves. If, based on the work we have performed, we conclude that there is a
material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
9. Responsibilities of directors
As explained more fully in the statement of directors’ responsibilities the directors are
responsible for the preparation of the financial statements and for being satisfied that they
give a true and fair view, and for such internal control as the directors determine is necessary
to enable the preparation of financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Group’s
and the parent Company’s ability to continue as a going concern, disclosing as applicable,
matters related to going concern and using the going concern basis of accounting unless the
directors either intend to liquidate the Group or the parent Company or to cease operations,
orhave no realistic alternative but to do so.
10. Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements
asa whole are free from material misstatement, whether due to fraud or error, and to issue an
auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance,
but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect
a material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located
on the FRC’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of
our auditor’s report.
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11. Extent to which the audit was considered capable of detecting irregularities,
including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations.
We design procedures in line with our responsibilities, outlined above, to detect material
misstatements in respect of irregularities, including fraud. The extent to which our procedures
are capable of detecting irregularities, including fraud is detailed below.
11.1.Identifying and assessing potential risks related to irregularities
In identifying and assessing risks of material misstatement in respect of irregularities, including
fraud and non-compliance with laws and regulations, we considered the following:
• the nature of the industry and sector, control environment and business performance
including the design of the Group’s remuneration policies, key drivers for directors’
remuneration, bonus levels and performance targets;
• the Group’s own assessment of the risks that irregularities may occur either as a result of
fraud or error that was approved by the board;
• results of our enquiries of management, internal audit, the directors and the audit
committee about their own identification and assessment of the risks of irregularities,
including those that are specific to the Group’s sector;
• any matters we identified having obtained and reviewed the Group’s documentation of their
policies and procedures relating to:
– identifying, evaluating and complying with laws and regulations and whether they were
aware of any instances of non-compliance;
– detecting and responding to the risks of fraud and whether they have knowledge of any
actual, suspected or alleged fraud;
– the internal controls established to mitigate risks of fraud or non-compliance with laws
and regulations;
• the matters discussed among the audit engagement team and relevant internal specialists,
including tax, valuations, real estate, IT, climate risk, prudential risk, economics, financial
instruments, share based payments, credit risk and analytics and modelling specialists
regarding how and where fraud might occur in the financial statements and any potential
indicators of fraud.
As a result of these procedures, we considered the opportunities and incentives that may exist
within the organisation for fraud and identified the greatest potential for fraud in the following
areas: loan impairment provisions and effective interest rate income recognition. In common
with all audits under ISAs (UK), we are also required to perform specific procedures to respond
to the risk of management override.
We also obtained an understanding of the legal and regulatory frameworks that the Group
operates in, focusing on provisions of those laws and regulations that had a direct effect on
the determination of material amounts and disclosures in the financial statements. The key
laws and regulations we considered in this context included the UK Companies Act, Listing
Rules and tax legislation.
In addition, we considered provisions of other laws and regulations that do not have a
direct effect on the financial statements but compliance with which may be fundamental
to the Group’s ability to operate or to avoid a material penalty. These included the Group’s
prudentialregulatory requirements and capital, liquidity and conduct requirements.
11.2.Audit response to risks identified
As a result of performing the above, we identified loan impairment provisions and effective
interest rate income recognition as key audit matters related to the potential risk of fraud.
Thekey audit matters section of our report explains the matters in more detail and also
describes the specific procedures we performed in response to those key audit matters.
In addition to the above, our procedures to respond to risks identified included the following:
• reviewing the financial statement disclosures and testing to supporting documentation to
assess compliance with provisions of relevant laws and regulations described as having a
direct effect on the financial statements;
• enquiring of management, the audit committee and in-house and external legal counsel
concerning actual and potential litigation and claims;
• performing analytical procedures to identify any unusual or unexpected relationships that
may indicate risks of material misstatement due to fraud;
• reading minutes of meetings of those charged with governance, reviewing internal audit
reports and reviewing correspondence with the Prudential Regulation Authority, the
Financial Conduct Authority and HMRC; and
• in addressing the risk of fraud through management override of controls, testing the
appropriateness of journal entries and other adjustments; assessing whether the
judgements made in making accounting estimates are indicative of a potential bias; and
evaluating the business rationale of any significant transactions that are unusual or outside
the normal course of business.
We also communicated relevant identified laws and regulations and potential fraud risks
to all engagement team members including internal specialists and significant component
audit teams, and remained alert to any indications of fraud or non-compliance with laws and
regulations throughout the audit.
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Report on other legal and regulatory requirements
12. Opinions on other matters prescribed by the Companies Act 2006
In our opinion the part of the directors’ remuneration report to be audited has been properly
prepared in accordance with the Companies Act 2006.
In our opinion, based on the work undertaken in the course of the audit:
the information given in the strategic report and the directors’ report for the financial year for
which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors’ report have been prepared in accordance with
applicable legal requirements.
In the light of the knowledge and understanding of the Group and the parent Company and
their environment obtained in the course of the audit, we have not identified any material
misstatements in the strategic report or the directors’ report.
13. Corporate Governance Statement
The Listing Rules require us to review the directors’ statement in relation to going concern,
longer-term viability and that part of the Corporate Governance Statement relating to the
Group’s compliance with the provisions of the UK Corporate Governance Code specified
forour review.
Based on the work undertaken as part of our audit, we have concluded that each of the
following elements of the Corporate Governance Statement is materially consistent with
thefinancial statements and our knowledge obtained during the audit:
• the directors’ statement with regards to the appropriateness of adopting the going concern
basis of accounting and any material uncertainties identified set out on pages 184 and 185;
• the directors’ explanation as to its assessment of the Group’s prospects, the period this
assessment covers and why the period is appropriate set out on page 184 and 185;
• the directors’ statement on fair, balanced and understandable set out on page 145;
• the board’s confirmation that it has carried out a robust assessment of the emerging and
principal risks set out on page 145;
• the section of the annual report that describes the review of effectiveness of risk
management and internal control systems set out on page 147; and
• the section describing the work of the audit committee set out on page 143 to 149.
14. Opinion on other matter prescribed by the Capital Requirements
(Country-by-Country Reporting) Regulations 2013
In our opinion the information given in note 46 to the financial statements for the financial
yearended 31 December 2024 has been properly prepared, in all material respects, in
accordance with the Capital Requirements (Country-by Country Reporting) Regulations 2013.
15. Matters on which we are required to report by exception
15.1.Adequacy of explanations received and accounting records
Under the Companies Act 2006 we are required to report to you if, in our opinion:
• we have not received all the information and explanations we require for our audit; or
• adequate accounting records have not been kept by the parent Company, or returns
adequate for our audit have not been received from branches not visited by us; or
• the parent Company financial statements are not in agreement with the accounting
recordsand returns.
We have nothing to report in respect of these matters.
15.2.Directors’ remuneration
Under the Companies Act 2006 we are also required to report if in our opinion certain disclosures of
directors’ remuneration have not been made or the part of the directors’ remuneration report to
be audited is not in agreement with the accounting records and returns.
We have nothing to report in respect of these matters.
16. Other matters which we are required to address
16.1.Auditor tenure
Following the recommendation of the Audit Committee, we were appointed by the shareholders
of the OSB GROUP PLC on 17 November 2020 to audit the Group financial statements for
the year ending 31 December 2020 and subsequent financial periods. The period of total
uninterrupted engagement including previous renewals and reappointments of the firm is
fiveyears, covering the years ending 31 December 2020 to 31 December 2024.
Prior to our appointment to audit the parent Company, we were auditor of the Group headed
by OneSavings Bank plc, since 9 May 2019. The period of total uninterrupted engagement for
OneSavings Bank plc, including previous renewals and reappointments of the firm, is six years,
covering the year ended 31 December 2019 to 31 December 2024.
16.2.Consistency of the audit report with the additional report to the audit committee
Our audit opinion is consistent with the additional report to the audit committee we are
required to provide in accordance with ISAs (UK).
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17. Use of our report
This report is made solely to the Company’s members, as a body, in accordance with Chapter
3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might
state to the Company’s members those matters we are required to state to them in an auditor’s
report and for no other purpose. To the fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than the Company and the Company’s members as
abody, for our audit work, for this report, or for the opinions we have formed.
As required by the Financial Conduct Authority (FCA) Disclosure Guidance and Transparency
Rule (DTR) 4.1.15R – DTR 4.1.18R, these financial statements will form part of the Electronic
Format Annual Financial Report filed on the National Storage Mechanism of the FCA in
accordance with DTR 4.1.15R – DTR 4.1.18R. This auditor’s report provides no assurance over
whether the Electronic Format Annual Financial Report has been prepared in compliance
with DTR 4.1.15R – DTR 4.1.18R. We have been engaged to provide assurance on whether the
Electronic Format Annual Financial Report has been prepared in compliance with DTR 4.1.15R
–DTR 4.1.18R and will publicly report separately to the members on this.
Ben Jackson, FCA (Senior statutory auditor)
For and on behalf of Deloitte LLP
Statutory Auditor
London, United Kingdom
12 March 2025
OSB GROUP PLC | Annual Report and Accounts 2024
Strategic Report
Governance Financial StatementsOverview Appendices
196
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2024
20242023
Note£m£m
Interest receivable and similar income
3
2,099 .3
1 , 76 7. 0
Interest payable and similar charges
4
(1 ,4 32 .9)
(1 ,1 0 8 .4)
Net interest income
666.4
658 .6
Fair value losses on financial instruments
5
(1.5)
(4.4)
Loss on sale of financial instruments
6
(2 . 4)
–
Other operating income
7
4.7
3 .9
Total income
6 6 7. 2
6 5 8 .1
Administrative expenses
8
(2 5 8 .1)
(2 3 4.6)
Provisions
33
(2 .7)
(0 .4)
Impairment of financial assets
21
11. 7
(4 8. 8)
Profit before taxation
4 1 8 .1
37 4. 3
Taxation
11
(110.0)
(91.7)
Profit for the year
308.1
282.6
Other comprehensive expense
Items which may be reclassified to profit or loss:
Fair value changes on financial instruments measured at fair value through other comprehensive income (FVOCI):
Arising in the year
16
(0.1)
(0. 2)
Tax on items in other comprehensive expense
–
0 .1
Revaluation of foreign operations
–
(0.8)
Other comprehensive expense
(0 .1)
(0 .9)
Total comprehensive income for the year
308.0
281. 7
Dividend, pence per share
13
3 3.6
32. 0
Earnings per share (EPS), pence per share
Basic
12
7 7. 6
6 6 .1
Diluted
12
75.7
65.0
The above results are derived wholly from continuing operations.
The notes on pages 201 to 256 form part of these accounts.
The financial statements on pages 197 to 256 were approved by the Board of Directors on 12 March 2025.
197OSB GROUP PLC | Annual Report and Accounts 2024
Strategic Report
Governance Financial StatementsOverview Appendices
Consolidated Statement of Financial Position
As at 31 December 2024
20242023
Note£m£m
Assets
Cash in hand
0.3
0 .4
Loans and advances to credit institutions
15
3 , 4 0 5 .9
2,81 3.6
Investment securities
16
1 ,43 4 .4
621.7
Loans and advances to customers
17
25,1 26.3
25,7 65.0
Fair value adjustments on hedged assets
23
(179.3)
(2 43 .5)
Derivative assets
22
313 .8
5 30.6
Other assets
24
1 7. 8
2 7. 6
Current taxation asset
14.8
0.6
Deferred taxation asset
11
6. 2
3 .9
Property, plant and equipment
25
54.6
43.8
Intangible assets
26
48.8
2 6 .1
Total assets
30,243.6
2 9, 5 8 9. 8
Liabilities
Amounts owed to credit institutions
27
1 ,9 3 5 . 2
3 ,57 5.0
Amounts owed to retail depositors
28
23 ,82 0.3
22, 126.6
Fair value adjustments on hedged liabilities
23
(6 .1)
2 1 .9
Amounts owed to other customers
29
1 0 4 .9
63.3
Debt securities in issue
30
1,0 18. 3
818.5
Derivative liabilities
22
81.9
1 9 9.9
Lease liabilities
31
9.1
11 .2
Other liabilities
32
56 .4
3 9. 6
Provisions
33
4.6
0.8
Deferred taxation liability
11
1 3 .1
6.3
Senior notes
34
72 2 .7
3 0 7. 5
Subordinated liabilities
35
2 5 9. 8
2 5 9. 5
Perpetual Subordinated Bonds
36
–
15. 2
28,020.2
2 7, 4 4 5 . 3
20242023
Note£m£m
Equity
Share capital
38
3.7
3 .9
Share premium
38
4.5
3.8
Other equity instruments
39
150.0
15 0.0
Retained earnings
3,406.4
3 ,33 0. 2
Other reserves
40
(1,3 41.2)
(1 ,343. 4)
Shareholders’ funds
2 , 2 23 .4
2 ,14 4 . 5
Total equity and liabilities
30,243.6
2 9, 5 8 9. 8
The notes on pages 201 to 256 form part of these accounts. The financial statements on pages
197 to 256 were approved by the Board of Directors on 12 March 2025 and signed on its behalf by
Andy Golding Victoria Hyde
Chief Executive Officer Chief Financial Officer
Company number: 11976839
198 OSB GROUP PLC | Annual Report and Accounts 2024
Strategic Report
Governance Financial StatementsOverview Appendices
Consolidated Statement of Changes in Equity
For the year ended 31 December 2024
Capital
redemption Foreign Share-based
and transfer exchange payment Retained Other equity
Share capitalShare premium
reserve
1
Own shares
2
reserveFVOCI reservereserveearningsinstrumentsTotal
£m£m£m£m£m£m£m£m£m£m
As at 1 January 2023
4. 3
2 .4
(1 , 3 5 5 .1)
(2. 2)
(1.3)
0.3
13.2
3 , 3 8 9.4
150.0
2, 201.0
Profit for the year
–
–
–
–
–
–
–
282. 6
–
282. 6
Other comprehensive expense
–
–
–
–
(0.8)
(0. 2)
–
–
–
(1.0)
Tax on items in other comprehensive expense
–
–
–
–
–
0 .1
–
–
–
0 .1
Total comprehensive (expense)/income
–
–
–
–
(0.8)
(0.1)
–
282. 6
–
281.7
Coupon paid on Additional Tier 1 (AT1) securities
–
–
–
–
–
–
–
(9 .0)
–
(9 .0)
Dividends paid
–
–
–
–
–
–
–
(18 5.0)
–
(1 85.0)
Share-based payments
–
1 .4
–
–
–
–
0.6
5.0
–
7. 0
Own shares
2
–
–
–
1. 2
–
–
–
(1. 2)
–
–
Share repurchase
3
(0 .4)
–
0 .4
–
–
–
–
(151 . 6)
–
(15 1. 6)
Tax recognised in equity
–
–
–
–
–
–
0 .4
–
–
0 .4
As at 31 December 2023
3 .9
3.8
(1, 3 54. 7)
(1.0)
(2 .1)
0. 2
1 4.2
3, 33 0.2
150.0
2,1 4 4. 5
Profit for the year
–
–
–
–
–
–
–
308. 1
–
308. 1
Other comprehensive expense
–
–
–
–
–
(0.1)
–
–
–
(0.1)
Total comprehensive (expense)/income
–
–
–
–
–
(0 .1)
–
308. 1
–
308.0
Coupon paid on AT1 securities
–
–
–
–
–
–
–
(9. 0)
–
(9. 0)
Dividends paid
–
–
–
–
–
–
–
(12 6 .4)
–
(1 26 .4)
Share-based payments
–
0.7
–
–
–
–
1.7
4.7
–
7. 1
Own shares
2
–
–
–
0 .1
–
–
–
(0.1)
–
–
Share repurchase
3
(0. 2)
–
0. 2
–
–
–
–
(101.1)
–
(101.1)
Tax recognised in equity
–
–
–
–
–
–
0.3
–
–
0.3
As at 31 December 2024
3.7
4.5
(1,354.5)
(0 .9)
(2 .1)
0 .1
16.2
3,406. 4
150.0
2 , 2 2 3.4
1. Comprises Capital redemption reserve of £0.8m (2023: £0. 6m) and Transfer reserve of £1,355 .3m (2023: £(1,3 55.3)m).
2. The Group has adopted look-through accounting (see note 1 c) and recognised the Employee Benefit Trust (EBT) within OSB GROUP PLC (OSBG).
3. Includes £10 0.0m (2023: £1 50.0m) for shares repurchased, £0. 4m (2023: £0.8m) for transaction costs and £0.7m (2023: £0.8m) for incentive fees.
Share capital and premium is disclosed in note 38 and the reserves are further analysed in note 40.
199OSB GROUP PLC | Annual Report and Accounts 2024
Strategic Report
Governance Financial StatementsOverview Appendices
Consolidated Statement of Cash Flows
For the year ended 31 December 2024
20242023
Note£m£m
Cash flows from operating activities
Profit before taxation
41 8 .1
37 4. 3
Adjustments for non-cash and other items
47
246.0
29 4.0
Changes in operating assets and liabilities
47
1,69 1.0
(1 3 9. 5)
Cash generated from operating activities
2 , 3 5 5 .1
52 8.8
Net tax paid
(1 1 9. 4)
(1 03 . 6)
Net cash generated from operating activities
2 ,23 5.7
42 5. 2
Cash flows from investing activities
Maturity and sales of investment securities
7 8 9.1
366.3
Purchases of investment securities
(811.2)
(664 .3)
Interest received on investment securities
36.7
2 2.6
Purchases of property, plant and equipment
andintangible assets
25,26
(43. 9)
(2 5. 8)
Net cash from investing activities
(2 9. 3)
(3 01. 2)
Cash flows from financing activities
Financing received
37
1,736.5
1,328. 6
Financing repaid
37
(2 , 716 .8)
(1,430.3)
Interest paid on financing
37
(273 . 3)
(2 0 5 .4)
Dividends paid
13
(126.4)
(1 85.0)
Share repurchase
1
(90.6)
(1 5 2 .4)
Coupon paid on AT1 securities
(9. 0)
(9 .0)
Net swap interest paid on subordinated liabilities and
senior notes
(5 .0)
–
Net swap interest paid on structural hedge
(3. 3)
–
Repayments of principal portion of lease liabilities
(1 .9)
(2 .0)
Proceeds from issuance of shares under employee
Save As You Earn (SAYE) schemes
0.8
1.4
Net cash from financing activities
(1 ,4 8 9. 0)
(6 54 .1)
20242023
Note£m£m
Net increase/(decrease) in cash and cash
equivalents
7 1 7. 4
(53 0.1)
Cash and cash equivalents at the beginning
of the year
14
2 ,514. 0
3 , 0 4 4.1
Cash and cash equivalents at the end of the year
14
3,231.4
2 ,51 4.0
Movement in cash and cash equivalents
7 1 7. 4
(53 0 .1)
1. Includes £89.9m (2023: £15 0.0m) for shares repurchased, £0. 4m (2023: £0.8m) transaction costs and £0.3m (2023:
£1. 6m) incentive fee.
200 OSB GROUP PLC | Annual Report and Accounts 2024
Strategic Report
Governance Financial StatementsOverview Appendices
Notes to the Consolidated Financial Statements
For the year ended 31 December 2024
1. Accounting policies
a) Basis of preparation
The financial statements have been prepared in accordance with International Financial
Reporting Standards (IFRS) as adopted by the United Kingdom Endorsement Board (UKEB) and
interpretations issued by the IFRS Interpretations Committee (IFRS IC) and in conformity with
the requirements of the Companies Act 2006.
The financial statements have been prepared on a historical cost basis, as modified by the
revaluation of investment securities and derivative contracts and other financial assets held
at fair value through profit or loss (FVTPL) or FVOCI (see note 1 m. (ii)).
The financial statements are presented in pounds Sterling. All amounts in the financial
statements have been rounded to the nearest £0.1m.
b) Going concern
The Board undertakes regular rigorous assessments of whether the Group is a going concern
in light of current and potential future economic conditions and all available information about
future risks and uncertainties.
In assessing whether the going concern basis is appropriate, projections for the Group have
been prepared, covering its future performance, capital, and liquidity for a period in excess of
12 months from the date of approval of these financial statements. These forecasts have been
subject to sensitivity tests utilising a range of stress scenarios, which have been compared to
the latest economic scenarios provided by the Group’s external economic advisors, as well as
reverse stress tests.
The assessments include the following:
• Financial and capital forecasts were prepared utilising the latest economic forecasts
provided by the Group’s external economic advisers. Reverse stress tests were run to identify
combinations of adverse movements in house prices and unemployment levels which would
result in the Group breaching its minimum regulatory and total loss-absorbing capital
requirements. The reverse stress testing also considered what macroeconomic scenarios
would be required for the Group to breach its interim 18% Minimum Requirement for own
funds and Eligible Liabilities (MREL) requirement as of these dates. The Directors assessed
the likelihood of those reverse stress scenarios occurring within the next 12 months and
concluded that the likelihood is remote.
• The latest liquidity and contingent liquidity positions and forecasts were assessed
against internal combined stress scenarios with the Group maintaining sufficient liquidity
throughout the going concern assessment period.
• The Group continues to assess and mature the resilience of its business operating model and
supporting infrastructure in the context of the emerging economic, business and regulatory
environment. The Group’s Operational Resilience Self-Assessment Report for 2023 was
reviewed and endorsed by the Group Risk Committee and approved by the Board in June
2024. The Group is in the process of updating this for 2025 and has identified no material
changes to its conclusions. Key areas of focus include the provision of the Group’s Important
Business Services (IBSs) to minimise the impact of any service disruptions on the firm’s
customers or the wider financial services industry, and validating the levels of resilience of the
third parties that the Group depends upon for delivery of its IBSs. There were no items identified
that could threaten the Group’s viability over the going concern assessment time horizon.
The Group’s financial projections demonstrate that the Group has sufficient capital and
liquidity to continue to meet its regulatory capital requirements as set out by the Prudential
Regulation Authority (PRA).
The Board has therefore concluded that the Group has sufficient resources to continue in
operational existence for a period in excess of 12 months from the date of approval of these
financial statements and, as a result, it is appropriate to prepare these consolidated financial
statements on a going concern basis.
c) Basis of consolidation
The Group accounts include the results of OSB GROUP PLC (the Company) and all its
subsidiary undertakings. Subsidiaries are those entities, including structured entities, over
which the Group has control. The Group controls an entity when it is exposed, or has rights,
to variable returns from its involvement with the entity and has the ability to affect those
returns through its power over the investee.
Judgement is applied in assessing the relevant factors and conditions in totality when
determining whether the Group controls an entity. Specifically, judgement is applied in
assessing whether the Group has substantive decision-making rights over the relevant
activities and whether it is exercising power as a principal or an agent.
The Group is not deemed to control an entity when it exercises power over an entity in an
agency capacity. In determining whether the Group is acting as an agent, the Directors
consider the overall relationship between the Group, the investee and other parties to the
arrangement with respect to the following factors: (i) the scope of the Group’s decision-making
power; (ii) the rights held by other parties; (iii) the remuneration to which the Group is entitled;
and (iv) the Group’s exposure to variability of returns. The determination of control is based on
the current facts and circumstances and is continuously assessed.
Where the Group does not retain a direct ownership interest in a securitisation entity, but
the Directors have determined that the Group controls those entities, they are treated as
subsidiaries and are consolidated. Control is determined to exist if the Group has the power to
direct the activities of each entity (for example, managing the performance of the underlying
mortgage assets and raising debt on those mortgage assets which is used to fund the Group)
and, in addition to this, the Group is exposed to a variable return (for example, retaining the
residual risk on the mortgage assets).
201OSB GROUP PLC | Annual Report and Accounts 2024
Strategic Report
Governance Financial StatementsOverview Appendices
1. Accounting policies continued
Securitisation structures that do not meet these criteria are not treated as subsidiaries and are
excluded from the consolidated accounts. The Group applies the net approach in accounting
for securitisation structures where it retains an interest in the securitisation, netting the loan
notes held against the deemed loan balance.
Subsidiaries are fully consolidated from the date on which control is transferred to the Group
and are deconsolidated from the date that control ceases. Upon consolidation, intercompany
transactions, balances and unrealised gains on transactions are eliminated. Unrealised
losses are also eliminated unless the transaction provides evidence of impairment of the asset
transferred. Accounting policies of subsidiaries have been changed where necessary to ensure
consistency, so far as is possible, with the policies adopted by the Group.
The Group’s EBT is controlled and recognised by the Company using the look-through
approach, i.e. as if the EBT is included within the accounts of the Company.
In the Company’s financial statements, investments in subsidiary undertakings are stated
at cost less impairment. A full list of the Company’s subsidiaries which are included in
the Group’s consolidated financial statements can be found in note 2 to the Company’s
financial statements on page 260 to 262.
d) Foreign currency translation
The financial statements of each of the Company’s subsidiaries are measured using the
currency of the primary economic environment in which the subsidiary operates (the functional
currency). Foreign currency transactions are translated into the functional currencies using
the exchange rates prevailing at the date of the transactions. Monetary items denominated
in foreign currencies are retranslated at the rate prevailing at the period end.
e) Segmental reporting
IFRS 8 requires operating segments to be identified on the basis of internal reports and
components of the Group which are regularly reviewed by the chief operating decision maker
to allocate resources to segments and to assess their performance. For this purpose, the chief
operating decision maker of the Group is the Board of Directors.
The Group provides loans, asset finance and retail deposits within the UK.
The Group segments its lending business and operates under two segments:
• OneSavings Bank (OSB)
• Charter Court Financial Services (CCFS)
The Group has disclosed relevant risk management tables in note 42 at a sub-segment level to
provide detailed analysis of the Group’s core lending business.
Notes to the Consolidated Financial Statements continued
f) Interest income and expense
Interest income and interest expense for all interest-bearing financial instruments is recognised
in profit or loss using the effective interest rate (EIR) method. The EIR is the rate which discounts
the expected future cash flows, over the expected life of the financial instrument, to the net
carrying value of the financial asset or liability.
Interest income on financial assets categorised as stage 1 or 2 is recognised on a gross basis,
with interest income on stage 3 assets recognised net of expected credit losses (ECL).
For purchased or originated credit-impaired assets (see note 1 m (vii), interest income is calculated
by applying the credit-adjusted EIR to the amortised cost of the asset. The calculation of interest
income does not revert to a gross basis even if the credit risk of the asset improves. See note 1 m
(vii). for further information on IFRS 9 stage classifications.
When calculating the EIR, the Group estimates cash flows considering all contractual terms of
the instrument and behavioural aspects (for example, prepayment options) but not considering
future credit losses. The calculation of the EIR includes transaction costs and fees paid or
received that are an integral part of the interest rate, together with the discounts or premiums
arising on the acquisition of loan portfolios. Transaction costs include incremental costs that
are directly attributable to the acquisition or issue of a financial instrument.
The Group monitors the actual cash flows for each portfolio and resets cash flows on a
monthly basis, discounted at the EIR to derive a new carrying value, with changes taken
to profit or loss as interest income.
The EIR is adjusted where there is a movement in the expected reference interest rate (Sterling
Overnight Index Average (SONIA), synthetic London Interbank Offered Rate (LIBOR) or base rate)
affecting portfolios with a variable interest rate which will impact future cash flows. The revised EIR is
the rate which exactly discounts the revised cash flows to the net carrying value of the loan portfolio.
Interest income on investment securities is included in interest receivable and similar income.
Interest on derivatives is included in interest receivable and similar income or interest expense
and similar charges following the underlying instrument it is hedging.
Coupons paid on AT1 securities are recognised directly in equity in the period in which they are paid.
g) Fees and commissions
Fees and commissions which are an integral part of the EIR of a financial instrument are
recognised as an adjustment to the EIR and recorded in interest income. The Group includes
early redemption charges within the EIR.
Fees received on mortgage administration services and mortgage origination activities, which
are not an integral part of the EIR, are recorded in other operating income and accounted for
in accordance with IFRS 15 Revenue from Contracts with Customers, with income recognised
when the services are delivered and the benefits are transferred to clients and customers.
Other fees and commissions are recognised on the accrual basis as services are provided or on
the performance of a significant act, net of value added tax (VAT) and similar taxes.
202 OSB GROUP PLC | Annual Report and Accounts 2024
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Governance Financial StatementsOverview Appendices
1. Accounting policies continued
h) Taxation
Income tax comprises current and deferred tax. It is recognised in profit or loss, other
comprehensive income (OCI) or directly in equity, consistent with the recognition of items it
relates to. The Group recognises tax on coupons paid on AT1 securities directly in profit or loss.
Deferred tax assets are recognised only to the extent that it is probable that future taxable
profits will be available to utilise the asset. The recognition of deferred tax asset is mainly
dependent on the projections of future taxable profits and future reversals of temporary
differences. The current projections of future taxable income indicate that the Group will
be able to utilise its deferred tax asset within the foreseeable future.
Deferred tax liabilities are recognised for all taxable temporary differences.
The Company and its tax-paying UK subsidiaries are in a group payment arrangement for
corporation tax and show a net corporation tax liability and deferred tax liability accordingly.
The Company and its UK subsidiaries are in the same VAT group.
i) Dividends
Dividends are recognised in equity in the period in which they are paid or, if earlier, approved
by shareholders.
j) Cash and cash equivalents
For the purposes of the Consolidated Statement of Cash Flows, cash and cash equivalents
comprise cash, non-restricted balances with credit institutions and highly liquid financial
assets with maturities of less than three months from date of acquisition, subject to
an insignificant risk of changes in their fair value and are used by the Group in the
management of its short-term commitments.
k) Property, plant and equipment
Property, plant and equipment comprise freehold land and buildings, major alterations
to office premises, computer equipment and fixtures measured at cost less accumulated
depreciation. These assets are reviewed for impairment annually, and if they are considered
to be impaired, are written down immediately to their recoverable amounts.
Items of property, plant and equipment are depreciated on a straight-line basis over their
estimated useful economic lives as follows:
Buildings 50 years
Fixtures & fittings, computer hardware and vehicles 5 years
Leasehold improvements Shorter of useful life or lease term
For assets under construction (development assets), no depreciation is charged until the asset
is available for use.
Land, deemed to be 25% of purchase price of buildings, is not depreciated.
Notes to the Consolidated Financial Statements continued
l) Intangible assets
Purchased software and costs directly associated with the development of computer software
are capitalised as intangible assets where the software is a unique and identifiable asset
controlled by the Group and will generate future economic benefits. Costs to establish
technological feasibility or to maintain existing levels of performance are recognised as
an expense. The Group only recognises internally generated intangible assets if all of the
following conditions are met:
• an asset is being created that can be identified after establishing the technical and
commercial feasibility of the resulting product;
• it is probable that the asset created will generate future economic benefits; and
• the development cost of the asset can be measured reliably.
Subsequent expenditure on an internally generated intangible asset, after its purchase
or completion, is recognised as an expense in the period in which it is incurred. Where
no internally generated intangible asset can be recognised, development expenditure is
recognised as an expense in the period in which it is incurred.
Software is only recognised if:
• The Group has the contractual right to take possession of the software during the hosting
period without significant penalty; and
• It is feasible for the Group to run the software on its own hardware or contract with a party
unrelated to the supplier to host the software.
The costs of configuring or customising supplier application software in a Software-as-a-
Service (SaaS) arrangement that is determined to be a service contract is recognised as an
expense or prepayment. SaaS is an arrangement that provides the Group with the right to
receive access to the supplier’s application software in the future which is treated as a service
contract, rather than a software lease or the acquisition of a software intangible asset. Where
the configuration and customisation services are not distinct from the right to receive access
to the software, then the costs are recognised as an expense over the term of the arrangement.
Intangible assets are reviewed for impairment at least semi-annually, and if they are considered
to be impaired, are written down immediately to their recoverable amounts. Impairment losses
previously recognised for intangible assets, other than goodwill, are reversed when there has
been a change in the estimates used to determine the asset’s recoverable amount. An impairment
loss reversal is recognised in the Consolidated Statement of Comprehensive Income and the
carrying amount of the asset is increased to its recoverable amount.
203OSB GROUP PLC | Annual Report and Accounts 2024
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Governance Financial StatementsOverview Appendices
1. Accounting policies continued
Intangible assets are amortised on a straight- line basis over their estimated useful lives
as follows:
Computer software 5-7 years
Brand (included in Assets arising on Combination) 4 years
Broker relationships (included in Assets arising on Combination) 5 years
For development costs of assets that are under construction, no amortisation is applied until
the asset is available for use and is calculated using a full month when available for use.
The Group reviews the amortisation period on an annual basis. If the expected useful life of an
asset is different from previous assessments, the amortisation period is changed accordingly.
m) Financial instruments
i. Recognition
The Group initially recognises loans and advances, deposits, debt securities issued, senior
notes and subordinated liabilities on the date on which they are originated or acquired.
All other financial instruments are accounted for on the trade date which is when the
Group becomes a party to the contractual provisions of the instrument.
For financial instruments classified as amortised cost or FVOCI, the Group initially recognises
financial assets and financial liabilities at fair value plus transaction income or costs that are
directly attributable to its origination, acquisition or issue. Financial instruments classified as
amortised cost are subsequently measured using the EIR method.
Transaction costs directly attributable to the acquisition or issue of a financial instrument
at FVTPL are recognised in profit or loss as incurred.
ii. Classification
The Group classifies financial instruments based on the business model and the contractual
cash flow characteristics of the financial instruments. In accordance with IFRS 9, the Group
classifies financial assets into one of three measurement categories:
• Amortised cost – assets in a business model to hold financial assets in order to collect
contractual cash flows, where the contractual terms of the financial asset give rise on
specified dates to cash flows that are solely payments of principal and interest (SPPI)
on the principal amount outstanding.
• FVOCI – assets held in a business model which collects contractual cash flows and sells
financial assets, where the contractual terms of the financial assets give rise on specified
dates to cash flows that are SPPI on the principal amount outstanding.
• FVTPL – assets not measured at amortised cost or FVOCI. The Group measures derivatives,
an acquired mortgage portfolio and some investment securities under this category.
The Group reassesses its business models each reporting period.
Notes to the Consolidated Financial Statements continued
The Group classifies non-derivative financial liabilities as measured at amortised cost.
The Group classifies certain financial instruments as equity where they meet the following conditions:
• the financial instrument includes no contractual obligation to deliver cash or another
financial asset on potentially unfavourable conditions;
• the financial instrument is a non-derivative that includes no contractual obligation for the
issuer to deliver a variable number of its own equity instruments; or
• the financial instrument is a derivative that will be settled only by the issuer exchanging
a fixed amount of cash or another financial asset for a fixed number of its own
equity instruments.
The Group’s sources of debt funding are deposits from retail customers and credit institutions,
including collateralised loan advances from the Bank of England (BoE) under the Term
Funding Scheme with additional incentives for SMEs (TFSME), asset-backed loan notes issued
through the Group’s securitisation programmes, subordinated liabilities and senior notes.
Cash received under the TFSME is recorded in amounts owed to credit institutions. Financial
liabilities, including Tier 2 instruments, are classified as such where the terms allow no absolute
discretion over the payment of interest.
During the year equity financial instruments comprised own shares and AT1 securities. AT1
securities are designated as equity instruments and recognised at fair value on the date of
issuance in equity along with incremental costs directly attributable to the issuance of equity
instruments. Accordingly, the coupons paid on AT1 securities are recognised directly in retained
earnings when paid.
iii. Derecognition
The Group offers refinancing options to customers at which point the original mortgage asset
is derecognised and a new financial asset is recognised.
The forbearance measures offered by the Group are considered a modification event as
the contractual cash flows are renegotiated or otherwise modified. The Group considers the
renegotiated or modified cash flows are not a substantial modification from the contractual
cash flows and does not consider that forbearance measures give rise to a derecognition event.
Securitisations lead to derecognition of the associated mortgage pool where the Group
transfers its right to receive cash flows from the mortgages or assumes an obligation to pay
these cash flows to a third party in a qualifying ‘pass-through arrangement’ and transfers
substantially all the risks and rewards of ownership of the pool to a third party. In assessing
this latter point, the Group compares its exposure to variability on any retained investment in
the securitisation structure to that on the underlying mortgages.
Financial liabilities are derecognised only when the obligation is discharged, cancelled or
has expired.
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1. Accounting policies continued
iv. Offsetting
The Group’s derivatives are covered by industry standard master netting agreements.
Master netting agreements create a right of set-off that becomes enforceable only following
a specified event of default or in other circumstances not expected to arise in the normal
course of business. These arrangements do not qualify for offsetting and as such the Group
reports derivatives on a gross basis.
Collateral in respect of derivatives is subject to the standard industry terms of International
Swaps and Derivatives Association (ISDA) Credit Support Annex. This means that the cash
received or given as collateral can be pledged or used during the term of the transaction but
must be returned on maturity of the transaction. The terms also give each counterparty the
right to terminate the related transactions upon the counterparty’s failure to post collateral.
Collateral paid or received does not qualify for offsetting and is recognised in loans and
advances to credit institutions and amounts owed to credit institutions, respectively.
v. Amortised cost measurement
The amortised cost of a financial asset or financial liability is the amount at which the financial
asset or financial liability is measured at initial recognition, less principal payments or receipts,
plus or minus the cumulative amortisation using the EIR method of any difference between
the initial amount recognised and the maturity amount, minus any reduction for impairment
of assets.
vi. Fair value measurement
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement date in the principal or,
in its absence, the most advantageous market to which the Group has access at that date.
When available, the Group measures the fair value of an instrument using the quoted price
in an active market for that instrument. A market is regarded as active if transactions for the
asset or liability take place with sufficient frequency and volume to provide pricing information
on an ongoing basis. The Group measures its investment securities and Perpetual Subordinated
Bonds (PSBs) at fair value using quoted market prices where available.
If there is no quoted price in an active market, then the Group uses valuation techniques that
maximise the use of relevant observable inputs and minimise the use of unobservable inputs.
The Group uses SONIA curves to value its derivatives. The fair value of the Group’s derivative
financial instruments incorporates credit valuation adjustments (CVA) and debit valuation
adjustments (DVA). The DVA and CVA take into account the respective credit ratings of the
Group’s two banking entities and counterparty and whether the derivative is collateralised
or not. Derivatives are valued using discounted cash flow models and observable market
data and are sensitive to benchmark interest and basis rate curves.
Notes to the Consolidated Financial Statements continued
vii. Identification and measurement of impairment of financial assets
The Group assesses all financial assets for impairment.
Loans and advances to customers
The Group uses the IFRS 9 three-stage ECL approach for measuring impairment. The three
impairment stages are as follows:
• Stage 1 – a 12-month ECL allowance is recognised where there is no significant increase in
credit risk (SICR) since initial recognition.
• Stage 2 – a lifetime ECL allowance is recognised for assets where a SICR is identified since
initial recognition. The assessment of whether credit risk has increased significantly since
initial recognition is performed for each reporting period for the life of the loan.
• Stage 3 – requires objective evidence that an asset is credit impaired, at which point a
lifetime ECL allowance is recognised.
The Group measures impairment through the use of individual and modelled assessments.
Individual assessment
The Group’s provisioning process requires individual assessment for high exposure or higher
risk loans, where Law of Property Act (LPA) receivers have been appointed, the property is
taken into possession or there are other events that suggest a high probability of credit loss.
The individual assessments are carried out for all the loans associated with one counterparty.
The Group estimates cash flows from these loans, including expected interest and principal
payments, rental or sale proceeds, selling and other costs.
For all individually assessed loans, should the present value of estimated future cash flows
discounted at the original EIR be less than the carrying value of the loan, a provision is
recognised for the difference with such loans being classified as impaired. However, should
the present value of the estimated future cash flows exceed the carrying value, no provision
is recognised. For all remaining individually assessed loans, should a full loss be expected,
the provision is set to the carrying value.
The Group applies a modelled assessment to all loans with no individually assessed provision.
IFRS 9 modelled impairment
Measurement of ECL
The assessment of credit risk and the estimation of ECL are unbiased and probability weighted.
The ECL calculation is a product of an individual loan’s probability of default (PD), exposure at
default (EAD) and loss given default (LGD) discounted at the EIR. The ECL drivers of PD, EAD
and LGD are modelled at an account level. The assessment of whether a SICR has occurred is
based on quantitative relative and absolute PD thresholds and a suite of qualitative triggers.
205OSB GROUP PLC | Annual Report and Accounts 2024
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1. Accounting policies continued
Significant increase in credit risk (movement to stage 2)
The Group’s transfer criteria determine what constitutes a SICR, which results in an exposure
being moved from stage 1 to stage 2.
At the point of initial recognition, a loan is assigned a PD estimate. For each monthly reporting date
thereafter, an updated PD estimate is computed. The Group’s transfer criteria analyse relative and
absolute changes in PD versus the PD assigned at the point of origination, together with qualitative
triggers using both internal indicators, such as forbearance, and external information, such as
changes in income and adverse credit information to assess for SICR. In the event that given
early warning triggers have not already identified SICR, an account more than 30 days past
due is considered to have experienced a SICR.
A borrower will move back into stage 1 only if the SICR definition is no longer triggered.
Definition of default (movement to stage 3)
The Group uses a number of quantitative and qualitative criteria to determine whether
an account meets the definition of default and therefore moves to stage 3. The criteria
currently include:
• If an account is more than 90 days past due.
• Accounts triggering an unlikeliness to pay indicator, which include possession, distressed
restructuring forbearance, and internal behavioural alerts such as default within a
borrower’s broader relationship with the bank or external behavioural alerts such as
bankruptcy or individual voluntary arrangement (IVA).
A borrower will move out of stage 3 when its credit risk improves such that it no longer meets
the 90 days past due and unlikeliness to pay criteria and following this has completed an
internally approved 12-month probation period. The borrower will move to stage 1 or stage
2 dependent on whether the SICR applies.
Forward-looking macroeconomic scenarios
The risk of default and ECL assessments take into consideration the expectations of economic
changes that are deemed to be reasonably possible.
The Group conducts analysis to determine the most significant factors which may influence
the likelihood of an exposure defaulting in the future. The macroeconomic factors relate to
the House Price Index (HPI), unemployment rate (UR), Consumer Price Index (CPI), Gross
Domestic Product (GDP), Commercial Real Estate Index (CRE) and the BoE Base Rate (BBR).
The Group has developed an approach for factoring probability-weighted macroeconomic
forecasts into ECL calculations, adjusting PD and LGD estimates. The macroeconomic
scenarios feed directly into the ECL calculation, as the adjusted PD, lifetime PD and LGD
estimates are used within the individual account ECL allowance calculations.
Notes to the Consolidated Financial Statements continued
The Group sources economic forecast information from an appropriately qualified third party
when determining scenarios. The Group considers four probability-weighted scenarios, base,
upside, downside and severe downside scenarios. The expected scenarios, management
actions and results are discussed and approved by the Board.
The base case is also utilised within the Group’s impairment forecasting process which in turn
feeds the wider business planning processes. The ECL models are also used to set the Group’s
credit risk appetite thresholds and limits.
Period over which ECL is measured
The ECL is measured from the initial recognition of the asset which is the date at which the
loan is originated or the date a loan is purchased and at each balance sheet date thereafter.
The maximum period considered when measuring ECL (either 12 months or lifetime ECL) is the
maximum contractual period over which the Group is exposed to the credit risk of the asset.
For modelling purposes, the Group considers the contractual maturity of the loan product
and then considers the behavioural trends of the asset.
Purchased or originated credit impaired (POCI)
Acquired loans that meet the Group’s definition of default (90 days past due or an unlikely
to pay position) at acquisition are treated as POCI assets. These assets attract a lifetime ECL
allowance over the full term of the loan, even when these loans no longer meet the definition
of default post-acquisition. The Group does not originate credit-impaired loans.
Write-off
Loans are written off against the related provision when the underlying security is sold and
there is a shortfall amount remaining. Subsequent recoveries of amounts previously written off
are taken through profit and loss. Accounts that are derecognised for accounting purposes
will continue to be serviced and corresponding collection procedures are only discontinued
following approval from the Group Chief Credit Officer.
Intercompany loans
Intercompany receivables in the Company financial statements are assessed for ECL based on
an assessment of the PD and LGD, discounted to a net present value.
Other financial assets
Other financial assets comprise cash balances with the BoE and other credit institutions and
high-grade investment securities. The Group deems the likelihood of default across these
counterparties as low and does not recognise a provision against the carrying balances.
Share repurchase
Upon Board authorisation of a share repurchase programme and signing an irrevocable
agreement, a share repurchase liability is recognised in other liabilities with the offset in
retained earnings. Each share repurchase reduces the provision. Upon share cancellation,
share capital is debited with a credit to the capital redemption reserve equal to the nominal
value of £0.01 for each share cancelled.
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1. Accounting policies continued
n) Loans and advances to customers
Loans and advances to customers are predominantly mortgage loans and advances to
customers with fixed or determinable payments that are not quoted in an active market and
that the Group does not intend to sell in the near term. They are initially recorded at fair value
plus any directly attributable transaction costs and are subsequently measured at amortised
cost using the EIR method, less impairment losses. Where exposures are hedged by derivatives,
designated and qualifying as fair value hedges, the fair value adjustment for the hedged risk
to the carrying value of the hedged loans and advances is reported in fair value adjustments
for hedged assets.
Loans and the related provision are written off when there is a shortfall remaining after the
underlying security is sold. Subsequent recoveries of amounts previously written off are taken
through profit or loss.
Loans and advances to customers over which the Group transfers its rights to the collateral
thereon to the BoE under the TFSME and Index Long-Term Repo (ILTR) schemes are not
derecognised from the Consolidated Statement of Financial Position, as the Group retains
substantially all the risks and rewards of ownership, including all cash flows arising from the
loans and advances and exposure to credit risk. The Group classifies TFSME and ILTR as
amortised cost under IFRS 9 Financial Instruments.
Loans and advances to customers include a small acquired mortgage portfolio where the
contractual cash flows include payments that are not SPPI and as such are measured at FVTPL.
Loans and advances to customers include the Group’s asset finance lease lending. Finance
leases are initially measured at an amount equal to the net investment in the lease, using the
interest rate implicit in the finance lease. Direct costs are included in the initial measurement
of the net investment in the lease and reduce the amount of income recognised over the
lease term. Finance income is recognised over the lease term, based on a pattern reflecting
a constant periodic rate of return on the net investment in the lease.
o) Investment securities
Investment securities include securities held for liquidity purposes (UK treasury bills, UK Gilts,
Covered bonds and Residential Mortgage-Backed Securities (RMBS)). These assets are non-
derivatives that are classified on an individual basis as amortised cost, FVOCI or FVTPL.
Notes to the Consolidated Financial Statements continued
p) Sale and repurchase agreements
Financial assets sold subject to repurchase agreements (repo) continue to be recognised in the
financial statements if they fail the derecognition criteria of IFRS 9 described in paragraph m) iii
above. The financial assets that are retained in the financial statements are reflected as loans
and advances to customers or investment securities and the counterparty liability is included
in amounts owed to credit institutions or other customers. Financial assets purchased under
agreements to resell at a predetermined price where the transaction is financing in nature
(reverse repo) are accounted for as loans and advances to credit institutions. The difference
between the sale and repurchase price is treated as interest and accrued over the life of the
agreement using the EIR method.
q) Derivative financial instruments
The Group uses derivative financial instruments (interest rate swaps) to manage its exposure
to interest rate risk. The Group does not hold or issue derivative financial instruments for
proprietary trading.
The Group also uses derivatives to hedge the interest rate risk inherent in irrevocable offers
to lend. This exposes the Group to movements in the fair value of derivatives until the loan
is drawn. The changes to fair value are recognised in profit or loss in the period.
r) Hedge accounting
The Group has chosen to continue to apply the hedge accounting requirements of
International Accounting Standards (IAS) 39 instead of the requirements in Chapter 6 of IFRS 9.
The Group uses fair value hedge accounting for a portfolio hedge of interest rate risk.
The hedging strategy of the Group is divided into portfolio hedges, where the hedged item is a
homogeneous portfolio of assets (mortgage lending) or liabilities (savings products), and micro
hedges, where the hedged item is a distinctly identifiable asset or liability (debt issuance). The
Group applies fair value hedge accounting for both its portfolio and micro hedges.
i. Portfolio hedges
Portfolio hedge accounting allows for hedge effectiveness testing and accounting over an
entire portfolio of financial assets or liabilities. The Group applies fair value portfolio hedge
accounting to its fixed rate portfolio of mortgages and savings accounts. The hedged portfolio
is analysed into repricing time periods based on expected repricing dates, utilising the Group
Assets and Liabilities Committee (ALCO) approved prepayment curve. Interest rate swaps are
designated against the repricing time periods to establish the hedge relationship.
ii. Micro hedges
The Group’s micro hedging strategy entails hedge accounting on an individual instrument-
by-instrument basis, which in some instances may be implemented through partial term fair
value hedging where the instrument may be exercised early. The Group applies fair value micro
hedge accounting to manage its exposure to the interest rate risk arising from some of its fixed
rate debt issuances. Interest rate swaps are assigned to specific issuances of fixed rate notes
with terms that closely align with the hedged item.
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1. Accounting policies continued
iii. Hedge effectiveness
Hedge effectiveness is calculated as a percentage of the fair value movement of the interest
rate swap against the fair value movement of the hedged item over the period tested.
The Group considers the following as key sources of hedge ineffectiveness:
• the mismatch in maturity date of the swap and hedged item, as swaps with a given
maturity date cover a portfolio of hedged items which may mature throughout the month;
• the actual behaviour of the hedged item differing from expectations, such as early
repayments or withdrawals and arrears;
• minimal movements in the yield curve leading to ineffectiveness where hedge relationships
are sensitive to small value changes; and
• the mismatch in the swap interest rate and rate used to value the hedged item where the
swap rate is higher than the contractual rate of the hedged item.
Where there is an effective hedge relationship for fair value hedges, the Group recognises the
change in fair value of each hedged item in profit or loss with the cumulative movement in their
value being shown separately in the Consolidated Statement of Financial Position as fair value
adjustments on hedged assets and liabilities. The fair value changes of both the derivative and
the hedge substantially offset each other to reduce profit volatility.
The Group discontinues hedge accounting when the derivative ceases through expiry, when
the derivative is cancelled or the underlying hedged item matures, is sold or is repaid.
If a derivative no longer meets the criteria for hedge accounting or is cancelled whilst still
effective, including LIBOR-linked derivatives cancelled as a result of Interbank Offered Rate
(IBOR) reforms, the fair value adjustment relating to the hedged assets or liabilities within the
hedge relationship prior to the derivative becoming ineffective or being cancelled remains on
the Consolidated Statement of Financial Position and is amortised over the remaining life of
the hedged assets or liabilities. The rate of amortisation over the remaining life is in line with
expected income or cost generated from the hedged assets or liabilities. Each reporting period,
the expectation is compared to actual with an accelerated run-off applied where the two
diverge by more than set parameters.
s) Debit and credit valuation adjustments
The DVA and CVA are included in the fair value of derivative financial instruments. The DVA is
based on the expected loss a counterparty faces due to the risk of the Group’s two banking
entities defaulting. The CVA reflects the Group’s risk of the counterparty’s default.
The methodology is based on a standard calculation, taking into account the credit
rating of the swap counterparty, time to maturity, the fair value of the swap and any
collateral arrangements.
Notes to the Consolidated Financial Statements continued
t) Provisions and contingent liabilities
A provision is recognised when there is a present obligation as a result of a past event, it is
probable that the obligation will be settled and the amount can be estimated reliably.
Provisions include ECLs on the Group’s undrawn loan commitments.
Contingent liabilities are possible obligations arising from past events, whose existence will
be confirmed only by uncertain future events, or present obligations arising from past events
which are either not probable or the amount of the obligation cannot be reliably measured.
Contingent liabilities are not recognised but disclosed.
u) Employee benefits – defined contribution scheme
The Group contributes to defined contribution personal pension plans or defined contribution
retirement benefit schemes for all qualifying employees who subscribe to the terms and
conditions of the schemes’ policies.
Obligations for contributions to defined contribution pension arrangements are recognised as
an expense in profit or loss as incurred.
v) Share-based payments
Equity-settled share-based payments to employees providing services are measured at the
fair value of the equity instruments at the grant date in accordance with IFRS 2. The fair value
excludes the effect of non-market-based vesting conditions.
The cost of the awards is charged on a straight-line basis to profit or loss (with a corresponding
increase in the share-based payment reserve within equity) over the vesting period in which
the employees become entitled to the awards. The increase within the share-based payment
reserve is reclassified to retained earnings upon exercise.
The amount recognised as an expense for non-market conditions and related service
conditions is adjusted each reporting period to reflect the actual number of awards expected
to be met. The amount recognised as an expense for awards subject to market conditions is
based on the proportion that is expected to meet the condition as assessed at the grant date.
No adjustment is made to the fair value of each award calculated at grant date.
Share-based payments that are not subject to further vesting conditions (i.e. the Deferred
Share Bonus Plan (DSBP) for senior managers) are expensed in the year services are received
with a corresponding increase in equity.
Where the allowable cost of share-based options or awards for tax purposes is greater than the
cost determined in accordance with IFRS 2, the tax effect of the excess is taken to the share-based
payment reserve within equity. The tax effect is reclassified to retained earnings upon vesting.
Employer’s national insurance is charged to profit or loss at the share price at the reporting
date on the same service or vesting schedules as the underlying options and awards.
Own shares are recorded at cost and deducted from equity and represent shares of OSBG
that are held by the EBT.
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1. Accounting policies continued
w) Leases
The Group’s leases are predominantly for property leases where the Group is a lessee. At lease
commencement date, the Group recognises the right-of-use asset and lease liability on the
statement of financial position, except for leases of low-value assets and short-term leases
of 12 months or less are recognised directly in profit or loss on a straight-line basis over the
lease term.
Lease liability payments are recognised within financing activities in the Consolidated
Statement of Cash Flows.
The Group assesses the likely impact of early terminations in recognising the right-of-use asset
and lease liability where an option to terminate early exists.
For modifications that increase the length of a lease; the modified lease term is determined,
and the lease liability remeasured by discounting the revised lease payments using a revised
discount rate, at the effective date of the lease modification; a corresponding adjustment is
made to the right-of-use asset. Where modifications decrease the length of a lease, the lease
liability and right-of-use asset are reduced in proportion to the reduction in the lease term,
with any gain or loss recognised in profit or loss.
x) Adoption of new standards
International financial reporting standards issued and adopted for the first time in the
year ended 31 December 2024
The following amendments to IFRS issued by the International Accounting Standards Board
(IASB) are applicable for the first time this year:
• Non-current Liabilities with Covenants
• Classification of Liabilities as Current or Non-current
• Supplier Finance Arrangements
• Lease Liability in a Sale and Leaseback
None of the above have a material impact on the Group’s financial statements.
Exemptions
The Group has applied the temporary exception issued by IASB from the accounting
requirements for deferred taxes in IAS 12 ‘Income Taxes’. Accordingly, the Group neither
recognises nor discloses information about deferred tax assets and liabilities related to Pillar 2
income taxes.
Notes to the Consolidated Financial Statements continued
International financial reporting standards issued but not yet effective which are
applicable to the Group
In April 2024, the IASB released IFRS 18 Presentation and Disclosure in Financial Statements
which is designed to give more comparability between entities in the presentation and
classification of items within the income statement and around management-defined
performance measures. The Group is currently assessing the impacts of this standard.
Certain other amendments to accounting standards and interpretations that were not effective
on 31 December 2024 have not been early-adopted by the Group. The adoption of these
amendments is not expected to have a material impact on the financial statements of the
Group in future periods.
2. Judgements in applying accounting policies and critical
accounting estimates
In preparing these financial statements, the Group has made judgements, estimates and
assumptions which affect the reported amounts within the current and future financial years.
Actual results may differ from these estimates.
As set out in the Strategic Report on page 100, climate change is a global challenge and an
emerging risk to businesses, people and the environment. Therefore, in preparing the financial
statements, the Group has considered the impact of climate-related risks on its financial
position and performance, including the impact on ECL and redemption profiles included in
EIR. While the effects of climate change represent a source of uncertainty, the Group does not
consider there to be a material impact on its judgements and estimates from the physical or
transition risks in the short term. As part of the Group’s recognition of climate risk and overall
Environmental, Social and Governance (ESG) agenda, the Group considers the physical risks
of climate change and has retained a post-model adjustment (PMA) of £0.3m (2023: £0.5m) as
of 31 December 2024.
Estimates and judgements are regularly reviewed based on past experience, expectations of
future events and other factors.
Judgements
The Group has made the following key judgements in applying the accounting policies:
(i) Loan book impairments
Significant increase in credit risk for classification in stage 2
The Group’s SICR rules considers changes in default risk, internal impairment measures,
changes in customer credit bureau files, or whether forbearance measures had been applied.
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2. Judgements in applying accounting policies and critical
accountingestimates continued
(ii) IFRS 9 classification
Application of the ‘business model’ requirements under IFRS 9 requires the Group to conclude
on the business models that it operates and is a fundamental aspect in determining the
classification of the Group’s financial assets.
Management assessed the intention for holding financial assets and the contractual terms of
those assets, concluding that the Group’s business model is a ‘held to collect’ business model.
This conclusion was reached on the basis that the Group originates and purchases loans and
advances with the intention to collect contractual cash flows over the life of the originated or
purchased financial instrument. The Group considered the PMF 2024-2 securitisation that led
to the derecognition of £1,249.9m of mortgages and concluded that the size and frequency of
such transactions did not affect the Group’s overall business model.
The Group considers whether the contractual terms of a financial asset give rise on specified
dates to cash flows that are SPPI on the principal amount outstanding when applying the
classification criteria of IFRS 9. The majority of the Group’s assets being loans and advances
to customers which have been accounted for under amortised cost with the exception of one
acquired mortgage book of £12.9m (2023: £13.7m) that is recognised at FVTPL.
(iii) Derecognition of financial assets
Management judgement was required in determining the extent to which the Group retains
risks and rewards on mortgage assets transferred as part of the PMF 2024-2 securitisation.
The Group transferred £1,249.9m of mortgages to the securitisation special purpose vehicle
(SPV), receiving 70% of the Class A notes issued by the SPV and 5% of other tranches. No
residual certificates were retained. The Group concluded that substantially all of the risks
and rewards of the mortgages were transferred to other note and certificate holders and thus
derecognised the mortgages at the point of sale.
Estimates
The Group has made the following estimates in the application of the accounting policies that
have a significant risk of material adjustment to the carrying amount of assets and liabilities
within the next financial year:
(i) Loan book impairments
Set out below are details of the critical accounting estimates which underpin loan impairment
calculations. Less significant estimates are not discussed as they are not expected to have
a material effect in next 12 months. The Group has recognised total impairments of £126.9m
(2023: £145.8m) at the reporting date as disclosed in note 20.
Notes to the Consolidated Financial Statements continued
Modelled impairment
Modelled provision assessments are also subject to estimation uncertainty, underpinned
by a number of estimates being made by management which are utilised within impairment
calculations. Key areas of estimation within modelled provisioning calculations include those
regarding the LGD and forward-looking macroeconomic scenarios.
Loss given default model
The Group has a number of LGD models, which include estimates regarding propensity to go
to possession given default (PPD), forced sale discount, time to sale and sale costs. The LGD is
sensitive to the application of the HPI, with an 8% haircut (2023: an 8% haircut) seen to be a
reasonable percentage change for a sensitivity when reviewing historical and expected 12-month
outcomes. The table below shows the resulting incremental provision required in an 8% house price
haircut (2023: an 8% house price haircut) being directly applied to all exposures at 31 December
2024 which not only adjust the sale discount but also the propensity to go to possession.
2024 2023
£m £m
OSB
22.3
25.6
CCFS
9.1
11.6
Group
31.4
37.2
The Group’s forecasts of HPI movements used in the impairment models are disclosed in the
Risk profile performance review on page 64.
Forward-looking macroeconomic scenarios
The forward-looking macroeconomic scenarios affect all model components of the ECL
thus the calculation remains sensitive to both the scenarios utilised and their associated
probability weightings.
The Group has adopted an approach which utilises four macroeconomic scenarios.
These scenarios are provided by a reputable economics advisory firm, providing management
and the Board with advice on which scenarios to utilise and the probability weightings to
attach to each scenario. A base case forecast is provided, together with a plausible upside
scenario. Two downside scenarios are also provided (downside and a severe downside). The
Group’s macroeconomic scenarios can be found in the Credit Risk section of the Risk profile
performance overview on page 64.
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2. Judgements in applying accounting policies and critical
accountingestimates continued
Forward-looking macroeconomic scenarios continued
The following tables detail the ECL scenario sensitivity analysis with each scenario weighted at
100% probability. The sensitivity analysis is performed without considering the staging shifts driven
by relative or absolute PD thresholds. The purpose of using multiple economic scenarios is to model
the non-linear impact of assumptions surrounding macroeconomic factors and ECL calculated:
100% 100% 100% Severe
Weighted Base case 100% Upside Downside downside
As at 31 December 2024 (see note 20) scenario scenario scenario scenario
Total loans before provisions, £m
25,240.3
25,240.3
25,240.3
25,240.3
25,240.3
Modelled ECL, £m
79.6
63.6
53.2
114.5
153.0
Individually assessed provisions
ECL, £m
37.6
37.6
37.6
37.6
37.6
Post model adjustments ECL, £m
9.7
7.2
4.3
15.9
23.5
Total ECL, £m
126.9
108.4
95.1
168.0
214.1
ECL coverage, %
0.50
0.43
0.38
0.67
0.85
100% 100% 100% Severe
Weighted Base case 100% Upside Downside downside
As at 31 December 2023 (see note 20) scenario scenario scenario scenario
Total loans before provisions, £m
25,897.1
25,8 97.1
25,8 97.1
25,8 97.1
25,8 97.1
Modelled ECL, £m
97.2
76.8
60.5
138.1
206.8
Individually assessed provisions
ECL, £m
25.1
25.1
25.1
25.1
25.1
Post model adjustments ECL, £m
23.5
18.3
12.9
34.4
55.0
Total ECL, £m
145.8
120.2
98.5
197.6
286.9
ECL coverage, %
0.56
0.46
0.38
0.76
1.11
The Group’s assessment of ECL primarily focuses on scenarios where economic distress is driven by
weak demand. These scenarios typically involve low inflation accompanied by falling interest rates.
While the Group acknowledges that economic distress can also stem from supply-side shocks
(characterised by high inflation and rising interest rates), the analysis suggested that the
impact of such scenarios on the ECL calculation is not currently significant. The Group would
continue to monitor the potential impact of supply-driven shocks on ECL and will incorporate
these considerations if they become material in future reporting periods.
Notes to the Consolidated Financial Statements continued
(ii) Effective interest rate on lending
Estimates are made when calculating the EIR for loan assets. These include the likely customer
redemption profiles. Mortgage products offered by the Group include directly attributable net
fee income and a period on reversion rates after the fixed/discount period.
Products revert to the standard variable rate (SVR) or base rate plus a margin for the Kent
Reliance (OSB) brand, a SONIA/Base rate plus a margin for the Precise (CCFS) brand and a
LIBOR replacement rate/base rate for the InterBay brand. Subsequent to origination, changes
in actual and expected customer prepayment rates are reflected as increases or decreases in
the carrying value of loan assets with a corresponding increase or decrease in interest income.
The Group uses historical customer behaviours, expected take-up rate of retention products
and macroeconomic forecasts in its assessment of expected prepayment rates. Customer
prepayments in a fixed rate or incentive period can give rise to Early Repayment Charge
(ERC) income.
Judgement is used in estimating the expected average life of a mortgage, to determine the
quantum and timing of redemptions that incur ERCs, the period over which net fee income
is recognised and the length of time customers spend on reversion after the fixed/discounted
period. Estimates are reviewed regularly and during the second half of 2024, the Group
adjusted behavioural assumptions for both the fixed period and the reversionary period across
key lending portfolios. Precise borrowers spent c.one month less time on the reversion rate
which was shown to be a sustained trend in second half. Borrowers across brands with five
year product terms issued prior to 2023 in the lower rate environment have terms which are
now favourable to the current market and their propensity to prepay in the fixed term was
reduced. Borrowers’ behaviour can be variable as base rate and market dynamics change, and
we will continue to monitor their behaviour for any potential impact on the measurement of
EIR. The adverse EIR adjustment was £15.9m (2023: adverse EIR adjustment of £210.7m) which
reduced net interest income and loans and advances to customers. The adjustment of £210.7m
in 2023 was due to a revised estimate of shorter time spent by Precise customers on reversion,
following observed behaviour of quicker refinancing, amid rising BBR-linked reversion rates
compared to previously observed behavioural trends.
A two months’ movement in the weighted average time spent in the reversion period for Precise
customers is considered to be a reasonably possible change in assumption in a dynamic
interest rate environment and an uncertain macroeconomic outlook. The impact of a -/+ two
months movement in time spent on reversion by Precise customers is -/+ £26.9m. £20.8m of
this total sensitivity relates to the £3.8bn of loans with product terms issued up to the end of
2022. These loans are from the annual cohorts identified as having been written in a low-rate
environment. The remaining £6.1m sensitivity relates to the £6.1bn in loans with product terms
issued from 2023 onwards, written in a higher-rate environment, where the step-up in reversion
is smaller. Over time, the overall sensitivity will continue to decline as loans from the low-rate
environment reach the end of their fixed period.
211OSB GROUP PLC | Annual Report and Accounts 2024
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2. Judgements in applying accounting policies and critical
accountingestimates continued
As base rate increased throughout 2022 and 2023, using the EIR approach resulted in
additional monthly net interest income as the benefit of time spent on a reversion rate became
greater. Forward rates are used in the EIR calculation and a decrease greater than the current
expected forward rate curve leads to a decrease in monthly net interest income. Based on
the loans and advances to customers balance as at 31 December 2024, if there was a 50bps
parallel shift downwards in the forward curve, it is estimated that this would decrease monthly
interest income by £1.4m across all mortgage portfolios.
3. Interest receivable and similar income
2024 2023
£m £m
At amortised cost:
On OSB mortgages
1
858.6
7 57.6
On CCFS mortgages
2
627.4
431.1
On finance leases
17.9
12.3
On investment securities
30.7
12.5
On other liquid assets
173.7
159.6
Amortisation of fair value adjustments on CCFS loan book
at Combination
(24.4)
(57.4)
Amortisation of fair value adjustments on hedged assets
3
20.5
(2.6)
1,704.4
1,313.1
At FVTPL:
Net income on derivative financial instruments
– lending activities
384.3
442.8
On investment securities
1.6
–
385.9
442.8
At FVOCI:
On investment securities
9.0
11.1
2,099.3
1,767.0
1. Includes adverse EIR behavioural adjustment of £3.1m (2023: £1.0m favourable).
2. Includes adverse EIR behavioural adjustment of £12.8m (2023: £211.7m adverse).
3. The amortisation relates to hedged assets where the hedges were terminated before maturity and were effective at the
point of termination.
Notes to the Consolidated Financial Statements continued
4. Interest payable and similar charges
2024 2023
£m £m
At amortised cost:
On retail deposits
1,118.1
762.3
On BoE borrowings
113.8
196.5
On debt securities in issue
62.7
21.5
On senior notes
63.5
9.1
On subordinated liabilities
25.3
17.1
On wholesale borrowings
17.7
29.9
On Perpetual Subordinated Bonds
0.5
0.7
On lease liabilities
0.3
0.2
Amortisation of fair value adjustments on CCFS customer
deposits at Combination
–
(0.5)
Amortisation of fair value adjustments on hedged liabilities
1
–
(0.6)
1,401.9
1,036.2
At FVTPL:
Net expense on derivative financial instruments
– savings activities
20.5
71.5
Net expense on derivative financial instruments
– subordinated liabilities and senior notes
7.2
0.7
Net expense on derivative financial instruments
– structural hedge
3.3
–
1,432.9
1,108.4
1. The amortisation relates to hedged liabilities where the hedges were terminated before maturity and were effective at
the point of termination.
212 OSB GROUP PLC | Annual Report and Accounts 2024
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5. Fair value losses on financial instruments
2024 2023
£m £m
Fair value changes in hedged assets
31.7
580.3
Hedging of assets
(53.6)
(590.2)
Fair value changes in hedged liabilities
37.9
(82.7)
Hedging of liabilities
(35.8)
94.6
Ineffective portion of hedges
(19.8)
2.0
Net gains/(losses) on unmatched swaps
1
21.2
(11.1)
Amortisation of inception adjustments
2
(5.5)
(4.3)
Amortisation of acquisition-related inception adjustments
3
2.3
6.4
Amortisation of de-designated hedge relationships
4
(0.9)
–
Fair value movements on mortgages at FVTPL
0.7
0.6
Fair value movements on loans and advances to credit
institutions at FVTPL
0.5
0.5
Debit and credit valuation adjustment
–
1.5
(1.5)
(4.4)
1. Net gains/(losses) on unmatched swaps include fair value movements of £5.7m (2023: nil) on swaps used for the equity
structural hedge (see note 23 for further information). The Group excluded a portion of mortgage hedging swaps from
hedge accounting providing an offsetting fair value movement of £5.1m (2023: nil).
2. The amortisation of inception adjustment relates to the amortisation of the hedging adjustments arising when hedge
accounting commences, primarily on derivative instruments previously taken out against the mortgage pipeline and on
derivative instruments previously taken out against new retail deposits.
3. Relates to hedge accounting assets and liabilities recognised at acquisition. The inception adjustments are
being amortised over the life of the derivative instruments acquired at acquisition subsequently designated in
hedging relationships.
4. Relates to the amortisation of hedged items where hedge accounting has been discontinued.
Notes to the Consolidated Financial Statements continued
6. Loss on sale of financial instruments
In December 2024, the Group completed PMF 2024-2 transaction which securitised £1,249.9m
of CCFS Buy-to-Let (BTL) mortgages. The Group recognised a loss on sale of £2.4m from this
transaction due to the difference between proceeds received and the carrying value of the
items derecognised from the Group’s balance sheet.
7. Other operating income
2024 2023
£m £m
Interest received on mortgages held at FVTPL
0.9
0.9
Fees and commissions receivable
3.8
3.0
4.7
3.9
8. Administrative expenses
2024 2023
£m £m
Staff costs
143.9
122.2
Support costs
49.3
43.0
Professional fees
25.7
32.9
Facilities costs
7.9
7.9
Depreciation (see note 25)
6.3
6.2
Amortisation (see note 26)
5.0
5.7
Marketing costs
5.0
5.8
Other costs
15.0
10.9
258.1
234.6
213OSB GROUP PLC | Annual Report and Accounts 2024
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214
8. Administrative expenses continued
I ncluded in professional fees are amounts paid to the Company’s auditor as follows:
2024 2023
£’000 £’000
Fees payable to the Company’s auditor for the audit of the
Company’s annual accounts
83
81
Fees payable to the Company’s auditor for the audit of the
accounts of subsidiaries
4,038
3,788
Total audit fees
4,121
3,869
Audit-related assurance services
1
391
487
Other assurance services
2
330
366
Other non-audit services
3
73
42
Total non-audit fees
794
895
Total fees payable to the Company’s auditor
4,915
4,764
1. Includes review of interim financial information and profit verifications.
2. Costs comprise assurance reviews of Alternative Performance Measures (APMs), ESG and European Single Electronic
Format (ESEF) tagging.
3. Costs primarily comprise work related to the Euro Medium Term Note (EMTN) programme.
Staff costs comprise the following:
2024 2023
£m £m
Salaries, incentive pay and other benefits
1
119.2
101.2
Share-based payments
6.3
5.6
Social security costs
12.7
10.5
Other pension costs
5.7
4.9
143.9
122.2
1. In the fourth quarter, the Group implemented a redundancy programme which affected 139 roles in the UK and India
and resulted in £4.5m one-off expense.
During the year £2.7m (2023: £0.4m) of staff costs were capitalised to intangible assets as part
of the Group’s transformation programme.
Notes to the Consolidated Financial Statements continued
The average number of people employed by the Group (including Executive Directors) during
the year is analysed below.
2024
2023
UK
1,566
1,461
India
993
811
2,559
2,272
9. Directors’ emoluments and transactions
2024 2023
£’000 £’000
Short-term employee benefits
1
3,247
3,207
Post-employment benefits
102
114
Share-based payments
2
746
1,421
4,095
4,742
1. Short-term employee benefits comprise Directors’ salary costs, Non-Executive Directors’ fees and other short-term
incentive benefits, which are disclosed in the Annual Report on Remuneration.
2. Share-based payments represent the amounts received by Directors for schemes that vested during the year.
In addition to the total Directors’ emoluments above, the Executive Directors were granted
deferred bonuses of £427k (2023: £642k) in the form of shares.
The Executive Directors received a further share award under the Performance Share Plan
(PSP) with a grant date fair value of £1,613k (2023: £1,592k) using a share price of £3.86 (2023:
£4.98) (the mid-market quotation on the day preceding the date of grant). These shares
vest annually from year three in tranches of 20 per cent, subject to performance conditions
discussed in note 10 and the Annual Report on Remuneration.
The Directors of the Company are employed and compensated by OneSavings Bank plc.
No compensation was paid for loss of office during 2024 and 2023.
There were no outstanding loans granted in the ordinary course of business to Directors and
their connected persons as at 31 December 2024 and 2023.
The Annual Report on Remuneration and note 10 Share-based payments provide further details
on Directors’ emoluments.
OSB GROUP PLC | Annual Report and Accounts 2024
Strategic Report
Governance Financial StatementsOverview Appendices
10. Share-based payments
The share-based expense for the year includes a charge in respect of the Sharesave
Scheme, DSBP and PSP. All charges are included in employee expenses within note 8
Administrative expenses.
A summary of the share-based schemes operated by the Group is set out below.
Sharesave Scheme
The Sharesave Scheme is a share option scheme which is available to all UK-based employees.
The Sharesave Scheme allows employees to purchase options by saving a fixed amount of
between £10 and £500 per month over a period of three years at the end of which the options,
subject to leaver provisions, are usually exercisable. If not exercised, the amount saved is
returned to the employee. The Sharesave Scheme has been in operation since 2014 and an
invitation to join the scheme is usually extended annually, with the option price calculated
using the mid-market price of an OSBG ordinary share over the three dealing days prior to
the Invitation Date and applying a discount of 20%.
Deferred Share Bonus Plan
DSBP awards are granted to Executive Directors and certain senior managers to allow a
portion of their performance bonuses to be deferred in shares for up to three to seven years
for Executive Directors and typically one year for senior managers. There are no further
performance or vesting conditions attached to deferred awards for senior managers, which
also applies to Executive Directors for awards granted from April 2021. The share awards
are subject to clawback provisions. The DSBP awards are expensed in the year services are
received with a corresponding increase in equity. Awards granted to Executive Directors
in March 2020 and prior, are subject to vesting conditions and are expensed over the
vesting period.
DSBP awards for senior managers carry entitlements to dividend equivalents, which are paid
when the awards vest. DSBP awards granted from April 2021 to Executive Directors are entitled
to dividend equivalents. Awards granted in prior years were not entitled to dividend equivalents.
Performance Share Plan
PSP awards are typically made annually at the discretion of the Group Remuneration and
People Committee with Executive Directors and certain senior managers being eligible for
awards. The vesting of PSP awards is determined based on a mixture of internal financial
performance targets, risk-based measures, and relative total shareholder returns (TSR). During
the year, the Group introduced new ESG targets as conditions to the PSP awards. Following
changes to the Good Leaver definition enacted in 2024, the Group now recognises the expense
related to the PSP scheme over three years (previously three to seven years). The Group took a
charge of £0.9m in 2024 related to this change.
Notes to the Consolidated Financial Statements continued
The performance conditions that apply to PSP awards are based on a combination of
weightings as follows:
2024
2020–2023
Prior to 2020
EPS %
30
35
40
TSR %
30
35
40
Risk-based %
15
15
–
Return on equity (ROE) %
15
15
20
ESG %
10
–
–
The PSP conditions are assessed independently. The EPS element assesses the EPS growth rate
over the performance period. For the TSR element, the performance of the Company’s ordinary
shares is measured against the constituents of the FTSE 250 (excluding investment trusts). The
risk-based measure is assessed against the risk management performance with regard to all
relevant risks. For the ROE element, performance is assessed based on the Group’s underlying
profit after taxation as a percentage of average shareholders’ equity.
The share-based payment expense during the year comprised the following:
2024 2023
£m £m
Sharesave Scheme
0.8
0.9
Deferred Share Bonus Plan
2.6
3.0
Performance Share Plan
2.9
1.7
6.3
5.6
215OSB GROUP PLC | Annual Report and Accounts 2024
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216
10. Share-based payments continued
Movements in the number of share awards and their weighted average exercise prices are set
out below:
Sharesave Scheme
Deferred Share Bonus Plan
Performance Share Plan
Weighted
average
exercise
Number
price, £
Number
Number
As at 1 January 2024
2,801,587
2.91
895,162
6,747,268
Granted
898,516
2.96
587,681
3,501,310
Exercised/Vested
(303,627)
2.47
(531,669)
(772,568)
Forfeited
(460,747)
3.29
(6,379)
(911,580)
As at 31 December 2024
2,935,729
2.91
944,795
8,564,430
Exercisable at:
31 December 2024
81,035
3.90
–
–
Sharesave Scheme
Deferred Share Bonus Plan
Performance Share Plan
Weighted
average
exercise
Number
price, £
Number
Number
As at 1 January 2023
2,147,972
3.08
763,390
5,391,269
Granted
1,851,510
2.72
652,227
2,381,500
Exercised/Vested
(729,619)
2.31
(518,524)
(568,782)
Forfeited
(468,276)
3.90
(1,931)
(456,719)
As at 31 December 2023
2,801,587
2.91
895,162
6,747, 268
Exercisable at:
31 December 2023
200,676
2.31
–
–
For the share-based awards granted during the year, the weighted average grant date fair
value was 272 pence (2023: 275 pence).
Notes to the Consolidated Financial Statements continued
The range of exercise prices and weighted average remaining contractual life of outstanding
awards are as follows:
2024
2023
Weighted Weighted
average average
remaining remaining
contractual life contractual life
Exercise price Number
(years)
Number
(years)
Sharesave Scheme
229–429 pence
(2023: 229–429 pence)
2,935,729
2.0
2,801,587
2.3
Deferred Share Bonus Plan
Nil
944,795
1.1
895,162
1.1
Performance Share Plan
Nil
8,564,430
2.5
6,747,268
2.5
12,444,954
2.3
10,444,017
2.3
Sharesave Scheme
2024
2023
2022
2021
2020
2019
2018
Contractual life,
years
3
3
3
3
3
5
5
5
Share price at
issue, £
3.70
3.40
5.36
5.13
2.86
2.86
3.32
4.19
Exercise price, £
2.96
2.72
4.29
3.96
2.29
2.29
2.65
3.35
Expected volatility, %
51.9
46.5
31.4
37.9
57.6
57.6
31.9
16.5
Risk-free rate, %
3.7
4.8
5.3
1.3
0.1
0.2
0.8
1.4
Dividend yield, %
8.1
9.9
7. 3
4.5
3.3
3.3
4.8
4.4
Grant date
fair value, £
1.28
0.85
0.68
1.46
1.22
1.34
0.91
0.43
OSB GROUP PLC | Annual Report and Accounts 2024
Strategic Report
Governance Financial StatementsOverview Appendices
10. Share-based payments continued
The Sharesave Schemes are not entitled to dividends between the option and exercise date.
A Black Scholes model is used to determine the grant date fair value with two inputs:
• Expected volatility - from 2019, the expected volatility is based on the Company’s share
price. Prior to this the Group used the FTSE 350 diversified financials volatility as insufficient
history was available for the Company’s share price.
• Risk-free rate – based on long-term Government bonds.
• Dividend yield – based on the average dividend yield across external analyst reports for the
quarter prior to scheme grant date.
Deferred Share Bonus Plan
2020
Contractual life, years
3
Mid-market share price, £
2.58
Dividend yield, %
5.6
Grant date fair value, £
2.21
For awards granted from 2021, there are no further performance or vesting conditions
attached to deferred awards, for further details see DSBP above.
For DSBP awards where conditions exist, these schemes carry no rights to dividend equivalents
and a Black Scholes model is used to determine the grant date fair value with a dividend yield
input applied – based on the average dividend yield across external analyst reports for the
quarter prior to scheme grant date.
Performance Share Plan
Non-market performance conditions also exist for the scheme, notably that a participant is
employed by the Company over the performance period with good leaver exceptions, and
an attrition rate is applied as an estimate of the actual number of awards that will meet the
related conditions at the vesting date.
The awards are not entitled to a dividend equivalent between grant date and vesting and a
Black Scholes model is used to determine the grant date fair value with a dividend yield input
applied – based on the average dividend yield across external analyst reports for the quarter
prior to the scheme grant date.
The fair value of the portion of awards that is subject to market conditions (i.e. the relative TSR
element of the PSP) is determined at the grant date using a Monte Carlo model.
Notes to the Consolidated Financial Statements continued
The inputs into the models are as follows:
2024
2023
2022
2021
2020
Contractual life, years
3–7
3–7
3–7
3–7
3–7
Mid-market share price, £
3.86
5.01
5.58
4.94
2.58
Attrition rate, %
9.7
6.0
6.9
12.8
7.3
Expected volatility, %
49.8
35.4
37.4
59.5
43.9
Dividend yield, %
7.3
8.7
4.7
3.8
5.6
Vesting rate – TSR %
33.0
62.7
32.3
40.8
27.8
Grant date fair value, £
2.53
3.08
4.64
4.26
2.06
11. Taxation
The Group publishes its tax strategy on its corporate website. The table below shows the
components of the Group’s tax charge for the year:
2024 2023
£m £m
Current tax
Corporation tax
110.2
105.7
Corporation tax - prior year adjustments
1
(4.8)
(0.4)
Total current tax charge
105.4
105.3
Deferred tax
Deferred tax
5.4
0.7
Deferred tax – prior year adjustments
1
5.5
–
Release of deferred tax on CCFS Combination
2
(6.3)
(14.3)
Total deferred tax charge/(credit)
4.6
(13.6)
Total tax charge
110.0
91.7
1. Includes a prior year adjustment between deferred tax (debit of £5.5m) and current tax (credit of £5.5m) due to full
expensing tax relief claims made in the 2023 tax returns. A further debit of £0.7m in current tax relates to other prior
year adjustments (2023: £0.4m of other prior year adjustments).
2. Release of deferred tax on CCFS Combination relates to the unwind of the deferred tax liabilities recognised on the fair
value adjustments of the CCFS assets and liabilities at the acquisition date £(6.3)m (2023: £(14.3)m).
217OSB GROUP PLC | Annual Report and Accounts 2024
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218
11. Taxation continued
The charge for taxation on the Group’s profit before taxation differs from the charge based on
the weighted average standard rate of UK Corporation Tax of 25% (2023: 23.5%) as follows:
2024 2023
£m £m
Profit before taxation
418.1
374.3
Profit multiplied by the standard rate of UK Corporation Tax
25.0% (2023: 23.5%)
104.5
88.0
Bank surcharge
1
6.6
8.4
Tax effects of:
Expenses not deductible for tax purposes
0.6
0.3
Securitisation profits not taxable
2
(0.8)
(2.5)
Timing differences on capital items
(5.1)
(0.8)
Utilisation of brought forward tax losses
(0.1)
(0.3)
Tax adjustments in respect of share-based payments
0.5
0.4
Fair value adjustments on acquisition
3
6.3
14.3
Adjustments in respect of earlier years
(4.8)
(0.4)
Tax on coupon paid on AT1 securities
4
(2.3)
(2.1)
Total current tax charge
105.4
105.3
Movements in deferred taxes
5.4
0.7
Deferred tax – prior year adjustments
5.5
–
Release of deferred tax on CCFS Combination
3
(6.3)
(14.3)
Total deferred tax charge/(credit)
4.6
(13.6)
Total tax charge
110.0
91.7
1. Tax charge for the two banking entities of £7.4m (2023: £10.6m) offset by the tax impact of unwinding CCFS
Combination items of £0.8m (2023: £2.2m).
2. Securitisation companies are taxed in accordance with the Taxation of Securitisation Companies Regulation 2006, such
that they are subject to tax on their retained profits rather than their tax adjusted profit before tax.
3. The unwinding of the fair value adjustments of the CCFS assets and liabilities acquired as part of the CCFS combination
are not deductible for tax purposes. A deferred tax liability has been recognised in relation to these amounts which is
released as they unwind.
4. The Group has issued AT1 capital instruments that are classified as Hybrid Capital Instruments (HCI) for tax purposes.
The coupons paid under HCI are deductible under UK tax legislation despite being charged to equity.
Notes to the Consolidated Financial Statements continued
Factors affecting tax charge for the year
The standard rate of UK corporation tax applicable in the period was 25.0% (2023: 23.5%).
The Group’s banking entities also pay the bank surcharge at 3.0% (2023: 4.25%) on combined
profits for the full year above £100.0m (2023: £81.3m).
The effective tax rate for the year ended 31 December 2024, excluding the impact of
adjustments in respect of earlier years and the deferred tax rate change, was 26.1% (2023:
24.6%). This is higher than the standard rate of UK corporation tax, principally due to the
impact of the bank surcharge payable by the two banking entities, offset by the impact of
swap movements in securitisation companies that are not subject to tax, and deductions
available for the coupon paid on AT1 instruments that are charged to equity.
Factors that may affect future tax charges
During 2023 the Organisation for Economic Cooperation and Development (OECD) Inclusive
Framework Pillar 2 rules in the UK, including a Qualified Domestic Minimum Top-Up Tax rule, were
enacted. This legislation seeks to ensure that UK headed multinational groups pay a minimum tax
rate of 15 per cent on UK and overseas profits arising after 31 December 2023. Given the headline
tax rates in the countries that the Group operates in, and the nature of the Group’s business in
those countries, these rules are not currently expected to have any impact on the Group.
Deferred taxation asset
The table below shows movements on deferred tax asset during the year.
Share-based
payments
Others
1
Total
£m £m £m
As at 1 January 2023
4.6
1.7
6.3
Profit or loss (charge)/credit
0.2
(0.9)
(0.7)
Transferred from Deferred tax liability
2
–
(1.7)
(1.7)
Tax taken directly to OCI
–
0.1
0.1
Tax taken directly to equity
(0.1)
(0.1)
As at 31 December 2023
4.8
(0.9)
3.9
Profit or loss (charge)/credit
0.4
0.8
1.2
Transferred to Deferred tax liability
2
–
1.0
1.0
Tax taken directly to equity
0.1
–
0.1
As at 31 December 2024
5.3
0.9
6.2
1. Others include deferred taxation assets recognised on IFRS 9 transitional adjustments, losses carried forward and
accelerated depreciation.
2. £1.0m relating to accelerated depreciation previously shown within the deferred tax asset has been transferred to the
deferred tax liability (2023: £1.7m relating to other deferred tax assets previously shown within the deferred tax liability
has been transferred to the deferred tax asset).
OSB GROUP PLC | Annual Report and Accounts 2024
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11. Taxation continued
As at 31 December 2024, the Group had £3.5m (2023: £3.5m) of losses for which a deferred
tax asset has not been recognised as the Group does not expect sufficient future profits in the
entity from which the deferred tax asset arises to be available to utilise the losses.
As at 31 December 2024 deferred tax assets of £2.7m (2023: £2.0m) are expected to be utilised
within 12 months and £3.5m (2023: £1.8m) utilised after 12 months.
Deferred taxation liability
The deferred tax liability recognised on the Combination relates to the timing differences
of the recognition of assets and liabilities at fair value, where the fair values will unwind in
future periods in line with the underlying asset or liability. The deferred tax liability has been
measured using the relevant rates for the expected periods of utilisation.
CCFS Accelerated
Combination depreciation Total
£m £m £m
As at 1 January 2023
22.3
–
22.3
Profit or loss credit
(14.3)
–
(14.3)
Transfer to deferred tax asset
1
(1.7)
–
(1.7)
As at 31 December 2023
6.3
–
6.3
Profit or loss (credit)/charge
(6.3)
6.6
0.3
Profit or loss charge – prior year adjustment
–
5.5
5.5
Transfer from Deferred tax asset
1
–
1.0
1.0
As at 31 December 2024
–
13.1
13.1
1. £1.0m relating to accelerated depreciation previously shown within the deferred tax asset has been transferred to the
deferred tax liability (2023: £1.7m relating to other deferred tax assets previously shown within the deferred tax liability
has been transferred to the deferred tax asset).
As at 31 December 2024 deferred tax liabilities of £1.1m (2023: £3.8m) are expected to be due
within 12 months and £12.0m (2023: £2.5m) due after 12 months.
Notes to the Consolidated Financial Statements continued
12. Earnings per share
EPS is based on the profit for the year and the weighted average number of ordinary shares
in issue. Basic EPS are calculated by dividing profit attributable to ordinary shareholders by
the weighted average number of ordinary shares in issue during the year. Diluted EPS take into
account share options and awards which can be converted to ordinary shares.
For the purpose of calculating EPS, profit attributable to ordinary shareholders is arrived at by
adjusting profit for the year for the coupon on securities classified as equity:
2024 2023
£m £m
Profit after tax
308.1
282.6
Less: coupon paid on AT1 securities classified as equity
(9.0)
(9.0)
Profit attributable to ordinary shareholders
299.1
273.6
2024
2023
Weighted average number of shares, millions
Basic
385.6
414.2
Dilutive impact of share-based payment schemes
9.5
7.0
Diluted
395.1
421.2
Earnings per share, pence per share
Basic
77.6
66.1
Diluted
75.7
65.0
219OSB GROUP PLC | Annual Report and Accounts 2024
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220
13. Dividends
2024
2023
£m
Pence per share
£m
Pence per share
Final dividend for the prior year
85.6
21.8
93.8
21.8
Special dividend for the prior
year
–
–
50.3
11.7
Interim dividend for the current
year
40.8
10.7
40.9
10.2
126.4
185.0
The Directors recommend a final dividend of £85. 2m, 22. 9 pence per share (2023: £85 .7m,
21.8 pence per share) payable on 13 May 2025 with an ex-dividend date of 27 March 2025 and
a record date of 28 March 2025. This dividend is not reflected in these financial statements as
it is subject to approval by shareholders at the Annual General Meeting on 8 May 2025.
If the final dividend is approved, this will make up the total dividend for 2024 of £126.0m,
33.6 pence per share (2023: £126.6m, 32. 0 pence per share).
A summary of the Company’s distributable reserves is shown below:
2024 2023
£m £m
Retained earnings
1,354.2
1,358.6
Own shares
1
(0.9)
(1.0)
Distributable reserves
1,353.3
1,357.6
1. Own shares comprises own shares held in the Group’s EBT of £0.9m (2023: £1.0m) which are recognised within OSBG
under look-through accounting.
Further additional distributable reserves can be realised over time from dividend receipts from
profits generated from the subsidiaries including two regulated banks within the Group.
Notes to the Consolidated Financial Statements continued
14. Cash and cash equivalents
The following table analyses the cash and cash equivalents disclosed in the Consolidated
statement of cash flows:
2024 2023
£m £m
Cash in hand
0.3
0.4
Unencumbered loans and advances to credit institutions
3,231.1
2,513.6
3,231.4
2,514.0
15. Loans and advances to credit institutions
2024 2023
£m £m
Unencumbered
BoE call account
3,053.9
2,256.3
Call accounts
58.5
92.2
Cash held in special purpose vehicles (SPVs)
1
99.5
147.8
Term deposits
19.2
17. 3
Encumbered
BoE cash ratio deposit
2
–
69.6
Cash held in SPVs
1
40.6
31.8
Cash margin given
134.2
198.6
3,405.9
2,813.6
1. Cash held in SPVs is ring-fenced for use in managing the Group’s securitised debt facilities under the terms of
securitisation agreements. Cash held in SPVs is treated as unencumbered in proportion to the retained interest in the
SPV, based on the nominal value of the bonds held by the Group to total bonds in the securitisation, and is included
in cash and cash equivalents. Cash retained in SPVs designated as cash reserve credit enhancement is treated as
encumbered in proportion to the external holdings in the SPV and excluded from cash and cash equivalents.
2. The Cash Ratio Deposit was a scheme that funded the BoE’s monetary policy and financial stability functions.
On 1 March 2024 the scheme was replaced by an annual BoE Levy.
OSB GROUP PLC | Annual Report and Accounts 2024
Strategic Report
Governance Financial StatementsOverview Appendices
16. Investment securities
2024 2023
£m £m
Held at amortised cost
RMBS loan notes
742.1
325.4
Covered bond
56.2
–
798.3
325.4
Held at FVOCI
UK Sovereign debt
226.0
296.0
226.0
296.0
Held at FVTPL
RMBS loan notes
410.1
0.3
1,434.4
621.7
At 31 December 2024, the Group had no RMBS loan notes (2023: nil) sold under repos.
The Directors consider that the primary purpose of holding investment securities is prudential.
These securities are held as liquid assets with the intention of use on a continuing basis in the
Group’s activities and are classified as amortised cost, FVOCI and FVTPL in accordance with
the Group’s business model for each security.
The credit risk on investment securities held at amortised cost has not significantly increased
since initial recognition and is categorised as stage 1. At 31 December 2024, there were no
ECLs on investment securities (2023: nil).
Movements during the year in investment securities held by the Group are analysed as follows:
2024 2023
£m £m
As at 1 January
621.7
412.9
Additions
1
1,597.3
664.3
Disposals and maturities
2
(789.1)
(456.3)
Movement in accrued interest
4.6
1.0
Changes in fair value
(0.1)
(0.2)
As at 31 December
1,434.4
621.7
1. Additions include £786.1m of notes received as part of PMF 2024-2 securitisation. In 2023 additions included £233.9m
UK Treasury bills which had a maturity of less than three months from date of acquisition.
2. 2023 Disposals and maturities include £323.9m of UK Treasury bills which had a maturity of less than three months from
date of acquisition.
Notes to the Consolidated Financial Statements continued
At 31 December 2024, investment securities included investments in unconsolidated structured
entities (see note 42) of £92.6m (2023: £100.7m) notes in PMF 2020-1B and £472.5m (2023:
nil) notes in PMF 2024-2. These investments represent the maximum exposure to loss from
unconsolidated structured entities.
17. Loans and advances to customers
2024 2023
£m £m
Held at amortised cost:
Loans and advances (see note 18)
24,923.4
25,674.4
Finance leases (see note 19)
316.9
222.7
25,240.3
25,897.1
Less: Expected credit losses (see note 20)
(126.9)
(145.8)
25,113.4
25,751.3
Held at FVTPL:
Residential mortgages
12.9
13.7
25,126.3
25,765.0
18. Loans and advances
2024
2023
OSB CCFS Total OSB CCFS Total
£m £m £m £m £m £m
Gross carrying
amount
Stage 1
12,029.3
7,539.0
19,568.3
11,048.7
9,313.8
20,362.5
Stage 2
2,411.8
1,935.5
4,347.3
2,712.6
1,819.3
4,531.9
Stage 3
653.2
294.1
947.3
491.9
2 17.2
709.1
Stage 3 (POCI)
27.8
32.7
60.5
33.4
37.5
70.9
15,122.1
9,801.3
24,923.4
14,286.6
11,3 87.8
25,674.4
The mortgage loan balances pledged as collateral for liabilities are:
2024 2023
£m £m
BoE under TFSME and ILTR
3,745.2
6,092.4
Securitisation
995.9
841.7
4,741.1
6,934.1
221OSB GROUP PLC | Annual Report and Accounts 2024
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222
18. Loans and advances continued
The Group’s securitisation programmes and use of TFSME and ILTR result in certain assets being
encumbered as collateral against such funding. As at 31 December 2024, the percentage of the
Group’s gross loans and advances to customers that are encumbered was 19% (2023: 27%).
The table below shows the movement in loans and advances to customers by IFRS 9 stage
during the year:
Stage 3
Stage 1 Stage 2 Stage 3 (POCI) Total
£m £m £m £m £m
As at 1 January 2023
18,563.9
4,416.3
501.7
83.0
23,564.9
Originations
1
4,561.7
–
–
–
4,561.7
Acquisitions
2
175.8
–
–
–
175.8
Repayments and write-offs
3
(2,041.6)
( 447. 2)
(127.1)
(12.1)
(2,628.0)
Transfers:
– To Stage 1
1,534.7
(1,520.4)
(14.3)
–
–
– To Stage 2
(2,299.0)
2,347.5
(48.5)
–
–
– To Stage 3
(133.0)
(264.3)
397.3
–
–
As at 31 December 2023
20,362.5
4,531.9
709.1
70.9
25,674.4
Originations
1
3,771.6
–
–
–
3,771.6
Acquisitions
2
5.9
–
–
–
5.9
Disposals
4
(1,126.1)
(124.5)
(0.2)
–
(1,250.8)
Repayments and write-offs
3
(2,669.7)
(469.2)
(128.4)
(10.4)
(3,27
7.7)
Transfers:
– To Stage 1
1,244.4
(1,210.5)
(33.9)
–
–
– To Stage 2
(1,874.4)
1,933.5
(59.1)
–
–
– To Stage 3
(145.9)
(313.9)
459.8
–
–
As at 31 December 2024
19,568.3
4,347.3
947.3
60.5
24,923.4
1. Originations include further advances and drawdowns on existing commitments.
2. The Group repurchased £5.9m (2023: £175.8m) of own-originated UK residential and Buy-to-Let mortgages from
deconsolidated SPVs at par.
3. Repayments and write-offs include customer redemptions and £10.7m (2023: £33.6m) of write-offs during the year.
4. Disposals include loans and advances to customers derecognised as part of the PMF 2024-2 securitisation.
Notes to the Consolidated Financial Statements continued
The contractual amount outstanding on loans and advances that were written off during
the reporting period and were still subject to collections and recovery activity was £1.9m at
31 December 2024 (2023: £0.3m).
As at 31 December 2024, loans and advances of £280.8m (2023: £126.7m) were in a probation
period before they can move out of Stage 3, see note 1 m (vii). for further details.
Where a borrower has multiple facilities, all facilities are considered in default when a minimum
threshold of the borrower’s exposure has been classified as defaulted. As at 31 December 2024,
loans and advances of £72.0m (2023: £55.7m) were in this category of default.
19. Finance leases
The Group provides asset finance lending through InterBay Asset Finance Limited.
2024 2023
£m £m
Gross investment in finance leases, receivable
Less than one year
120.3
83.6
Between one and two years
97.7
68.6
Between two and three years
74.0
51.7
Between three and four years
42.2
31.4
Between four and five years
18.9
12.0
More than five years
4.8
2.3
357.9
249.6
Unearned finance income
(41.0)
(26.9)
Net investment in finance leases
316.9
222.7
Net investment in finance leases, receivable
Less than one year
102.0
71.7
Between one and two years
85.6
60.4
Between two and three years
67.4
47.1
Between three and four years
39.3
29.7
Between four and five years
18.0
11.6
More than five years
4.6
2.2
316.9
222.7
The Group has recognised £4.1m of ECLs on finance leases as at 31 December 2024 (2023: £3.0m).
During the year, originations in InterBay Asset Finance Limited amounted to £182.1m (2023: £130.5m).
OSB GROUP PLC | Annual Report and Accounts 2024
Strategic Report
Governance Financial StatementsOverview Appendices
20. Expected credit losses
The ECL has been calculated based on various scenarios as set out below:
2024
2023
Weighted Weighted
ECL provision
Weighting
ECL provision
ECL provision
Weighting
ECL provision
£m
%
£m
£m
%
£m
Scenarios
Upside
53.2
30
16.0
60.5
30
18.2
Base case
63.6
40
25.4
76.8
40
30.7
Downside scenario
114.5
20
22.9
138.1
20
27. 6
Severe downside
scenario
153.0
10
15.3
206.8
10
20.7
Total weighted
provisions
79.6
97.2
Other provisions:
Individually assessed
provisions
37.6
25.1
Post model
adjustments
9.7
23.5
Total provision
126.9
145.8
The Group held £9.7m (2023: £23.5m) of ECL due to post model adjustments for risks not
sufficiently accounted for in the IFRS 9 framework.
Notes to the Consolidated Financial Statements continued
The Group continued to recognise the increases in credit risk due to the cost of borrowing
as stresses persist and interest rates have remained elevated and are expected to remain
higher for longer. This resulted in a PMA £2.1m of provision held (2023: £9.4m) noting that the
component associated with cost of living risks has been removed due to robust wage growth
which has aligned with inflation. The Group continued to observe an elongated time to sale,
which was in excess of modelled expectations and observations prior to the pandemic which
accounted for £6.3m (2023: £10.0m) as a PMA. Physical risk relating to climate change and
concerns around cladding are less material however continue to be recognised through the
PMA framework.
The Group’s ECL by segment and IFRS 9 stage is shown below:
2024
2023
OSB CCFS Total OSB CCFS Total
£m £m £m £m £m £m
Stage 1
11.8
1.9
13.7
15.8
6.6
22.4
Stage 2
29.6
9.7
39.3
39.2
15.1
54.3
Stage 3
58.6
13.1
71.7
55.1
11.6
66.7
Stage 3 (POCI)
1.1
1.1
2.2
1.0
1.4
2.4
101.1
25.8
126.9
111.1
34.7
145.8
The table above shows the movement in the ECL by IFRS 9 stage during the year. ECLs on
originations and acquisitions reflect the IFRS 9 stage of loans originated or acquired during
the year as at 31 December and not the date of origination. Re-measurement of loss allowance
relates to existing loans which did not redeem during the year and includes the impact of loans
moving between IFRS 9 stages.
223OSB GROUP PLC | Annual Report and Accounts 2024
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224
20. Expected credit losses continued
Stage 3
Stage 1 Stage 2 Stage 3 (POCI) Total
£m £m £m £m £m
As at 1 January 2023
7.2
50.9
68.3
3.6
130.0
Originations
10.2
–
–
–
10.2
Acquisitions
1.2
–
–
–
1.2
Repayments and write-offs
(0.6)
(4.1)
(39.7)
(0.7)
(45.1)
Re-measurement of loss
allowance
(9.7 )
30.1
29.9
0.2
50.5
Transfers:
– To Stage 1
13.0
(12.4)
(0.6)
–
–
– To Stage 2
(0.8)
2.2
(1.4)
–
–
– To Stage 3
(0.2)
(6.7)
6.9
–
–
Changes in assumptions and
model parameters
2.1
(5.7)
3.3
(0.7)
(1.0)
As at 31 December 2023
22.4
54.3
66.7
2.4
145.8
Originations
6.1
–
–
–
6.1
Acquisitions
0.1
–
–
–
0.1
Disposals
1
(0.6)
(0.3)
–
–
(0.9)
Repayments and write-offs
(2.4)
(5.0)
(15.4)
(0.3)
(23.1)
Re-measurement of loss
allowance
(24.3)
13.0
18.5
(0.3)
6.9
Transfers:
– To Stage 1
15.3
(13.4)
(1.9)
–
–
– To Stage 2
(2.3)
3.9
(1.6)
–
–
– To Stage 3
(0.2)
(9.0)
9.2
–
–
Changes in assumptions and
model parameters
(0.4)
(4.2)
(3.8)
0.4
(8.0)
As at 31 December 2024
13.7
39.3
71.7
2.2
126.9
1. Disposals include ECL on the loans and advances to customers derecognised as part of the PMF 2024-2 securitisation.
Notes to the Consolidated Financial Statements continued
The table below shows the stage 2 ECL balances by transfer criteria:
2024
2023
Carrying Carrying
value ECL Coverage value ECL Coverage
£m £m % £m £m %
Criteria:
Relative/absolute
PD movement
3,998.9
35.7
0.89
4,343.5
53.2
1.22
Qualitative measures
283.6
3.3
1.16
139.3
0.8
0.57
30 days past
due backstop
70.4
0.3
0.43
55.1
0.3
0.54
Total
4,352.9
39.3
0.90
4,5 37.9
54.3
1.20
The Group has a number of qualitative measures to determine whether a SICR has taken place.
These triggers utilise both internal performance information, to analyse whether an account is
in distress but not yet in arrears, and external credit bureau information, to determine whether
the customer is experiencing financial difficulty with an external credit obligation.
21. Impairment of financial assets
The (credit)/charge for impairment of financial assets in the Consolidated Statement of
Comprehensive Income comprises:
2024 2023
£m £m
Write-offs in year
10.7
33.6
(Decrease)/increase in ECL provision
(22.4)
15.2
(11.7)
48.8
The (credit)/charge for provisions of £(11.7)m (2023: £48.8m) shown in the Consolidated
Statement of Comprehensive Income also includes a less than £0.1m credit (2023: £4.6m)
in respect of insurance recoveries.
OSB GROUP PLC | Annual Report and Accounts 2024
Strategic Report
Governance Financial StatementsOverview Appendices
22. Derivatives
The table below reconciles the gross amount of derivative contracts to the carrying balance
shown in the Consolidated Statement of Financial Position:
Net amount of Contracts
financial assets subject to Cash collateral
/(liabilities) master netting paid/
presented agreements not (received) not
in the offset in the offset in the
Gross amount Consolidated Consolidated Consolidated
of recognised statement statement statement
financial assets of financial of financial of financial
/(liabilities) position position position Net amount
As at 31 December 2024 £m £m £m £m £m
Derivative assets:
Interest rate risk hedging
– product
1
312.7
312.7
(75.7)
(163.8)
73.2
Interest rate risk hedging
– structural hedge
1.1
1.1
(1.1)
–
–
313.8
313.8
(76.8)
(163.8)
73.2
Derivative liabilities:
Interest rate risk hedging
– product
1
(7 7.0)
( 77.0)
75.7
–
(1.3)
Interest rate risk hedging
– structural hedge
(4.9)
(4.9)
1.1
3.8
–
(81.9)
(81.9)
76.8
3.8
(1.3)
As at 31 December 2023
Derivative assets:
Interest rate risk hedging
– product
1
530.6
530.6
(45.7)
(212.8)
272.1
Derivative liabilities:
Interest rate risk hedging
– product
1
(199.9)
(199.9)
45.7
216.1
61.9
1. Product relates to the hedging of loan assets, retail deposits and debt issued, including pipeline hedges.
Notes to the Consolidated Financial Statements continued
Derivative assets and liabilities include an initial margin of £131.7m (2023: £198.4m) with
swap counterparties. Margin is posted daily in respect of derivatives transacted with
swap counterparties.
Included within the Group’s derivative assets is £72.6m (2023: £112.0m) and derivative liabilities
£1.2m (2023: nil) relating to derivative contracts not covered by master netting agreements on
which no cash collateral has been paid.
The table below profiles the maturity of nominal amounts for interest rate risk hedging
derivatives based on contractual maturity:
Less than More than
Total nominal 3 months 3–12 months 1–5 years 5 years
As at 31 December 2024 £m £m £m £m £m
Derivative assets
16,474.8
1,555.4
4,390.7
10,249.0
279.7
Derivative liabilities
11,291.4
711.0
4,696.8
5,773.6
110.0
27,766.2
2,266.4
9,087.5
16,022.6
389.7
As at 31 December 2023
Derivative assets
17,568.6
812.3
8,181.3
8,560.0
15.0
Derivative liabilities
8,913.6
1,148.0
2,300.0
5,108.6
357.0
26,482.2
1,960.3
10,481.3
13,668.6
372.0
The Group has 1,111 (2023: 944) derivative contracts with an average fixed rate of 3.71%
(2023: 2.70%).
225OSB GROUP PLC | Annual Report and Accounts 2024
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23. Hedge accounting
2024 2023
£m £m
Hedged assets
Current hedge relationships
(165.3)
(253.1)
Swap inception adjustment
23.5
40.4
Cancelled hedge relationships
(33.2)
(30.8)
De-designated hedge relationships
(4.3)
–
Fair value adjustments on hedged assets
(179.3)
(243.5)
Hedged liabilities
Current hedge relationships
9.0
(22.2)
Swap inception adjustment
(2.9)
0.3
Fair value adjustments on hedged liabilities
6.1
(21.9)
In the first half of 2024, the Group commenced the implementation of an equity structural
hedge comprising of a series of receive fixed rate swaps, to reduce earnings volatility due to
interest rate changes arising from the portion of the balance sheet funded by equity. The
Group continued to hedge its fixed rate mortgage portfolio in full with pay fixed rate swaps.
The equity structural hedge was not designated as a hedge under IAS 39 and, to minimise fair
value volatility through the income statement, an equivalent portion of the existing mortgage
hedge was de-designated. The equity structural hedge has a weighted average life of 2.5 years
and the notional amount was £1,409.9m as at 31 December 2024.
The swap inception adjustment relates to hedge accounting adjustments arising when hedge
accounting commences, reflecting the change in fair value on the hedged item due to the
hedged risk that occurred prior to being designated in a hedge accounting relationship. The
Group uses the associated swap value as a proxy for this initial value, based on derivative
instruments previously taken out on the mortgage pipeline or new retail deposits.
De-designated hedge relationships relate to hedge accounting adjustments on failed or
discontinued hedge relationships which are amortised over the remaining lives of the original
hedged items.
Cancelled hedge relationships predominantly represent the unamortised fair value adjustment
for interest rate risk hedges that have been cancelled and replaced due to IBOR transition,
securitisation activities, the inception of the equity structural hedge and legacy long-term fixed
rate mortgages (c. 25 years at origination).
Notes to the Consolidated Financial Statements continued
The table below analyses the Group’s portfolio hedge accounting for fixed rate loans and
advances to customers:
2024
2023
Hedging Hedging
Hedged item instrument Hedged item instrument
Loans and advances to customers £m £m £m £m
Carrying amount of hedged item/
nominal value of hedging instrument
13,123.0
13,809.9
15,390.4
15,425.6
Cumulative fair value adjustments
of hedged item/fair value of
hedging instrument
(165.3)
217.6
(253.1)
312.7
Changes in the fair value adjustment
of hedged item/hedging instrument
used for recognising the hedge
ineffectiveness for the period
31.7
(53.6)
580.3
(590.5)
Cumulative fair value on cancelled
hedge relationships
(33.2)
–
(30.8)
–
In the Consolidated Statement of Financial Position, £265.9m (2023: £469.9m) of hedging
instruments were recognised within derivative assets; and £48.3m (2023: £157.2m) within
derivative liabilities.
The movement in cancelled hedge relationships is as follows:
2024 2023
Hedged assets £m £m
As at 1 January
(30.8)
(5.2)
New cancellations
1
(22.9)
(23.0)
Amortisation
20.5
(2.6)
As at 31 December
(33.2)
(30.8)
1. The new cancellations are from the securitisation of mortgages during the year where the Group cancels swaps which
were effective prior to the event, replacing these with new swaps within SPV structures, with the designated hedge
moved to cancelled hedge relationships to be amortised over the remaining original life of the swap. Additionally,
in 2024, cancellations occurred due to the commencement of the structural hedge programme.
OSB GROUP PLC | Annual Report and Accounts 2024
Strategic Report
Governance Financial StatementsOverview Appendices
23. Hedge accounting continued
The table below analyses the Group’s portfolio hedge accounting for fixed rate amounts owed
to retail depositors:
2024
2023
Hedging Hedging
Hedged item instrument Hedged item instrument
Customer deposits £m £m £m £m
Carrying amount of hedged item/
nominal value of hedging instrument
8,368.8
8,393.9
8,955.5
8,947.0
Cumulative fair value adjustments
of hedged item/fair value of
hedging instrument
6.5
(4.3)
(6.7)
16.9
Changes in the fair value adjustment
of hedged item/hedging instrument
used for recognising the hedge
ineffectiveness for the period
24.9
(22.8)
(67.2)
78.8
In the Consolidated Statement of Financial Position, £3.6m (2023: £40.3m) of hedging
instruments were recognised within derivative assets; and £7.9m (2023: £23.4m) within
derivative liabilities.
Notes to the Consolidated Financial Statements continued
The table below analyses the Group’s ‘micro’ hedge accounting for fixed rate senior notes and
subordinated liabilities:
2024
2023
Hedging Hedging
Hedged item instrument Hedged item instrument
Senior notes and subordinated liabilities £m £m £m £m
Carrying amount of hedged item/
nominal value of hedging instrument
765.0
765.0
365.0
365.0
Cumulative fair value adjustments
of hedged item/fair value of
hedging instrument
2.5
(2.7)
(15.5)
15.6
Changes in the fair value adjustment
of hedged item/hedging instrument
used for recognising the hedge
ineffectiveness for the period
13.0
(13.0)
(15.5)
15.8
The Group has elected to partially hedge the senior notes up to the optional redemption date
which reflects management’s expectations about the exercise of the call option.
In the Consolidated Statement of Financial Position, £5.9m (2023: £15.6m) of hedging instruments
were recognised within derivative assets, and £8.6m (2023: nil) within derivative liabilities.
24. Other assets
2024 2023
£m £m
Falling due within one year
Prepayments
15.1
9.9
Other assets
1.1
11.9
Falling due more than one year
Prepayments
1.0
5.8
Other assets
0.6
–
17.8
27.6
227OSB GROUP PLC | Annual Report and Accounts 2024
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25. Property, plant and equipment
Right of use assets
Freehold land Development Leasehold Equipment and
and buildings Asset improvements fixtures Property leases Other leases Total
£m £m £m £m £m £m £m
Cost
As at 1 January 2023
20.0
–
3.0
16.5
13.8
4.6
57.9
Additions
1
0.3
–
–
5.7
2.0
1.2
9.2
Disposals and write-offs
2
–
–
–
(3.3)
–
(0.1)
(3.4)
Foreign exchange difference
–
–
–
(0.1)
–
–
(0.1)
As at 31 December 2023
20.3
–
3.0
18.8
15.8
5.7
63.6
Additions
1
–
11.8
0.6
3.8
0.9
–
17.1
Transfer during the year
3.7
(4.1)
0.3
0.1
–
–
–
Disposals and write-offs
2
–
–
–
(2.9)
–
–
(2.9)
As at 31 December 2024
24.0
7.7
3.9
19.8
16.7
5.7
77.8
Accumulated depreciation
As at 1 January 2023
1.7
–
1.2
8.9
4.9
0.3
17.0
Charged in year
0.3
–
0.3
3.5
1.9
0.2
6.2
Disposals and write-offs
2
–
–
–
(3.3)
–
(0.1)
(3.4)
As at 31 December 2023
2.0
–
1.5
9.1
6.8
0.4
19.8
Charged in year
0.3
–
0.3
3.3
2.4
–
6.3
Disposals and write-offs
2
–
–
–
(2.9)
–
–
(2.9)
As at 31 December 2024
2.3
–
1.8
9.5
9.2
0.4
23.2
Net book value
As at 31 December 2024
21.7
7.7
2.1
10.3
7.5
5.3
54.6
As at 31 December 2023
18.3
–
1.5
9.7
9.0
5.3
43.8
1. Additions include property lease modifications of £0.5m (2023: £0.5m) of right of use assets.
2. During the year the Group derecognised fully depreciated assets.
Notes to the Consolidated Financial Statements continued
OSB GROUP PLC | Annual Report and Accounts 2024
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26. Intangible assets
Computer Assets
Development software and arising on
costs
1
licences Combination Total
£m £m £m £m
Cost
As at 1 January 2023
3.8
14.1
21.5
39.4
Additions
19.1
0.7
–
19.8
Transfer during the year
(2.2)
2.2
–
–
Disposals and write-offs
2
–
(3.4)
(0.1)
(3.5)
As at 31 December 2023
20.7
13.6
21.4
55.7
Additions
27.5
0.2
–
27.7
Transfer during the year
3
(32.3)
32.3
–
–
Disposals and write-offs
2
–
(1.3)
(21.4)
(22.7)
As at 31 December 2024
15.9
44.8
–
60.7
Accumulated amortisation
As at 1 January 2023
1.3
8.4
17.7
27.4
Charged in year
0.7
2.8
2.2
5.7
Disposals and write-offs
2
–
(3.4)
(0.1)
(3.5)
As at 31 December 2023
2.0
7. 8
19.8
29.6
Transfer during the year
(2.0)
3.3
(1.3)
–
Charged in year
–
2.1
2.9
5.0
Disposals and write-offs
2
–
(1.3)
(21.4)
(22.7)
As at 31 December 2024
–
11.9
–
11.9
Net book value
As at 31 December 2024
15.9
32.9
–
48.8
As at 31 December 2023
18.7
5.8
1.6
26.1
1. Development costs are largely related to the transformation project.
2. During the year the Group derecognised fully amortised assets.
3. Transfer during the year includes the capital expenditure relating to the Savings product that was launched in October 2024.
The Directors have considered the carrying value of intangible assets and determined that
there are no indications of impairment at the year end.
Notes to the Consolidated Financial Statements continued
27. Amounts owed to credit institutions
2024 2023
£m £m
BoE TFSME
1,394.9
3,352.0
BoE ILTR
380.3
10.1
Commercial repo
–
0.1
1,775.2
3,362.2
Cash collateral and margin received
160.0
212.8
1,935.2
3,575.0
28. Amounts owed to retail depositors
2024
2023
OSB CCFS Total OSB CCFS Total
£m £m £m £m £m £m
Fixed rate deposits
9,016.1
6,340.2
15,356.3
8,846.6
7,493.9
16,340.5
Variable rate
deposits
4,509.3
3,954.7
8,464.0
3,399.9
2,386.2
5,786.1
13,525.4
10,294.9
23,820.3
12,246.5
9,880.1
22,126.6
29. Amounts owed to other customers
2024 2023
£m £m
Fixed rate deposits
102.3
58.8
Variable rate deposits
2.6
4.5
104.9
63.3
229OSB GROUP PLC | Annual Report and Accounts 2024
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230
30. Debt securities in issue
2024 2023
£m £m
Asset-backed loan notes at amortised cost
1,018.3
818.5
Amount due for settlement within 12 months
2.3
109.5
Amount due for settlement after 12 months
1,016.0
709.0
1,018.3
818.5
The asset-backed loan notes are secured on fixed and variable rate mortgages and are
redeemable in part from time to time, but such redemptions are mainly from the net principal
received from borrowers in respect of underlying mortgage assets. The maturity date of the
funds matches the contractual maturity date of the underlying mortgage assets. The Group
expects that a large proportion of the underlying mortgage assets, and therefore these notes,
will be repaid within five years.
Where the Group owns the call rights for a transaction, it may repurchase the asset-backed
loan notes on any interest payment date on or after the call dates, or on any interest payment
date when the current balance of the mortgages outstanding is less than or equal to 10% of
the principal amount outstanding on the loan notes on the date they were issued.
Interest is payable at fixed margins above SONIA.
The asset-backed loan notes were issued through the following funding vehicles:
2024 2023
£m £m
PMF 2024-1 plc
441.2
–
CMF 2024-1 plc
283.1
–
CMF 2023-1 plc
193.5
291.3
Canterbury Finance No.4 plc
100.5
167.5
Keys Warehouse No.1 Limited
–
250.2
CMF 2020-1 plc
–
109.5
1,018.3
818.5
Notes to the Consolidated Financial Statements continued
31. Lease liabilities
2024 2023
£m £m
As at 1 January
11.2
9.9
New leases
0.6
3.3
Lease modification
(0.8)
–
Lease repayments
(2.2)
(2.2)
Interest accruals
0.3
0.2
As at 31 December
9.1
11.2
During the year, the Group incurred expenses of £0.2m (2023: £0.1m) in relation to
short-term leases.
32. Other liabilities
2024 2023
£m £m
Falling due within one year
Accruals
33.8
26.5
Deferred income
0.2
0.4
Other creditors
12.4
12.7
Share repurchase liability
10.0
–
56.4
39.6
On 15 August 2024, the Board authorised an ordinary share repurchase programme of up
to £50.0m, recognising a £50.3m (including incentive fee of £0.3m) reduction in retained
earnings and a share repurchase liability. As at 31 December 2024, 10,721,471 shares had
been purchased by the Group’s agent under the programme at a total cost of £40.3m,
reducing the share repurchase liability to £10.0m. Other creditors include £0.5m for 114,098
shares purchased by the agent prior to 31 December 2024 for which the Group has
completed payment in January 2025. Any share repurchases made under this programme
were announced to the market each day in line with regulatory requirements, see note 38
for further details.
OSB GROUP PLC | Annual Report and Accounts 2024
Strategic Report
Governance Financial StatementsOverview Appendices
33. Provisions and contingent liabilities
The Group is reviewing and enhancing its collections processes and how mortgage
customers in arrears are managed as well as undertaking a retrospective review of the
Group’s application of forbearance measures and associated outcomes for certain cohorts
of customers. This review has led to the Group recognising a provision of £3.0m based on its
estimate of cost and redress due on accounts reviewed as at 31 December 2024.
The Group recognised a provision of £1.1m (2023: nil) relating to dismantling costs. This was
capitalised to the cost of the associated right-of-use asset.
The Group operates in a highly regulated environment and in the normal course of business,
may from time to time receive complaints and claims or be involved in legal proceedings that
could lead to a provision or contingent liability. This environment continues to evolve through
legislation, regulatory guidance and court rulings and the Group actively monitors these
developments. At the reporting date the Group considered that it had no material provisions or
contingent liabilities save as here.
An analysis of the Group’s provisions is presented below:
Other regulatory ECL on undrawn
provision loan facilities Dismantling cost Total
£m £m £m £m
As at 1 January 2023
–
0.4
–
0.4
Profit or loss charge
–
0.4
–
0.4
As at 31 December 2023
–
0.8
–
0.8
Additions
–
–
1.1
1.1
Profit or loss charge/(credit)
3.0
(0.3)
–
2.7
As at 31 December 2024
3.0
0.5
1.1
4.6
Notes to the Consolidated Financial Statements continued
34. Senior notes
The Group’s outstanding senior notes are as follows:
2024 2023
Reset date
Spread
£m £m
Fixed rate
Senior notes 2028 (9.5%)
7 September 2027
4.985%
307.7
3 07.5
Senior notes 2030 (8.875%)
16 January 2029
5.252%
415.0
–
722.7
3 07.5
The senior notes comprise fixed rate notes denominated in pounds Sterling and are listed on
the official list of the Financial Conduct Authority (FCA) and admitted to trading on the main
market of the London Stock Exchange plc.
The principal terms of the senior notes are as follows:
• Interest: Interest on the senior notes is fixed at an initial rate until the reset date. If the senior
notes are not redeemed prior to the reset date, the interest rate will be reset and fixed based
on a benchmark gilt rate plus the specified spread.
• Redemption: The Issuer may redeem the senior notes in whole (but not in part) in its sole
discretion on the reset date. Optional redemption may also take place for certain regulatory
or tax reasons. Any optional redemption requires the prior consent of the PRA.
• Ranking: The senior notes constitute direct, unsubordinated and unsecured obligations of
OSBG and rank at least pari passu, without any preference, among themselves as senior
notes. The notes rank behind the claims of depositors, but in priority to holders of Tier 1 and
Tier 2 capital instruments as well as equity holders of OSBG.
The table below shows a reconciliation of the Group’s senior notes during the year:
2024 2023
£m £m
As at 1 January
307.5
–
Addition
1
398.0
298.4
Movement in accrued interest
17.2
9.1
As at 31 December
722.7
3 07.5
1. Addition includes £2.0m (2023: £1.6m) towards transaction costs which has been amortised through the EIR of the
loan notes.
231OSB GROUP PLC | Annual Report and Accounts 2024
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35. Subordinated liabilities
The Group’s outstanding subordinated liabilities are summarised below:
2024 2023
Reset date
Spread
£m £m
Fixed rate
Subordinated liabilities 2033
(9.993%)
27 July 2028
6.296%
259.8
259.5
All subordinated liabilities are denominated in pounds sterling and are listed on the official list
of the FCA and admitted to trading on the main market of the London Stock Exchange plc.
The principal terms of the subordinated debt liabilities are as follows:
• Interest: Interest on the notes is fixed at an initial rate until the reset date. If the notes are
not redeemed prior to the reset date, the interest rate will be reset and fixed based on a
benchmark gilt rate plus the specified spread.
• Redemption: The Issuer may redeem the Tier 2 notes in whole (but not in part) in its sole
discretion on any day from (and including) 27 April 2028 to (and including) 27 July 2028
(the reset date) as specified in the terms of the agreement. Optional redemption may also
take place for certain regulatory or tax reasons. Any optional redemption requires the prior
consent of the PRA.
• Ranking: The notes constitute direct, unsecured and subordinated obligations of OSBG and
rank at least pari passu, without any preference, among themselves as Tier 2 capital. The notes
rank behind the claims of depositors and other unsecured and unsubordinated creditors, but
rank in priority to holders of Tier 1 capital instruments and of equity holders of OSBG.
The table below shows a reconciliation of the Group’s subordinated liabilities during the year:
2024 2023
£m £m
As at 1 January
259.5
–
Addition
1
–
248.7
Movement in accrued interest
0.3
10.8
As at 31 December
259.8
259.5
1. 2023 addition includes £1.3m towards transaction costs which has been amortised through the EIR of the loan notes.
Notes to the Consolidated Financial Statements continued
36. Perpetual subordinated bonds
2024 2023
£m £m
Sterling PSBs (4.6007%)
–
15.2
On 27 August 2024, the PSBs originally issued in February 2011 (ISIN: GB00B67JQX63) were
redeemed and cancelled. The listing of these PSBs was cancelled on the Official List of the
FCA and on the Main Market of the London Stock Exchange.
37. Reconciliation of cash flows from financing activities
The table below shows a reconciliation of the Group’s liabilities classified as financing activities
within the Consolidated Statement of Cash Flows:
Amounts
owed to Debt
credit securities in Subordinated
institutions issue (see Senior notes liabilities (see PSBs (see
(see note 27) note 30) (see note 34) note 35) note 36) Total
£m £m £m £m £m £m
As at 1 January 2023
4,543.2
265.9
–
–
15.2
4,824.3
Cash movements
Principal drawdowns
189.9
591.6
298.4
248.7
–
1,328.6
Principal repayments
(1,390.2)
(40.1)
–
–
–
(1,430.3)
Interest paid
(178.0)
(20.4)
–
(6.3)
(0.7)
(205.4)
Non-cash
movements
Interest charged
197. 3
21.5
9.1
17.1
0.7
245.7
As at 31 December
2023
3,362.2
818.5
307.5
259.5
15.2
4,762.9
Cash movements
Principal drawdowns
594.4
744.1
398.0
–
–
1,736.5
Principal repayments
(2,153.4)
(548.4)
–
–
(15.0)
(2,716.8)
Interest paid
(142.7)
(58.6)
(46.3)
(25.0)
(0.7)
(273.3)
Non-cash
movements
Interest charged
114.7
62.7
63.5
25.3
0.5
266.7
As at 31 December
2024
1,775.2
1,018.3
722.7
259.8
–
3,776.0
OSB GROUP PLC | Annual Report and Accounts 2024232
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Governance Financial StatementsOverview Appendices
38. Share capital
Number of shares
issued and Nominal value Premium
Ordinary shares fully paid £m £m
As at 1 January 2023
429,868,625
4.3
2.4
Shares cancelled under repurchase programme
(38,243,031)
(0.4)
–
Shares issued under OSBG employee
share plans
1,562,087
–
1.4
As at 31 December 2023
393,187,681
3.9
3.8
Shares cancelled under repurchase programme
(22,595,996)
(0.2)
–
Shares issued under OSBG employee
share plans
1,554,107
–
0.7
As at 31 December 2024
372,145,792
3.7
4.5
The Group commenced a share repurchase programme on 14 March 2024 (2023: 17 March
2023) which allowed the Group to repurchase a maximum of 43,024,375 shares (2023:
43,024,375 shares), restricted by a total cost of £50.0m (2023: £150.0m). On completion,
11,988,623 shares (2023: 38,243,031), representing 3.0% (2023: 8.9%) of the issued share
capital, were repurchased and cancelled at an average price of £4.17 (2023: £3.92) per share
and a total cost of £50.0m (2023: £150.0m) excluding transaction costs.
The Group commenced a further share repurchase programme on 6 September 2024. As at
31 December 2024, 10,721,471 shares were repurchased at an average price of £3.76 per share
and total cost of £40.3m, of which 10,607,373 shares have been cancelled representing 2.7%
of the issued share capital. The programme allows the Group to repurchase a maximum of
39,358,310 shares, restricted by a total cost of £50.0m excluding transaction costs.
The holders of ordinary shares are entitled to receive dividends as declared from time to time,
and are entitled to one vote per share at meetings of the Company. All ordinary shares rank
equally with regard to the Company’s residual assets.
All ordinary shares issued in the current and prior year were fully paid.
Notes to the Consolidated Financial Statements continued
39. Other equity instruments
The Group’s other equity instruments are as follows:
2024 2023
Additional Tier 1 securities £m £m
6% Perpetual subordinated contingent convertible securities
150.0
150.0
AT1 Securities
On 5 October 2021, OSBG issued AT1 securities which comprise £150.0m of Fixed Rate Resetting
Perpetual Subordinated Contingent Convertible Securities that qualify as AT1 capital under CRD
IV. The securities will be subject to full conversion into ordinary shares of OSBG in the event that
the Group’s Common Equity Tier 1 (CET1) capital ratio falls below 7%. The securities pay interest at
a rate of 6% per annum until the first reset date of 7 April 2027, with the reset interest rate equal to
539.3 basis points over the 5-year Gilt Rate (benchmark gilt) for such a period. Interest is paid semi-
annually in April and October.
OSBG may, at any time, cancel any interest payment at its full discretion and must cancel
interest payments in certain circumstances specified in the terms and conditions of the securities.
The securities are perpetual with no fixed redemption date. OSBG may at its option, redeem
the Securities, in whole but not in part, (i) on any day falling in the period commencing on (and
including) 7 October 2026 and ending on (and including) the First Reset Date or (ii) on any Reset
Date thereafter at 100 per cent. of their principal amount, together with any accrued but unpaid
interest (which excludes any interest cancelled or deemed cancelled as described above) to (but
excluding) the date fixed for redemption.
40. Other reserves
The Group’s other reserves are as follows:
2024 2023
£m £m
Share-based payment
16.2
14.2
Capital redemption & transfer
(1,354.5)
(1,354.7)
Own shares
(0.9)
(1.0)
FVOCI
0.1
0.2
Foreign exchange
(2.1)
(2.1)
(1,341.2)
(1,343.4)
233OSB GROUP PLC | Annual Report and Accounts 2024
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40. Other reserves continued
Capital redemption and transfer reserve
The capital redemption reserve represents the shares cancelled through the Group’s share
repurchase programme.
On 27 November 2020, a new ultimate parent company was inserted into the Group, being
OSBG. The share capital generated from issuing 447,304,198 nominal shares at £3.04 per
share, replacing the nominal shares of £0.01 in OSB previously recognised in share capital at
the consolidation level, created a transfer reserve of £1,355.3m.
Own shares
The Company has adopted the look-through approach for the EBT, including the EBT within
the Company. As at 31 December 2024, the EBT held 134,349 OSBG shares (2023: 188,106
OSBG shares). The Group and Company show these shares as a deduction from equity,
being the cost at which the shares were acquired of £0.9m (2023: £1.0m).
FVOCI reserve
The FVOCI reserve represents the cumulative net change in the fair value of investment
securities measured at FVOCI.
Foreign exchange reserve
The foreign exchange reserve relates to the revaluation of the Group’s Indian subsidiary,
OSB India Private Limited.
41. Financial commitments and guarantees
a) The Group had £4.9m (2023: £0.1m) of contracted capital expenditure commitments not
provided for as at 31 December 2024.
b) The Group had £0.1m (2023: £0.4m) of minimum lease commitments under leases for low-
value assets and short-term leases of 12 months or less.
c) Undrawn loan facilities:
2024 2023
£m £m
OSB mortgages
697.9
580.2
CCFS mortgages
289.1
391.8
Asset finance
–
27.4
987.0
999.4
Undrawn loan facilities are approved loan applications which have not yet been exercised.
They are payable on demand and are usually drawn down or expire within three months.
d) The Group did not have any issued financial guarantees as at 31 December 2024 (2023: nil).
Notes to the Consolidated Financial Statements continued
42. Risk management
Overview
Financial instruments form the vast majority of the Group’s assets and liabilities. The Group
manages risk on a consolidated basis and risk disclosures that follow are provided on
this basis.
Types of financial instruments
Financial instruments are a broad definition which includes financial assets, financial liabilities
and equity instruments. The main financial assets of the Group are loans to customers and
liquid assets, which in turn consist of cash in the BoE call accounts, call accounts with other
credit institutions, RMBS, covered bonds and UK sovereign debt. These are funded by a
combination of financial liabilities and equity instruments. Financial liability funding comes
predominantly from retail deposits and drawdowns under the BoE TFSME and ILTR, supported
by debt securities, senior notes, subordinated debts, wholesale and other funding. Equity
instruments include own shares and AT1 securities meeting the equity classification criteria.
The Group’s main activity is mortgage lending; it raises funds or invests in particular types of
financial assets to meet customer demand and manage the risks arising from its operations.
The Group does not trade in financial instruments for speculative purposes.
The Group uses derivative instruments to manage its financial risks. Derivatives are used
by the Group solely to reduce (hedge) the risk of loss arising from changes in market rates.
Derivatives are not used for speculative purposes.
Types of derivatives and uses
The derivative instruments used by the Group in managing its risk exposures are interest
rate swaps. Interest rate swaps convert fixed interest rates to floating or vice versa. As with
other derivatives, the underlying product is not sold and payments are based on notional
principal amounts.
Unhedged fixed rate liabilities create the risk of paying above-the-market rate if interest rates
subsequently decrease. Unhedged fixed rate mortgages and liquid assets bear the opposite
risk of income below-the-market rate when rates go up. While fixed rate assets and liabilities
naturally hedge each other to a certain extent, this hedge is usually never perfect because of
maturity mismatches and principal amounts.
The Group uses swaps to convert its instruments, such as mortgages, deposits and issued
debt, from fixed or base rate-linked rates to reference linked variable rates. This ensures a
guaranteed margin between the interest income and interest expense, regardless of changes
in the market rates.
Types of risk
The principal financial risks to which the Group is exposed are credit, liquidity and market risks,
the latter comprising interest and exchange rate risk. In addition to financial risks, the Group is
exposed to various other risks, most notably operational, conduct and compliance/regulatory,
which are covered in the Risk review on pages 46 to 69.
OSB GROUP PLC | Annual Report and Accounts 2024234
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42. Risk management continued
Credit risk
Credit risk is the risk that losses may arise as a result of the Group’s borrowers or market
counterparties failing to meet their obligations to repay.
The Group has adopted the Standardised Approach for assessment of credit risk regulatory
capital requirements. This approach considers risk weightings as defined under Basel II and
Basel III principles.
The classes of financial instruments to which the Group is most exposed are loans and advances
to customers, loans and advances to credit institutions, cash in the BoE call account, call and
current accounts with other credit institutions and investment securities. The maximum credit
risk exposure equals the total carrying amount of the above categories plus off-balance sheet
undrawn committed mortgage facilities.
The change, during the year and cumulatively, in the fair value of investments in debt
securities and loans and advances to customers at FVOCI and FVTPL that is attributable
to changes in credit risk is not material.
Credit risk – loans and advances to customers
Credit risk associated with mortgage lending is largely driven by the housing market and
level of unemployment. A recession and/or high interest rates could cause pressure within
the market, resulting in rising levels of arrears and repossessions.
All loan applications are assessed in accordance with the Group’s Lending Policy. Changes to
the policy are approved by the Group Risk Committee, with mandates set for the approval of
loan applications.
The Group Credit Committee and ALCO regularly monitor lending activity, taking
appropriate actions to reprice products and adjust lending criteria in order to control risk
and manage exposure. Where necessary and appropriate, changes to the Lending Policy
are recommended to the Group Risk Committee.
The following tables show the Group’s maximum exposure to credit risk and the impact of collateral
held as security, capped at the gross exposure amount, by impairment stage. Capped collateral
excludes the impact of forced sale discounts and costs to sell. The collateral value is determined by
indexing against HPI data.
Notes to the Consolidated Financial Statements continued
OSB
CCFS
Total
Gross Capped Gross Capped Gross Capped
carrying collateral carrying collateral carrying collateral
amount held amount held amount held
2024 £m £m £m £m £m £m
Stage 1
12,338.1
12,290.5
7,539.0
7,538.4
19,877.1
19,828.9
Stage 2
2 ,417.4
2,416.0
1,935.5
1,935.0
4,352.9
4,351.0
Stage 3
655.7
649.6
294.1
294.1
949.8
943.7
Stage 3 (POCI)
27.8
27.4
32.7
32.6
60.5
60.0
15,439.0
15,383.5
9,801.3
9,800.1
25,240.3
25,183.6
2023
Stage 1
11,263.0
11,228.7
9,313.8
9,313.8
20,576.8
20,542.5
Stage 2
2,718.6
2,717.0
1,819.3
1,818.6
4,537.9
4,535.6
Stage 3
494.3
488.8
217.2
2 17.2
711.5
706.0
Stage 3 (POCI)
33.4
33.0
37.5
37.4
70.9
70.4
14,509.3
14,4 67.5
11,3 87.8
11,387.0
25,897.1
25,854.5
The Group’s main form of collateral held is property, based in the UK and the Channel Islands.
235OSB GROUP PLC | Annual Report and Accounts 2024
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Governance Financial StatementsOverview Appendices
42. Risk management continued
The Group uses indexed loan to value (LTV) ratios to assess the quality of the uncapped collateral held. Property values are updated to reflect changes in the HPI. A breakdown of loans and
advances to customers by indexed LTV is as follows:
2024
2023
OSB CCFS Total OSB CCFS Total
£m £m £m % £m £m
£m
%
Band
0%–50%
2,375.0
1,091.3
3,466.3
14
2,454.7
1,105.5
3,560.2
14
50%–60%
2,291.2
1,312.7
3,603.9
14
2,275.8
1,454.5
3,730.3
14
60%–70%
4,548.2
3,035.8
7,584.0
30
4,414.4
3,244.0
7,658 .4
30
70%–80%
4,624.2
3,881.3
8,505.5
34
3,822.1
5,000.9
8,823.0
34
80%–90%
1,043.7
461.5
1,505.2
6
1,045.7
573.2
1,618.9
6
90%–100%
221.0
14.8
235.8
1
222.0
8.8
230.8
1
>100%
335.7
3.9
339.6
1
274.6
0.9
275.5
1
Total loans before provisions
15,439.0
9,801.3
25,240.3
100
14,509.3
11,387.8
25,897.1
100
The table below shows the LTV banding for the OSB segments’ two major lending streams:
2024
2023
BTL/SME Residential Total BTL/SME Residential Total
OSB £m £m
£m
%
£m £m
£m
%
Band
0%–50%
1,037.4
1,337.6
2,375.0
15
1,078.1
1,376.6
2,454.7
17
50%–60%
2,021.2
270.0
2,291.2
15
2,027.5
248.3
2,275.8
16
60%–70%
4,345.0
203.2
4,548.2
29
4,181.4
233.0
4,414.4
30
70%–80%
4,430.7
193.5
4,624.2
30
3,616.9
205.2
3,822.1
26
80%–90%
799.1
244.6
1,043.7
8
826.3
219.4
1,045.7
7
90%–100%
190.8
30.2
221.0
1
174.8
47.2
222.0
2
>100%
331.6
4.1
335.7
2
270.1
4.5
274.6
2
Total loans before provisions
13,155.8
2,283.2
15,439.0
100
12,175.1
2,334.2
14,509.3
100
Notes to the Consolidated Financial Statements continued
OSB GROUP PLC | Annual Report and Accounts 2024236
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42. Risk management continued
The tables below show the LTV analysis of the OSB BTL/SME sub-segment:
OSB
Residential
Band
Buy-to-Let
1
Commercial development Funding lines Total
2024 £m £m £m £m £m
0%–50%
925.7
107.0
3.9
0.8
1,037.4
50%–60%
1,819.0
128.7
66.1
7.4
2,021.2
60%–70%
3,951.9
207.2
184.0
1.9
4,345.0
70%–80%
3,918.8
495.5
7.0
9.4
4,430.7
80%–90%
562.0
237.1
–
–
799.1
90%–100%
100.8
90.0
–
–
190.8
>100%
239.9
90.5
1.0
0.2
331.6
Total loans
before provisions
11,518.1
1,356.0
262.0
19.7
13,155.8
2023
0%–50%
968.1
93.4
8.2
8.4
1,078.1
50%–60%
1,857.3
106.6
61.1
2.5
2,027.5
60%–70%
3,800.3
169.7
210.5
0.9
4,181.4
70%–80%
3,271.4
323.6
–
21.9
3,616.9
80%–90%
596.0
230.3
–
–
826.3
90%–100%
68.7
106.1
–
–
174.8
>100%
202.7
66.0
1.0
0.4
270.1
Total loans
before provisions
10,764.5
1,095.7
280.8
34.1
12,175.1
1. Includes net investment in finance leases.
Notes to the Consolidated Financial Statements continued
The table below shows the LTV analysis of the OSB Residential sub-segment:
OSB
2024
2023
Second Second
First charge charge Total First charge charge Total
£m £m £m £m £m £m
Band
0%–50%
1,272.8
64.8
1,337.6
1,292.6
84.0
1,376.6
50%–60%
248.6
21.4
270.0
219.9
28.4
248.3
60%–70%
192.9
10.3
203.2
218.3
14.7
233.0
70%–80%
189.5
4.0
193.5
199.5
5.7
205.2
80%–90%
244.0
0.6
244.6
218.1
1.3
219.4
90%–100%
29.8
0.4
30.2
46.8
0.4
47.2
>100%
3.6
0.5
4.1
3.9
0.6
4.5
Total loans
before provisions
2,181.2
102.0
2,283.2
2,199.1
135.1
2,334.2
237OSB GROUP PLC | Annual Report and Accounts 2024
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42. Risk management continued
The tables below show the LTV analysis of the four CCFS sub-segment:
Band
CCFS
Second Total
charge
Buy-to-Let Residential Bridging lending
2024 £m £m £m £m
£m
%
0%–50%
335.2
607.7
123.8
24.6
1,091.3
11
50%–60%
714.9
508.1
73.1
16.6
1,312.7
13
60%–70%
2,024.9
896.5
101.4
13.0
3,035.8
31
70%–80%
3,099.8
713.3
60.3
7.9
3,881.3
40
80%–90%
183.0
275.7
1.2
1.6
461.5
5
90%–100%
7.4
3.6
3.7
0.1
14.8
–
>100%
2.1
0.8
1.0
–
3.9
–
Total loans
before provisions
6,367.3
3,005.7
364.5
63.8
9,801.3
100
2023
0%–50%
360.3
573.9
138.1
33.2
1,105.5
10
50%–60%
838.1
527.7
66.8
21.9
1,454.5
13
60%–70%
2,365.6
782.7
79.9
15.8
3,244.0
28
70%–80%
4,098.0
849.2
43.4
10.3
5,000.9
44
80%–90%
271.7
296.0
2.3
3.2
573.2
5
90%–100%
3.5
3.3
2.0
–
8.8
–
>100%
–
0.3
0.6
–
0.9
–
Total loans
before provisions
7,937.2
3,033.1
333.1
84.4
11,387. 8
100
Notes to the Consolidated Financial Statements continued
Forbearance measures undertaken
The Group has a range of options available where borrowers experience financial difficulties
that impact their ability to service their financial commitments under the loan agreement.
These options are explained in the Risk review on pages 46 to 69.
A summary of the forbearance measures undertaken during the year is shown below. The
balances disclosed reflect the year-end balance of the accounts where a forbearance measure
was undertaken during the year.
As at
Restated
1
As at
Number of 31 December Number of 31 December
accounts 2024 accounts 2023
Forbearance type 2024 £m 2023 £m
Interest-only switch
1,081
127.3
510
67.5
Interest rate reduction
1,077
85.6
637
69.8
Term extension
1
0.1
3
0.2
Payment deferral
747
104.5
689
101.2
Payment concession (reduced
monthly payments)
72
17.4
72
15.2
Capitalisation of interest
14
2.7
18
2.7
Full or partial debt forgiveness
21
10.6
125
4.5
Total
3,013
348.2
2,054
261.1
Loan type
First charge owner-occupier
2,322
226.1
1,299
153.6
Second charge owner-occupier
169
4.9
294
8.0
Buy-to-Let
460
104.0
371
82.2
Commercial
62
13.2
90
17.3
Total
3,013
348.2
2,054
261.1
1. In 2024 the Group updated its forbearance reporting to standardise the approach used across its entities. To aid
comparability, the 2023 figures have been restated to reflect this change. This has the effect of increasing the number
of accounts in 2023 by 502 to 2,054 and the 2023 year-end balance by £26.4m to £261.1m.
OSB GROUP PLC | Annual Report and Accounts 2024238
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42. Risk management continued
Geographical analysis by region
An analysis of loans, excluding asset finance leases, by region is provided below:
2024
2023
OSB CCFS Total OSB CCFS Total
Region £m £m £m % £m £m
£m
%
East Anglia
447.4
1,084.7
1,532.1
6
480.1
1,236.2
1,716.3
7
East Midlands
756.7
674.3
1,431.0
6
723.4
774.7
1,498.1
6
Greater London
6,329.8
2,769.6
9,099.4
36
6,185.6
3,416.4
9,602.0
37
Guernsey
17.0
–
17.0
–
18.2
–
18.2
–
Jersey
63.2
–
63.2
–
67. 8
–
67.8
–
North East
224.4
282.4
506.8
2
195.7
299.6
495.3
2
North West
1,017.1
890.1
1,907.2
8
983.4
1,031.0
2,014.4
8
Northern Ireland
7.9
–
7.9
–
9.4
–
9.4
–
Scotland
23.5
282.1
305.6
1
61.1
298.1
359.2
1
South East
3,419.1
1,57
7.6
4,996.7
20
2,907.8
1,834.0
4,741.8
18
South West
1,0 47.7
680.1
1,727.8
7
959.4
751.2
1,710.6
7
Wales
345.1
289.4
634.5
3
327.4
315.0
642.4
3
West Midlands
907.4
755.9
1,663.3
7
992.6
851.0
1,843.6
7
Yorks and Humberside
515.8
515.1
1,030.9
4
374.7
580.6
955.3
4
Total loans before provisions
15,122.1
9,801.3
24,923.4
100
14,286.6
11,387. 8
25,674.4
100
Approach to measurement of credit quality
The Group categorises the credit quality of loans and advances to customers into internal risk grades based on the 12-month PD calculated at the reporting date. The PDs include a combination of
internal behavioural and credit bureau characteristics and are aligned with capital models to generate the risk grades which are then further grouped into the following credit quality segments:
• Excellent quality – where there is a very high likelihood the asset will be recovered in full with a negligible or very low risk of default.
• Good quality – where there is a high likelihood the asset will be recovered in full with a low risk of default.
• Satisfactory quality – where the assets demonstrate a moderate default risk.
• Lower quality – where the assets require closer monitoring and the risk of default is of greater concern.
Notes to the Consolidated Financial Statements continued
239OSB GROUP PLC | Annual Report and Accounts 2024
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42. Risk management continued
The following tables disclose the credit risk quality ratings of loans and advances to customers by IFRS 9 stage. The assessment of whether credit risk has increased significantly since initial
recognition is performed for each reporting period for the life of the loan. Loans and advances to customers initially booked on very low PDs and graded as excellent quality loans can experience
SICR and therefore be moved to Stage 2. Similarly, loans and advances to customers initially booked on high PDs having lower credit quality can remain in stage 1 if subsequently SICR is not
experienced or triggered. Such loans may still be graded as excellent quality, if they meet the overall criteria.
Stage 3
Stage 1 Stage 2 Stage 3 (POCI) Total PD lower range PD upper range
2024 £m £m £m £m £m % %
OSB
Excellent
5,426.9
212.9
–
–
5,639.8
–
0.3
Good
6,199.2
1,135.3
–
–
7,334.5
0.3
2.0
Satisfactory
633.0
503.1
–
–
1,136.1
2.0
7.4
Lower
79.0
566.1
–
–
645.1
7.4
100.0
Impaired
–
–
655.7
–
655.7
100.0
100.0
POCI
–
–
–
27.8
27.8
100.0
100.0
CCFS
Excellent
4,623.4
622.3
–
–
5,245.7
–
0.3
Good
2,682.2
740.7
–
–
3,422.9
0.3
2.0
Satisfactory
220.1
242.5
–
–
462.6
2.0
7.4
Lower
13.3
330.0
–
–
343.3
7.4
100.0
Impaired
–
–
294.1
–
294.1
100.0
100.0
POCI
–
–
–
32.7
32.7
100.0
100.0
19,87
7.1
4,352.9
949.8
60.5
25,240.3
2023
OSB
Excellent
4,609.0
257.1
–
–
4,866.1
–
0.3
Good
6,062.0
1,397.6
–
–
7,459.6
0.3
2.0
Satisfactory
543.1
505.9
–
–
1,049.0
2.0
7.4
Lower
48.9
558.0
–
–
606.9
7.4
100.0
Impaired
–
–
494.3
–
494.3
100.0
100.0
POCI
–
–
–
33.4
33.4
100.0
100.0
CCFS
Excellent
6,204.6
633.1
–
–
6,837.7
–
0.3
Good
2,934.3
653.7
–
–
3,588.0
0.3
2.0
Satisfactory
168.2
213.5
–
–
381.7
2.0
7.4
Lower
6.7
319.0
–
–
325.7
7.4
100.0
Impaired
–
–
217.2
–
2 17.2
100.0
100.0
POCI
–
–
–
37.5
37.5
100.0
100.0
20,576.8
4,537.9
711.5
70.9
25,897.1
Notes to the Consolidated Financial Statements continued
OSB GROUP PLC | Annual Report and Accounts 2024240
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42. Risk management continued
The tables below show the Group’s other financial assets and derivatives by credit risk rating
grade. The credit grade is based on the external credit rating of the counterparty; AAA to AA-
are rated Excellent; A+ to A- are rated Good; and BBB+ to BBB- are rated Satisfactory.
Excellent Good Satisfactory Total
2024 £m £m £m £m
Investment securities
1,434.4
–
–
1,434.4
Loans and advances to
credit institutions
3,127. 2
264.4
14.3
3,405.9
Derivative assets
174.7
139.1
–
313.8
4,736.3
403.5
14.3
5,154.1
2023
Investment securities
621.7
–
–
621.7
Loans and advances to credit
institutions
2,446.7
357.7
9.2
2,813.6
Derivative assets
239.7
290.9
–
530.6
3,308.1
648.6
9.2
3,965.9
Credit risk – loans and advances to credit institutions and investment securities
The Group holds treasury instruments in order to meet liquidity requirements and for general
business purposes. The credit risk arising from these investments is closely monitored and
managed by the Group’s Treasury function. In managing these assets, Group Treasury operates
within guidelines laid down in the Group Market and Liquidity Risk Policy approved by ALCO
and performance is monitored and reported to ALCO monthly, including through the use of
an internally developed rating model based on counterparty credit default swap spreads.
The Group has limited exposure to emerging markets (Indian operations) and non-investment
grade debt. ALCO is responsible for approving treasury counterparties.
During the year, the average balance of cash in hand, loans and advances to credit institutions
and investment securities on a monthly basis was £4,081.1m (2023: £3,848.3m).
Notes to the Consolidated Financial Statements continued
The table below shows the industry sector of the Group’s loans and advances to credit
institutions and investment securities:
2024
2023
£m
%
£m
%
BoE
1
3,053.9
63
2,325.9
68
Other banks
352.0
7
487.7
14
Central government
226.0
5
296.0
9
Securitisation
1,208.4
25
325.7
9
Total
4,840.3
100
3,435.3
100
1. 2023 Balances with the BoE include £69.6m held in the cash ratio deposit.
The table below shows the geographical exposure of the Group’s loans and advances to credit
institutions and investment securities:
2024
2023
£m
%
£m
%
United Kingdom
4,821.1
100
3,418.0
99
India
19.2
–
17.3
1
Total
4,840.3
100
3,435.3
100
The Group monitors exposure concentrations against a variety of criteria, including asset
class, sector and geography. To avoid refinancing risks associated with any one counterparty,
sector or geographical region, the Board has set appropriate limits.
For further information on Credit risk please refer to pages 64.
241OSB GROUP PLC | Annual Report and Accounts 2024
Strategic Report
Governance Financial StatementsOverview Appendices
42. Risk management continued
Liquidity risk
Liquidity risk is the risk of having insufficient liquid assets to fulfil obligations as they become
due or the cost of raising liquid funds becoming too expensive.
The Group’s approach to managing liquidity risk is to maintain sufficient liquid resources to
cover cash flow imbalances and fluctuations in funding in order to retain full public confidence
in the solvency of the Group and to enable the Group to meet its financial obligations as they
fall due. This is achieved through maintaining a prudent level of liquid assets and control of the
growth of the business. The Group has established call accounts with the BoE and has access
to its contingent liquidity facilities.
The Board has delegated the responsibility for liquidity management to the Chief Executive
Officer, assisted by ALCO, with day-to-day management delegated to Treasury as detailed in
the Group Market and Liquidity Risk Policy. The Board is responsible for setting risk appetite
limits over the level and maturity profile of funding and for monitoring the composition of the
Group financial position.
The Group also monitors a range of triggers which are designed to capture liquidity stresses
in advance in order to allow sufficient time for management action to take effect. These are
monitored daily, with breaches immediately reported to the Group Chief Risk Officer, Chief
Executive Officer, Chief Financial Officer and the Group Treasurer.
Notes to the Consolidated Financial Statements continued
The tables below show the maturity profile for the Group’s financial assets and liabilities based
on contractual maturities at the reporting date:
Carrying Less than 3 3–12 1–5 More than 5
amount On demand months months years years
2024 £m £m £m £m £m £m
Financial asset by type
Cash in hand
0.3
0.3
–
–
–
–
Loans and advances
to credit institutions
3,405.9
3,386.5
12.5
6.7
0.2
–
Investment securities
1,434.4
–
606.2
127.2
647.4
53.6
Loans and advances
to customers
25,126.3
–
212.6
480.7
1,831.3
22,601.7
Derivative assets
313.8
–
11.3
25.5
274.8
2.2
Total assets
30,280.7
3,386.8
842.6
640.1
2,753.7
22,657.5
Financial liability
by type
Amounts owed to
retail depositors
23,820.3
7,314.5
7, 267.6
8,125.9
1,112.3
–
Amounts owed to
credit institutions
1,935.2
160.0
321.5
1,453.7
–
–
Amounts owed to
other customers
104.9
1.4
5.2
98.3
–
–
Derivative liabilities
81.9
–
1.2
9.4
71.2
0.1
Debt securities in issue
1,018.3
–
2.3
–
1,016.0
–
Lease liabilities
9.1
–
0.4
1.4
6.0
1.3
Senior notes
722.7
–
25.3
–
697.4
–
Subordinated liabilities
259.8
–
10.7
–
249.1
–
Total liabilities
27,952.2
7,475.9
7,634.2
9,688.7
3,152.0
1.4
Cumulative
liquidity gap
(4,089.1)
(10,880.7)
(19,929.3)
(20,327.6)
2,328.5
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42. Risk management continued
Carrying Less than 3 3–12 1–5 More than 5
amount On demand months months years years
2023 £m £m £m £m £m £m
Financial asset by type
Cash in hand
0.4
0.4
–
–
–
–
Loans and advances to
credit institutions
2,813.6
2,623.7
19.7
–
128.8
41.4
Investment securities
621.7
–
101.2
301.7
218.8
–
Loans and advances
to customers
25,765.0
–
249.6
469.1
1,383.1
23,663.2
Derivative assets
530.6
–
6.6
79.4
444.6
–
Total assets
29,731.3
2,624.1
377.1
850.2
2,175.3
23,704.6
Financial liability
by type
Amounts owed to
retail depositors
22,126.6
4,220.7
6,119.6
9,110.9
2,675.4
–
Amounts owed to
credit institutions
3,575.0
–
106.4
10.0
3,458.6
–
Amounts owed to
other customers
63.3
–
45.1
18.2
–
–
Derivative liabilities
199.9
–
6.0
18.9
164.9
10.1
Debt securities in issue
818.5
–
–
–
818.5
–
Lease liabilities
11.2
–
0.4
1.7
7.9
1.2
Senior notes
3 07.5
–
9.0
–
298.5
–
Subordinated liabilities
259.5
–
10.7
–
248.8
–
PSBs
15.2
–
–
15.2
–
–
Total liabilities
27, 376.7
4,220.7
6, 297.2
9,174.9
7,672. 6
11.3
Cumulative
liquidity gap
(1,596.6)
( 7,516. 7 )
(15,841.4)
(21,338.7)
2,354.6
Notes to the Consolidated Financial Statements continued
Liquidity risk – undiscounted contractual cash flows
The following tables provide an analysis of the Group’s gross contractual undiscounted
cash flows, derived using interest rates and contractual maturities at the reporting date
and excluding impacts of early payments or non-payments:
Gross
Carrying inflow/ Up to 3 3–12 More than 5
amount outflow months months 1–5 years years
2024 £m £m £m £m £m £m
Financial asset by type
Cash in hand
0.3
0.3
0.3
–
–
–
Loans and advances to
credit institutions
3,405.9
3,406.0
3,399.1
6.7
0.2
–
Investment securities
1,434.4
1,558.2
619.0
159.0
725.4
54.8
Loans and advances
to customers
25,126.3
62,539.2
553.6
1,849.2
9,284.6
50,851.8
Derivative assets
313.8
325.1
63.9
139.4
121.8
–
Total assets
30,280.7
67,828.8
4,635.9
2,154.3
10,132.0
50,906.6
Off-balance sheet
loan commitments
987.0
987.0
987.0
–
–
–
Financial liability
by type
Amounts owed to
retail depositors
23,820.3
25,520.8
15,413.9
8,929.7
1,17
7.2
–
Amounts owed to
credit institutions
1,935.2
1,991.6
484.1
1,507.5
–
–
Amounts owed to
other customers
104.9
104.9
1.4
5.2
98.3
–
Derivative liabilities
81.9
88.4
11.6
14.3
62.5
–
Debt securities in issue
1,018.3
1,177.0
32.4
95.4
1,049.2
–
Lease liabilities
9.1
9.0
0.4
1.4
5.9
1.3
Senior notes
722.7
945.3
32.0
32.0
881.3
–
Subordinated liabilities
259.8
343.7
12.5
12.5
318.7
–
Total liabilities
27,952.2
30,180.7
15,988.3
10,598.0
3,593.1
1.3
243OSB GROUP PLC | Annual Report and Accounts 2024
Strategic Report
Governance Financial StatementsOverview Appendices
42. Risk management continued
Gross
Carrying inflow/ Up to 3 3–12 1–5 More than 5
amount outflow months months years years
2023 £m £m £m £m £m £m
Financial asset by type
Cash in hand
0.4
0.4
0.4
–
–
–
Loans and advances to
credit institutions
2,813.6
2,813.6
2,643.4
–
128.8
41.4
Investment securities
621.7
678.9
106.4
320.0
252.5
–
Loans and advances
to customers
25,765.0
66,593.7
561.8
1,931.8
9,532.1
54,568.0
Derivative assets
530.6
540.7
99.1
247.5
193.6
0.5
Total assets
29,731.3
70,627.3
3,411.1
2,499.3
10,107.0
54,609.9
Off-balance sheet
loan commitments
999.4
999.4
999.4
–
–
–
Financial liability
by type
Amounts owed to
retail depositors
22,126.6
22,453.2
10,385.4
9,313.9
2,753.9
–
Amounts owed to
credit institutions
3,575.0
3,888.6
106.4
122.1
3,660.1
–
Amounts owed to
other customers
63.3
63.3
45.1
18.2
–
–
Derivative liabilities
199.9
195.7
2.3
4.7
186.1
2.6
Debt securities in issue
818.5
1,048.4
151.5
103.4
793.5
–
Lease liabilities
11.2
12.6
0.4
1.7
8.3
2.2
Senior notes
3 07.5
414.1
14.3
14.3
385.5
–
Subordinated liabilities
259.5
368.7
12.5
12.5
343.7
–
PSBs
15.2
15.6
0.3
15.3
–
–
Total liabilities
27, 376.7
28,460.2
10,718.2
9,606.1
8,131.1
4.8
The actual repayment profile of retail deposits may differ from the analysis above due to the
option of early withdrawal with a penalty.
Notes to the Consolidated Financial Statements continued
Cash flows on PSBs are disclosed up to the next interest rate reset date.
The actual repayment profile of loans and advances to customers may differ from the analysis
above since many mortgage loans are repaid prior to the contractual end date.
Liquidity risk – asset encumbrance
Asset encumbrance levels are monitored by ALCO. The following tables provide an analysis of
the Group’s encumbered and unencumbered assets:
Encumbered
Unencumbered
Pledged as Available as
collateral
Other
1
collateral Other Total
2024 £m £m £m £m £m
Cash in hand
–
–
0.3
–
0.3
Loans and advances to
credit institutions
134.2
40.6
3,053.9
17 7. 2
3,405.9
Investment securities
22.7
–
1,411.7
–
1,434.4
Loans and advances
to customers
2
4,741.1
–
19,101.3
1,283.9
25,126.3
Derivative assets
–
–
–
313.8
313.8
Non-financial assets
–
–
–
(37.1)
(37.1)
4,898.0
40.6
23,567. 2
1,737.8
30,243.6
2023
Cash in hand
–
–
0.4
–
0.4
Loans and advances to
credit institutions
198.6
101.4
2,256.3
257.3
2,813.6
Investment securities
27.1
–
594.6
–
621.7
Loans and advances
to customers
2
6,934.1
–
17,808.8
1,022.1
25,765.0
Derivative assets
–
–
–
530.6
530.6
Non-financial assets
–
–
–
(141.5)
(141.5)
7,159.8
101.4
20,660.1
1,668.5
29,589.8
1. Represents assets that are not pledged but that the Group believes it is restricted from using to secure funding for legal
or other reasons.
2. Unencumbered loans and advances to customers classified as other are restricted for use as collateral. These include
property registered outside of UK (Jersey and Guernsey), loans and advances not secured by immovable property and
non-performing loans.
OSB GROUP PLC | Annual Report and Accounts 2024244
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Governance Financial StatementsOverview Appendices
42. Risk management continued
Liquidity risk – liquidity reserves
The tables below analyse the Group’s liquidity reserves, where carrying value is considered to
be equal to fair value:
2024 2023
£m £m
Unencumbered balances with central banks
3,053.9
2,256.3
Unencumbered cash and balances with other banks
177.2
257.3
Other cash and cash equivalents
0.3
0.4
Unencumbered investment securities
1,411.7
594.6
4,643.1
3,108.6
Market risk
Market risk is the risk of an adverse change in the Group’s income or the Group’s net worth
arising from movement in interest rates, exchange rates or other market prices. Market risk
exists, to some extent, in all the Group’s businesses. The Group recognises that the effective
management of market risk is essential to the maintenance of stable earnings and preservation
of shareholder value.
Interest rate risk
The primary market risk faced by the Group is interest rate risk. Interest rate risk is the risk
of loss from adverse movement in the overall level of interest rates. It arises from mismatches in
the timing of repricing of assets and liabilities, both on and off-balance sheet. The Group does
not run a trading book, with all interest rate risk residing in the banking book (interest rate risk
in the banking book (IRRBB)). Through prudent management, the Group seeks to minimise its
IRRBB exposures, typically through matching assets and liabilities with similar tenors, executing
offsetting interest rate swaps and maintaining a structural hedge programme.
OSB and CCFS Banks apply an economic value (EV) at risk approach as well as an earnings-
at-risk approach for interest rate risk and basis risk. The interest rate sensitivity is impacted by
behavioural assumptions used by the Group; the most significant of which are prepayments
and mortgage offer pipeline take up. Expected prepayments and offer conversions are
monitored and modelled on a regular basis based upon historical analysis.
Notes to the Consolidated Financial Statements continued
The EV measure of duration risk quantifies risk by applying six shaped interest rate shocks
scenarios to the current forward curve. Scenarios are reviewed on semi-annual basis and
approved by ALCO and are based on three ‘shapes’ of curve movement (parallel, twist, flex)
using historical data to calibrate the severity of the shocks applied. The most detrimental net
present value to these scenarios is measured against the Board risk appetite of 1.5% of Tier
1 capital. The table below shows the maximum decreases to net interest income under these
scenarios after taking into account the effect of hedging:
2024 2023
£m £m
OSB
9.2
2.3
CCFS
2.9
1.8
12.1
4.1
The earnings measure of duration risk (EaR) quantifies the impact of changes in interest rates
to the net interest income of the bank within a given 12-month time horizon. A parallel shock
of +/-100bps is applied to interest rate sensitive instruments to determine EaR sensitivity of
the Group, assuming a constant balance sheet. EaR risk appetite limits are approved by the
Board, and currently set at 4% of full-year net interest income (NII). The table below shows the
maximum decreases after taking into account the effect of hedging:
2024 2023
£m £m
OSB
1.1
6.5
CCFS
6.5
9.2
7.6
15.7
EaR quantifies the impact of changes in interest rates to the net interest income within a given
3-year time horizon. A parallel shock of +/-100bps is applied to interest rate sensitive instruments
to determine EaR sensitivity of the Group, assuming a constant balance sheet. EaR risk appetite
limits are approved by the Board, and currently set at 4% of 3-year net interest income.
2024 2023
£m £m
OSB
14.2
24.6
CCFS
19.0
25.6
33.2
50.2
245OSB GROUP PLC | Annual Report and Accounts 2024
Strategic Report
Governance Financial StatementsOverview Appendices
42. Risk management continued
Basis risk measures the degree to which the bank is sensitive to exposures repricing by varying
degrees, even where their duration is the same, due to them being linked to different indices.
These indices may be market rates (e.g. BBR or SONIA) or administered (e.g. the Group’s SVR,
other discretionary variable rates, or that received on call accounts with other banks). The
Group measures basis risk using the impact of four scenarios on net interest income over a
one-year period, with the largest negative impact across the scenarios being the basis risk
exposure assessed against risk appetite. Dislocations between the bases are calculated on a
1 in 20-year confidence interval level and include increasing, decreasing and static base rate
environment, as well as a fourth scenario (in a decreasing rate environment) which measures
the impact of the timing lag between the repricing of administered rate savings against SVR
linked mortgages. The Board has set a limit on basis risk exposure across both banks of 3% of
full year net interest income. The table below shows the maximum decreases to net interest
income at 31 December 2024 and 2023:
2024 2023
£m £m
OSB
6.7
7.7
CCFS
4.1
4.8
10.8
12.5
Foreign exchange rate risk
The Group has limited exposure to foreign exchange risk in respect of its Indian operations.
A 5% increase in the GBP/INR exchange rate would result in a £0.7m (2023: £0.9m) effect in
profit or loss and £1.0m (2023: £0.6m) in equity.
Structured entities
The structured entities consolidated within the Group at 31 December 2024 were Canterbury
Finance No.2 plc, Canterbury Finance No.3 plc, Canterbury Finance No.4 plc, Canterbury
Finance No.5 plc, CMF 2020-1 plc, CMF 2023-1 plc, Keys Warehouse No.1 Limited, CMF 2024-1
plc and PMF 2024-1 plc. These entities hold legal title to a pool of mortgages which are used as a
security for issued debt. The transfer of mortgages fails derecognition criteria because the Group
retained the subordinated notes and residual certificates issued and as such did not transfer
substantially the risks and rewards of ownership of the securitised mortgages. Therefore, the
Group is exposed to credit, interest rate and other risks on the securitised mortgages.
Cash flows generated from the structured entities are ring-fenced and are used to pay interest and
principal of the issued debt securities in a waterfall order according to the seniority of the bonds.
The structured entities are self-funded and the Group is not contractually or constructively obliged
to provide further liquidity or financial support.
The structured entities consolidated within the Group at 31 December 2023 were Canterbury
Finance No.2 plc, Canterbury Finance No.3 plc, Canterbury Finance No.4 plc, Canterbury
Finance No.5 plc, CMF 2020-1 plc, CMF 2023-1 plc and Keys Warehouse No.1 Limited.
Notes to the Consolidated Financial Statements continued
Unconsolidated structured entities
Structured entities, which were sponsored by the Group include Charter Mortgage Funding
2018-1 plc, Precise Mortgage Funding 2019-1B plc, Precise Mortgage Funding 2020-1B plc,
PMF 2024-2 plc and Rochester Financing No.3 plc.
The structured entities are considered sponsored by the Group if any of the following
conditions are met:
• the Group had a key role in establishing the entity.
• the Group transferred assets to the entity.
• the entity’s name includes a reference to the Group.
• the Group provides guarantees on the entity’s performance.
These structured entities are not consolidated by the Group, as the Group does not control
the entities and is not exposed to the risks and rewards of ownership from the securitised
mortgages. The Group has no contractual arrangements with the unconsolidated structured
entities other than the investments disclosed in note 16 and servicing the structured entities’
mortgage portfolios.
The Group has not provided any support to the unconsolidated structured entities listed and
has no obligation or intention to do so.
During 2024 the Group received £8.1m interest income (2023: £5.3m) and £2.1m servicing
income (2023: £2.6m) from unconsolidated structured entities.
OSB GROUP PLC | Annual Report and Accounts 2024246
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43. Financial instruments and fair values
i. Financial assets and financial liabilities
The following tables set out the classification of financial instruments in the Consolidated
Statement of Financial Position:
2024
Total
Amortised carrying
FVTPL
1
FVOCI cost amount
Note £m £m £m £m
Assets
Cash in hand
–
–
0.3
0.3
Loans and advances to
credit institutions
15
–
–
3,405.9
3,405.9
Investment securities
16
410.1
226.0
798.3
1,434.4
Loans and advances to customers
17
12.9
–
25,113.4
25,126.3
Derivative assets
22
313.8
–
–
313.8
Other assets
2
24
–
–
1.7
1.7
736.8
226.0
29,319.6
30,282.4
Liabilities
Amounts owed to retail depositors
28
–
–
23,820.3
23,820.3
Amounts owed to credit institutions
27
–
–
1,935.2
1,935.2
Amounts owed to other customers
29
–
–
104.9
104.9
Debt securities in issue
30
–
–
1,018.3
1,018.3
Derivative liabilities
22
81.9
–
–
81.9
Other liabilities
3
32
–
–
56.2
56.2
Senior notes
34
–
–
722.7
722.7
Subordinated liabilities
35
–
–
259.8
259.8
81.9
–
27,917.4
27,999.3
1. All FVTPL assets and liabilities are mandatorily measured as such.
2. Balance excludes prepayments.
3. Balance excludes deferred income.
Notes to the Consolidated Financial Statements continued
2023
Total
Amortised carrying
FVTPL FVOCI cost amount
Note £m £m £m £m
Assets
Cash in hand
–
–
0.4
0.4
Loans and advances to
credit institutions
15
10.7
–
2,802.9
2,813.6
Investment securities
16
0.3
296.0
325.4
621.7
Loans and advances to customers
17
13.7
–
25,751.3
25,765.0
Derivative assets
22
530.6
–
–
530.6
Other assets
1
24
–
–
11.9
11.9
555.3
296.0
28,891.9
29,743.2
Liabilities
Amounts owed to retail depositors
28
–
–
22,126.6
22,126.6
Amounts owed to credit institutions
27
–
–
3,575.0
3,575.0
Amounts owed to other customers
29
–
–
63.3
63.3
Debt securities in issue
30
–
–
818.5
818.5
Derivative liabilities
22
199.9
–
–
199.9
Other liabilities
2
32
–
–
39.2
39.2
Senior notes
34
–
–
307.5
3 07.5
Subordinated liabilities
35
–
–
259.5
259.5
PSBs
36
–
–
15.2
15.2
199.9
–
27,204.8
27,404.7
1. Balance excludes prepayments.
2. Balance excludes deferred income.
The Group has no non-derivative financial assets or financial liabilities classified as held
for trading.
The designation at FVTPL for all financial assets is applied at inception.
247OSB GROUP PLC | Annual Report and Accounts 2024
Strategic Report
Governance Financial StatementsOverview Appendices
43. Financial instruments and fair values continued
ii. Fair values
The following tables summarise the carrying value and estimated fair value of financial
instruments not measured at fair value in the Consolidated Statement of Financial Position:
2024
2023
Carrying Estimated Carrying Estimated
value fair value value fair value
£m £m £m £m
Assets
Cash in hand
0.3
0.3
0.4
0.4
Loans and advances to credit institutions
3,405.9
3,405.9
2,802.9
2,802.9
Investment securities
798.3
796.0
325.4
325.2
Loans and advances to customers
25,113.4
24,843.5
25,751.3
24,900.0
Other assets
1
1.7
1.7
11.9
11.9
29,319.6
29,047.4
28,891.9
28,040.4
Liabilities
Amounts owed to retail depositors
23,820.3
23,806.8
22,126.6
22,125.4
Amounts owed to credit institutions
1,935.2
1,935.2
3,575.0
3,575.0
Amounts owed to other customers
104.9
104.9
63.3
63.3
Debt securities in issue
1,018.3
1,018.3
818.5
818.5
Other liabilities
2
56.2
56.2
39.2
39.2
Senior notes
722.7
763.0
3 07.5
309.1
Subordinated liabilities
259.8
273.5
259.5
246.0
PSBs
–
–
15.2
14.4
27,917.4
27,957.9
27,20
4. 8
27,190.9
1. Balance excludes prepayments.
2. Balance excludes deferred income.
The fair values in these tables are estimated using the valuation techniques below.
The estimated fair value is stated as at 31 December and may be significantly different
from the amounts which will actually be paid on the maturity or settlement dates of each
financial instrument.
Notes to the Consolidated Financial Statements continued
Cash in hand
This represents physical cash across the Group’s branch network where fair value is considered
to be equal to carrying value.
Loans and advances to credit institutions
This mainly represents the Group’s working capital current accounts and call accounts with
central governments and other banks with an original maturity of less than three months. Fair
value is not considered to be materially different to carrying value.
Investment securities
Investment securities’ fair values are provided by a third party and are based on the market
values of the financial instruments.
Loans and advances to customers
This mainly represents secured mortgage lending to customers. The fair value of fixed rate
mortgages has been estimated by discounting future cash flows at current market rates
of interest. Future cash flows include the impact of ECL. The interest rate on variable rate
mortgages is considered to be equal to current market product rates and as such fair value is
estimated to be equal to carrying value.
Other assets
Other assets disclosed in the table above exclude prepayments and the fair value is considered
to be equal to carrying value.
Amounts owed to retail depositors
The fair value of fixed rate retail deposits has been estimated by discounting future cash flows
at current market rates of interest. Retail deposits at variable rates and deposits payable on
demand are considered to be at current market rates and as such fair value is estimated to be
equal to carrying value.
Amounts owed to credit institutions
This mainly represents amounts drawn down under the BoE TFSME, ILTR and commercial repos.
Fair value is considered to be equal to carrying value.
Amounts owed to other customers
This represents saving products to corporations and local authorities. The fair value of fixed
rate deposits is estimated by discounting future cash flows at current market rates of interest.
Deposits at variable rates are considered to be at current market rates and the fair value is
estimated to be equal to carrying value.
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43. Financial instruments and fair values continued
Debt securities in issue
While the Group’s debt securities in issue are listed, the quoted prices for an individual note
may not be indicative of the fair value of the issue as a whole, due to the specialised nature
of the market in such instruments and the limited number of investors participating in it. Fair
value is not considered to be materially different to carrying value.
Other liabilities
Other liabilities disclosed in the table above exclude deferred income and the fair value is
considered to be equal to carrying value.
Senior notes, Subordinated liabilities and PSBs
The senior notes, subordinated liabilities and PSBs are listed on the London Stock Exchange
with fair value being the quoted market price at the reporting date.
iii. Fair value classification
The Group classifies fair value measurements using a fair value hierarchy that reflects the
significance of the inputs used in making the measurements. The following tables provide an
analysis of financial assets and financial liabilities measured at fair value in the Consolidated
Statement of Financial Position grouped into Levels 1 to 3 based on the degree to which the fair
value is observable:
Carrying Principal
amount amount Level 1 Level 2 Level 3 Total
2024 £m £m £m £m £m £m
Financial assets
Investment securities
636.1
638.3
226.0
409.8
0.3
636.1
Loans and advances
to customers
12.9
14.9
–
–
12.9
12.9
Derivative assets
313.8
16,474.8
–
313.8
–
313.8
962.8
17,128.0
226.0
723.6
13.2
962.8
Financial liabilities
Derivative liabilities
81.9
11,291.4
–
81.9
–
81.9
Notes to the Consolidated Financial Statements continued
Carrying Principal
amount amount Level 1 Level 2 Level 3 Total
2023 £m £m £m £m £m £m
Financial assets
Loans and advances to
credit institutions
10.7
10.1
–
10.7
–
10.7
Investment securities
296.3
300.3
296.0
–
0.3
296.3
Loans and advances
to customers
13.7
16.3
–
–
13.7
13.7
Derivative assets
530.6
17,568 .6
–
530.6
–
530.6
851.3
17, 895.3
296.0
541.3
14.0
851.3
Financial liabilities
Derivative liabilities
199.9
8,913.6
–
199.9
–
199.9
Level 1: Fair values that are based entirely on quoted market prices (unadjusted) in an actively
traded market for identical assets and liabilities that the Group has the ability to access.
Valuation adjustments and block discounts are not applied to Level 1 instruments. Since
valuations are based on readily available observable market prices, this makes them most
reliable, reduces the need for management judgement and estimation and also reduces the
uncertainty associated with determining fair values.
Level 2: Fair values that are based on one or more quoted prices in markets that are not active
or for which all significant inputs are taken from directly or indirectly observable market data.
These include valuation models used to calculate the present value of expected future cash
flows and may be employed either when no active market exists or when there are no quoted
prices available for similar instruments in active markets.
Level 3: Fair values for which any one or more significant input is not based on observable
market data and the unobservable inputs have a significant effect on the instrument’s fair
value. Valuation models that employ significant unobservable inputs require a higher degree of
management judgement and estimation in determining the fair value. Management judgement
and estimation are usually required for the selection of the appropriate valuation model to be
used, determination of expected future cash flows on the financial instruments being valued,
determination of the probability of counterparty default and prepayments, determination of
expected volatilities and correlations and the selection of appropriate discount rates.
249OSB GROUP PLC | Annual Report and Accounts 2024
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43. Financial instruments and fair values continued
The following tables provide an analysis of financial assets and financial liabilities not measured
at fair value in the Consolidated Statement of Financial Position grouped into Levels 1 to 3
based on the degree to which the fair value is observable:
Estimated fair value
Carrying Principal
amount amount Level 1 Level 2 Level 3 Total
2024 £m £m £m £m £m £m
Financial assets
Cash in hand
0.3
0.3
–
0.3
–
0.3
Loans and advances to
credit institutions
3,405.9
3,400.1
–
3,405.9
–
3,405.9
Investment securities
798.3
793.2
–
796.0
–
796.0
Loans and advances
to customers
25,113.4
25,313.6
–
2,183.0
22,660.5
24,843.5
Other assets
1
1.7
1.7
–
1.7
–
1.7
29,319.6
29,508.9
–
6,386.9
22,660.5
29,047.4
Financial liabilities
Amounts owed to retail
depositors
23,820.3
23,412.5
–
8,464.0
15,342.8
23,806.8
Amounts owed to
credit institutions
1,935.2
1,913.0
–
1,935.2
–
1,935.2
Amounts owed to
other customers
104.9
103.1
–
–
104.9
104.9
Debt securities in issue
1,018.3
1,016.2
–
1,018.3
–
1,018.3
Other liabilities
2
56.2
56.2
–
56.2
–
56.2
Senior notes
722.7
700.0
–
763.0
–
763.0
Subordinated liabilities
259.8
250.0
–
273.5
–
273.5
27,917.4
27,451.0
–
12,510.2
15,447.7
27,957.9
1. Balance excludes prepayments.
2. Balance excludes deferred income.
Notes to the Consolidated Financial Statements continued
Estimated fair value
Carrying Principal
amount amount Level 1 Level 2 Level 3 Total
2023 £m £m £m £m £m £m
Financial assets
Cash in hand
0.4
0.4
–
0.4
–
0.4
Loans and advances to
credit institutions
2,802.9
2,785.8
–
2,802.9
–
2,802.9
Investment securities
325.4
323.7
–
325.2
–
325.2
Loans and advances
to customers
25,751.3
25,928.2
–
2,112.9
22,787.1
24,900.0
Other assets
1
11.9
11.9
–
11.9
–
11.9
28,891.9
29,050.0
–
5,253.3
2 2,787.1
28,040.4
Financial liabilities
Amounts owed to
retail depositors
22,126.6
21,766.3
–
5,786.2
16,339.2
22,125.4
Amounts owed to
credit institutions
3,575.0
3,524.8
–
3,575.0
–
3,575.0
Amounts owed to
other customers
63.3
61.6
–
–
63.3
63.3
Debt securities in issue
818.5
818.2
–
818.5
–
818.5
Other liabilities
2
39.2
39.2
–
39.2
–
39.2
Senior notes
3 07.5
300.0
–
309.1
–
309.1
Subordinated liabilities
259.5
250.0
–
246.0
–
246.0
PSBs
15.2
15.0
–
14.4
–
14.4
27, 2 04.8
26,775.1
–
10,788.4
16,402.5
2 7,190.9
1. Balance excludes prepayments.
2. Balance excludes deferred income.
44. Pension scheme
Defined contribution scheme
The amount charged to profit or loss in respect of contributions to the Group’s defined
contribution and stakeholder pension arrangements is the contribution payable in the year.
The total pension cost in the year amounted to £5.7m (2023: £4.9m).
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45. Operating segments
The Group segments its lending business and operates under two segments in line with internal
reporting to the Board:
• OSB
• CCFS
The Group applies consistent accounting policies across all segments. The Group separately
discloses the impact of Combination accounting but does not consider this a business segment.
The financial position and results of operations of the above segments are summarised below:
OSB CCFS Combination Total
2024 £m £m £m £m
Balances at the reporting date
Gross loans and advances to customers
15,439.0
9,814.2
–
25,253.2
Expected credit losses
(101.1)
(25.8)
–
(126.9)
Loans and advances to customers
15,337.9
9,788.4
–
25,126.3
Capital expenditure
43.7
0.2
–
43.9
Depreciation and amortisation
7.5
3.1
0.7
11.3
Profit or loss for the year
Net interest income/(expense)
389.0
301.6
(24.2)
666.4
Other (expense)/income
(3.5)
3.1
1.2
0.8
Total income/(expense)
385.5
304.7
(23.0)
667. 2
Impairment of financial assets
2.9
9.9
(1.1)
11.7
Contribution to profit
388.4
314.6
(24.1)
678.9
Administrative expenses
(149.9)
(107.5)
(0.7)
(258.1)
Provisions
(2.7)
–
–
(2.7)
Profit/(loss) before taxation
235.8
207.1
(24.8)
418.1
Taxation
1
(65.3)
(51.6)
6.9
(110.0)
Profit/(loss) for the year
170.5
155.5
(17.9)
308.1
1. The taxation on Combination credit includes release of deferred taxation on CCFS Combination relating to the
unwind of the deferred tax liabilities recognised on the fair value adjustments of the CCFS assets and liabilities at
the acquisition date of £6.3m and the release of other deferred tax assets on Combination adjustments of £0.6m.
Notes to the Consolidated Financial Statements continued
OSB CCFS Combination Total
2023 £m £m £m £m
Balances at the reporting date
Gross loans and advances
to customers
14,509.3
11, 37 7. 2
24.3
25,910.8
Expected credit losses
(111.1)
(35.8)
1.1
(145.8)
Loans and advances to customers
14,398.2
11,341.4
25.4
25,765.0
Capital expenditure
25.6
0.2
–
25.8
Depreciation and amortisation
6.9
3.3
1.7
11.9
Profit or loss for the year
Net interest income/(expense)
473.8
240.9
(56.1)
658.6
Other (expense)/income
(3.1)
(3.8)
6.4
(0.5)
Total income/(expense)
470.7
237.1
(49.7)
658.1
Impairment of financial assets
(41.6)
(6.9)
(0.3)
(48.8)
Contribution to profit
429.1
230.2
(50.0)
609.3
Administrative expenses
(132.5)
(100.4)
(1.7)
(234.6)
Provisions
(0.3)
(0.1)
–
(0.4)
Profit/(loss) before taxation
296.3
129.7
(51.7)
374.3
Taxation
1
(75.6)
(30.7)
14.6
(91.7)
Profit/(loss) for the year
220.7
99.0
(37.1)
282.6
1. The taxation on Combination credit includes release of deferred taxation on CCFS Combination relating to the
unwind of the deferred tax liabilities recognised on the fair value adjustments of the CCFS assets and liabilities at
the acquisition date of £14.3m and the release of other deferred tax assets on Combination adjustments of £0.3m.
251OSB GROUP PLC | Annual Report and Accounts 2024
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46. Country by country reporting (CBCR)
CBCR was introduced through Article 89 of CRD IV, aimed at the banking and capital markets industry. The name, nature of activities and geographic location of the Group’s companies are
presented below:
Jurisdiction
Country
Name
Activities
UK
1
England
OSB GROUP PLC
Holding company
OneSavings Bank plc
Mortgage lending and deposit taking
5D Finance Limited
Mortgage servicer and provider
Broadlands Finance Limited
Mortgage administration services
CCFSG Holdings Limited (formerly: Charter Court Financial Services Group Plc)
2
Intermediate holding company
Charter Court Financial Services Limited
Mortgage lending and deposit taking
Charter Mortgages Limited
Mortgage administration and analytical services
Easioption Limited
Intermediate holding company
Exact Mortgage Experts Limited
Group service company
Guernsey Home Loans Limited
Mortgage provider
Heritable Development Finance Limited
Mortgage originator and servicer
Inter Bay Financial I Limited
Intermediate holding company
InterBay Asset Finance Limited
Asset finance and mortgage provider
Interbay Funding, Ltd
Mortgage servicer
Interbay ML, Ltd
Mortgage provider
Jersey Home Loans Limited
Mortgage provider
Prestige Finance Limited
Mortgage originator and servicer
Reliance Property Loans Limited
Mortgage provider
Rochester Mortgages Limited
Mortgage provider
Guernsey
Guernsey Home Loans Limited
Mortgage provider
Jersey
Jersey Home Loans Limited
Mortgage provider
1. Guernsey Home Loans Limited (Guernsey) and Jersey Home Loans Limited (Jersey) are incorporated in Guernsey and Jersey respectively but are considered to be located in the UK as they are managed and controlled in the UK with no permanent
establishments in Guernsey or Jersey.
Notes to the Consolidated Financial Statements continued
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Jurisdiction
Country
Name
Activities
UK
England
Canterbury Finance No. 2 plc
Special purpose vehicle
Canterbury Finance No. 3 plc
Canterbury Finance No. 4 plc
Canterbury Finance No. 5 plc
CMF 2020-1 plc
Keys Warehouse No.1 Limited
CMF 2023-1 plc
CMF 2024-1 plc
PMF 2024-1 plc
UK
England
WSE Bourton Road Limited
Land lease investment
India
India
OSB India Private Limited
Back office processing
2. On 18 March 2024 Charter Court Financial Services Group Plc changed its name to CCFSG Holdings Limited.
Other disclosures required by the CBCR directive are provided below:
2024
UK
India
Consolidation
2
Total
Average number of employees
1,566
993
–
2,559
Turnover
1
, £m
666.1
21.9
(20.8)
6 67.2
Profit/(loss) before tax, £m
417.1
3.5
(2.5)
418.1
Corporation tax paid, £m
118.5
0.9
–
119.4
2023
Average number of employees
1,461
811
–
2,272
Turnover
1
, £m
657. 3
18.7
(17.9)
658.1
Profit/(loss) before tax, £m
373.5
3.1
(2.3)
374.3
Corporation tax paid, £m
102.8
0.8
–
103.6
1. Turnover represents total income before impairment of financial and intangible assets, regulatory provisions and operating costs, but after net interest income, gains and losses on financial instruments and other operating income.
2. Relates to a management fee to Indian subsidiaries from OneSavings Bank plc for providing back-office processing.
Notes to the Consolidated Financial Statements continued
46. Country by country reporting (CBCR) continued
253OSB GROUP PLC | Annual Report and Accounts 2024
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46. Country by country reporting (CBCR) continued
The tables below reconcile tax charged and tax paid during the year.
UK India Total
2024 £m £m £m
Tax charge
109.1
0.9
110.0
Effects of:
Other timing differences
0.9
–
0.9
Tax outside of profit or loss
(0.2)
–
(0.2)
Prior year tax included within tax charge
4.8
–
4.8
Tax in relation to future periods prepaid
3.9
–
3.9
Tax paid
118.5
0.9
119.4
2023
Tax charge
90.9
0.8
91.7
Effects of:
Other timing differences
13.6
–
13.6
Tax outside of profit or loss
(0.5)
–
(0.5)
Prior year tax included within tax charge
0.4
–
0.4
Tax in relation to future periods prepaid
(1.6)
–
(1.6)
Tax paid
102.8
0.8
103.6
Notes to the Consolidated Financial Statements continued
47. Adjustments for non-cash items and changes in operating assets
and liabilities
2024 2023
£m £m
Adjustments for non-cash and other items
Depreciation and amortisation
11.3
11.9
Interest on investment securities
(41.3)
(23.6)
Interest on subordinated liabilities
25.3
17.1
Interest on PSBs
0.5
0.7
Interest on securitised debt
62.7
21.5
Interest on senior notes
63.5
9.1
Interest on financing debt
114.7
197.3
Impairment (credit)/ charge on loans
(11.7)
48.8
Administrative expenses
–
0.8
Provisions
2.7
0.4
Net expense on derivative financial instruments – subordinated
liabilities and senior notes
7.2
–
Net expense on derivative financial instruments – structural hedge
3.3
–
Fair value losses on financial instruments
1.5
4.4
Share-based payments
6.3
5.6
Total adjustments for non-cash and other items
246.0
294.0
Changes in operating assets and liabilities
Decrease in loans and advances to credit institutions
125.7
112.5
Increase in loans and advances to customers
1
(135.0)
(2,200.5)
Increase in amounts owed to retail depositors
1,693.7
2,370.8
Decrease in cash collateral and margin received
(52.8)
(336.9)
Net decrease/(increase) in other assets
9.8
(12.6)
Net decrease in derivatives and hedged items
1.7
(23.2)
Net increase/(decrease) in amounts owed to other customers
41.6
(49.8)
Net increase in other liabilities
6.3
0.9
Exchange differences on working capital
–
(0.7)
Total changes in operating assets and liabilities
1,691.0
(139.5)
1. The movement in loans and advances to customers has been adjusted to reflect the effect of £786.1m (2023: nil)
of non-cash consideration received initially as part of the PMF 2024-1 securitisation. The classification of the
cash consideration received, included in the movement, reflects the operating nature of the assets sold.
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48. Controlling party
As at 31 December 2024 there was no controlling party of the ultimate parent company of the
Group, OSB GROUP PLC.
49. Transactions with key management personnel
All related party transactions were made on terms equivalent to those that prevail in arm’s
length transactions. During the year, there were no related party transactions between the key
management personnel and the Group other than as described below.
The Directors and Group Executive team are considered to be key management personnel.
Directors’ remuneration is disclosed in note 9 and in the Directors’ Remuneration Report on
page 158. The Group Executive team are all employees of OSB, the table below shows the
aggregate remuneration for members of the team who are non-directors:
2024 2023
£’000 £’000
Short-term employee benefits
4,770
4,451
Post-employment benefits
232
62
Share-based payments
1,371
1,291
6,373
5,804
Key management personnel and connected persons held deposits with the Group of £1.6m
(2023: £2.3m).
Notes to the Consolidated Financial Statements continued
50. Capital management
The Group’s capital management approach is to provide a sufficient capital base to cover
business risks and support future business development. The Group remained, throughout
the year, compliant with its capital requirements as set out by the PRA, the Group’s primary
prudential supervisor.
The Group manages and reports its capital at a number of levels including Group level and for
the two regulated banking entities within the Group, on an individual consolidation basis (OSB
solo) and on an individual entity basis (Charter Court Financial Services Limited). OSB solo
consists of OneSavings Bank plc and its UK subsidiaries except for the CCFS entities acquired
in 2019. The capital position of the two regulated banking entities is not separately disclosed.
The Group’s capital management is based on the three ‘pillars’ of Basel III.
Under Pillar 1, the Group calculates its minimum capital requirements based on 8% of risk-
weighted assets.
Under Pillar 2, the Group, and its regulated entities, complete an annual self-assessment of
risks known as the Internal Capital Adequacy Assessment Process (ICAAP). The PRA applies
additional requirements to this assessment amount to cover risks under Pillar 2 to generate
a Total Capital Requirement and also sets capital buffers for the Group.
Pillar 3 requires firms to publish a set of disclosures which allow market participants to assess
information on the Group’s capital, risk exposures and risk assessment process. The Group’s
Pillar 3 disclosures can be found on the Group’s website.
On 12 September 2024, the PRA issued its final rules on the implementing Basel 3.1 in the
UK and subsequently delayed the implementation date by one year until 1st January 2027.
The Group has taken account of this in planning for future capital requirements.
The ultimate responsibility for capital adequacy rests with the Board of Directors. The Group’s
ALCO is responsible for the management of the capital process within the risk appetite defined
by the Board, including approving policy, overseeing internal controls and setting internal
limits over capital ratios.
The Group actively manages its capital position and reports this on a regular basis to
the Board and senior management via ALCO and other governance committees. Capital
requirements are included within budgets, forecasts and strategic plans with initiatives being
executed against this plan.
255OSB GROUP PLC | Annual Report and Accounts 2024
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50. Capital management continued
The Group’s Pillar 1 capital information is presented below:
(Unaudited) (Unaudited)
2024 2023
£m £m
Common Equity Tier 1 (CET1) capital
Called up share capital
3.7
3.9
Share premium
1
4.5
3.8
Retained earnings
3,406.4
3,330.2
Foreseeable dividends
(85.2)
(85.7)
Other reserves
1
(1,341.2)
(1,343.4)
CET1 capital: instruments and reserves
1,988.2
1,908.8
Regulatory Adjustments
Prudent valuation adjustment
2
(0.4)
(0.5)
Intangible assets
(48.8)
(26.1)
Deferred tax asset
(0.2)
(0.3)
COVID-19 ECL transitional adjustment
3
7.6
23.8
Total CET1 capital
1,946.4
1,905.7
AT1 capital
AT1 securities
150.0
150.0
Total Tier 1 capital
2,096.4
2,055.7
Tier 2 capital
Tier 2 securities
250.0
250.0
Total Tier 2 capital
250.0
250.0
Total regulatory capital
2,346.4
2,305.7
Risk-weighted assets (unaudited)
11,915.7
11,845.6
1. The share-based payment reserve which was previously presented alongside share premium has been re-presented as
part of other reserves. Also, transfer reserve which was previously presented separately has been re-presented as part
of other reserves.
2. The Group has adopted the simplified approach under the Prudent Valuation rules, recognising a deduction equal to
sum of absolute value equal to 0.1% (2023: 0.1%) of fair value assets and liabilities excluding offsetting fair-valued assets
and liabilities.
3. The COVID-19 ECL transitional adjustment relates to 25% (2023: 50%) of the Group’s increase in stage 1 and
stage 2 ECL following the impacts of COVID-19 and for which transitional rules are being adopted for regulatory
capital purposes.
Notes to the Consolidated Financial Statements continued
The movement in CET1 during the year was as follows:
(Unaudited) (Unaudited)
2024 2023
£m £m
As at 1 January
1,905.7
1,920.7
Movement in retained earnings
76.2
(59.2)
Share premium from Sharesave Scheme vesting
0.7
1.4
Movement in other reserves
2.0
1.3
Movement in foreseeable dividends
0.5
58.3
IFRS 9 transitional adjustment
–
(1.4)
COVID-19 ECL transitional adjustment
(16.2)
(2.1)
Movement in prudent valuation adjustment
0.1
0.5
Net increase in intangible assets
(22.7)
(14.1)
Movement in deferred tax asset for carried forward losses
0.1
0.3
As at 31 December
1,946.4
1,905.7
The Group’s MREL information is presented below:
(Unaudited) (Unaudited)
2024 2023
£m £m
Total regulatory capital
2,346.4
2,305.7
Eligible liabilities
700.0
300.0
Total own funds and eligible liabilities
3,046.4
2,605.7
On 16 January 2024, the Group issued a further £400.0m (2023: £300.0m) of senior unsecured
callable notes through OSB GROUP PLC which, while not included in total regulatory capital,
are eligible to meet MREL.
The Group has been given a preferred resolution strategy of a single point of entry bail-in
at the holding company level by the PRA and has begun compliance with the interim MREL
requirement of 18% of Risk Weighted Assets (RWAs).
The end-state MREL requirement applies from July 2026 and is the higher of:
(i) two times the sum of Pillar 1 and Pillar 2A plus regulatory buffers; or
(ii) if subject to a leverage ratio, two times the applicable requirement plus regulatory buffers.
51. Events after the reporting date
The Board has authorised a share repurchase of up to £100.0m of shares in the market from
14 March 2025. Any purchases made under this programme will be announced to the market
each day in line with regulatory requirements.
OSB GROUP PLC | Annual Report and Accounts 2024256
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Company Statement of Financial Position
As at 31 December 2024
Note
2024
£m
2023
£m
Assets
Investments in subsidiaries and intercompany loans 2 2,584.5 2,160.1
Current taxation asset 0.8 0.1
Total assets 2,585.3 2,160.2
Liabilities
Other liabilities 3 10.5 –
Senior notes 4 722.7 307.5
Subordinated liabilities 4 259.8 259.5
993.0 567.0
Equity
Share capital 4 3.7 3.9
Share premium 4 4.5 3.8
Other equity instruments 4 150.0 150.0
Retained earnings 1,354.2 1,358.6
Other reserves 6 79.9 76.9
Shareholders’ funds 1,592.3 1,593.2
Total equity and liabilities 2,585.3 2,160.2
The profit after tax for the year ended 31 December 2024 of OSBG was £227.7m (2023: £343.0m). As permitted by section 408 of the Companies Act 2006, no separate Statement of
Comprehensive Income is presented in respect of the Company.
The notes on pages 260 to 263 form an integral part of the Company financial statements.
The financial statements were approved by the Board of Directors on 12 March 2025 and were signed on its behalf by:
Andy Golding Victoria Hyde
Chief Executive Officer Chief Financial Officer
Company number: 11976839
257OSB GROUP PLC | Annual Report and Accounts 2024
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Governance Financial StatementsOverview Appendices
Company Statement of Changes in Equity
For the year ended 31 December 2024
Share capital
£m
Share premium
£m
Capital
redemption and
transfer reserve
1
£m
Own shares
2
£m
Share-based
payment reserve
£m
Other equity
instruments
£m
Retained
earnings
£m
Total
£m
As at 1 January 2023 4.3 2.4 65.9 (2.2) 10.2 150.0 1,359.3 1,589.9
Profit for the year – – – – – – 343.0 343.0
Dividend paid – – – – – – (185.0) (185.0)
Share-based payments – 1.4 – – 1.4 – 3.1 5.9
Own shares
2
– – – 1.2 – – (1.2) –
Coupon paid on AT1 securities – – – – – – (9.0) (9.0)
Share repurchase
3
(0.4) – 0.4 – – – (151.6) (151.6)
As at 31 December 2023 3.9 3.8 66.3 (1.0) 11.6 150.0 1,358.6 1,593.2
Profit for the year – – – – – – 227.7 227.7
Dividend paid – – – – – – (126.4) (126.4)
Share-based payments – 0.7 – – 2.7 – 4.5 7.9
Own shares
2
– – – 0.1 – – (0.1) –
Coupon paid on AT1 securities – – – – – – (9.0) (9.0)
Share repurchase
3
(0.2) – 0.2 – – – (101.1) (101.1)
As at 31 December 2024 3.7 4.5 66.5 (0.9) 14.3 150.0 1,354.2 1,592.3
1. Includes Capital redemption reserve of £0.8m (2023: £0.6m) and Transfer reserve of £65.7m (2023: £65.7m).
2. The Company has adopted look-through accounting (see note 1 c) to the Group’s consolidated financial statements) and recognised the EBT within OSBG.
3. Includes £100.0m (2023: £150.0m) for shares repurchased, £0.4m (2023: £0.8m) for transaction costs and £0.7m (2023: £0.8m) for incentive fee.
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Company Statement of Cash Flows
For the year ended 31 December 2024
Note
2024
£m
2023
£m
Cash flows from operating activities
Profit before taxation 227.7 342.9
Adjustments for non-cash and other items:
Interest on subordinated liabilities 25.3 17.1
Interest on senior notes 63.5 9.1
Administrative expenses – 0.8
Changes in operating assets and liabilities:
Change in intercompany loans
1
(417.2) (565.7)
Cash used in operating activities (100.7) (195.8)
Net tax paid (0.8) –
Net cash used in operating activities (101.5) (195.8)
Cash flows from investing activities
Change in investments in subsidiaries – –
Net cash from investing activities – –
Cash flows from financing activities
Issuance of subordinated liabilities 5 – 248.7
Issuance of senior notes 5 398.0 298.4
Interest paid on financing 5 (71.3) (6.3)
Share repurchase
2
(90.6) (152.4)
Dividend paid (126.4) (185.0)
Coupon paid on AT1 securities (9.0) (9.0)
Proceeds from issuance of shares under
employee SAYE scheme 0.8 1.4
Net cash from financing activities 101.5 195.8
Note
2024
£m
2023
£m
Net increase in cash and cash equivalents – –
Cash and cash equivalents at the beginning
of the year – –
Cash and cash equivalents at the end of
theyear
3
– –
Movement in cash and cash equivalents – –
Cash flows from operating activities include:
Dividends received from subsidiary
4
218.7 335.0
1. Includes less than £0.1m (2023: less than £0.1m) of current taxation asset surrendered to OSB.
2. Includes £89.9m (2023: £150.0m) for shares repurchased, £0.4m (2023: £0.8m) transaction costs and £0.3m
(2023: £1.6m) incentive fee.
3. The Company’s bank balance is swept to OneSavings Bank plc daily resulting in a nil balance.
4. The Company’s principal activity is to hold the investment in its wholly owned subsidiary, OneSavings Bank plc.
Dividends received are treated as operating income.
259OSB GROUP PLC | Annual Report and Accounts 2024
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Governance Financial StatementsOverview Appendices
Notes to the Company Financial Statements
For the year ended 31 December 2024
1. Basis of preparation
The separate financial statements of the Company are presented as required by the
Companies Act 2006. As permitted by that Act, the separate financial statements have
beenprepared in accordance with IFRS as adopted by the UK.
The financial statements have been prepared on the historical cost basis. The financial
statements are presented in pounds Sterling. All amounts in the financial statements have been
rounded to the nearest £0.1m (£m). The functional currency of the Company is pounds Sterling,
which is the currency of the primary economic environment in which the Company operates.
The principal accounting policies adopted are the same as those set out in note 1 to the
Group’s consolidated financial statements, aside from accounting policy in note 1v share-
based payments. For the Company, the cost of the awards is recognised on a straight-line
basis to investment in subsidiaries (with a corresponding increase in the share-based payment
reserve within equity) over the vesting period in which the employees become unconditionally
entitled to the awards.
There are no critical judgements and estimates that apply to the Company.
2. Investments in subsidiaries and intercompany loans
The Company holds an investment in ordinary shares of £1,452.1m (2023: £1,445.0m) and
in AT1 securities of £90.0m (2023: £90.0m) in its direct subsidiary, OneSavings Bank plc
(OSB). The Company also holds an investment in AT1 securities of £60.0m (2023: £60.0m)
in an indirect subsidiary, Charter Court Financial Services Limited. The investment in shares
and AT1 securities are carried at cost.
Intercompany
Investment in loans (payable)/
subsidiaries receivable
£m £m
As at 1 January 2023
1,590.7
(0.8)
Additions
1
4.3
571.3
Repayments
–
(5.4)
As at 31 December 2023
1,595.0
565.1
Additions
1
7.2
418.8
Repayments
–
(1.6)
As at 31 December 2024
1,602.2
982.3
1. Additions in investment in subsidiaries include £7.2m relating to share-based payments (2023: includes £4.3m relating to
share-based payments).
The transactions with subsidiaries during the year comprise transactions with OSB which include
senior notes issuance of £400.0m, £15.5m of accrued interest movement on subordinated
liabilities and senior notes. Repayments include £0.8m of share repurchase costs and £0.8m
relates to tax funded by OSB (2023: The transactions with subsidiaries comprise a subordinated
liabilities issuance of £250m, a senior notes issuance of £300m, £19.6m of accrued interest
movement on subordinated liabilities and senior notes and £1.7m of cash received from issuing
shares under SAYE. Repayments include £2.4m of share repurchase costs, issuance cost of £1.6m
and £1.3m on senior notes and subordinated liabilities respectively funded by OSB).
Investments in AT1 securities are financial assets and intercompany loans are financial
liabilities. Intercompany loans are payable on demand and no interest is charged on these
loans. Intercompany loans receivable includes subordinated liabilities and senior notes issued
by subsidiaries. The rates and other terms and conditions are same as the Company’s external
issued senior notes and subordinated liabilities. For details see note 34 Senior notes and note
35 Subordinated liabilities of the Group’s consolidated financial statements.
A list of the Company’s direct and indirect subsidiaries as at 31 December 2024 is shown below:
Direct investments
Activity
Registered office
Ownership
OneSavings Bank plc
Mortgage lending and deposit taking
Reliance House
100%
Indirect investments
Activity
Registered office
Ownership
5D Finance Limited
Mortgage servicer and provider
Reliance House
100%
Broadlands
Mortgage administration services
Charter Court
100%
Finance Limited
Canterbury Finance
Special purpose vehicle
Churchill Place
–
No.2 plc
Canterbury Finance
Special purpose vehicle
Churchill Place
–
No.3 plc
Canterbury Finance
Special purpose vehicle
Churchill Place
–
No.4 plc
Canterbury Finance
Special purpose vehicle
Churchill Place
–
No.5 plc
CCFSG
Holding company
Charter Court
100%
Holdings Limited
(formerly: Charter
Court Financial
Services Group Plc)
1
OSB GROUP PLC | Annual Report and Accounts 2024260
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Notes to the Company Financial Statements continued
Indirect investments
Activity
Registered office
Ownership
Charter Court
Mortgage lending and deposit taking
Charter Court
100%
Financial Services
Limited
Charter Mortgages Mortgage administration and
Charter Court
100%
Limited analytical services
CMF 2020-1 plc
Special purpose vehicle
Churchill Place
–
CMF 2023-1 plc
Special purpose vehicle
Churchill Place
–
CMF 2024-1 plc
Special purpose vehicle
Churchill Place
–
Easioption Limited
Holding company
Reliance House
100%
Exact Mortgage
Group service company
Charter Court
100%
Experts Limited
Guernsey Home
Mortgage provider
Reliance House
100%
Loans Limited
Guernsey Home Loans
Mortgage provider
Guernsey
100%
Limited (Guernsey)
Heritable Development
Mortgage originator and servicer
Reliance House
100%
Finance Limited
Inter Bay Financial I
Limited
Holding company
Reliance House
100%
InterBay Asset
Asset finance and mortgage provider
Reliance House
100%
Finance Limited
Interbay Funding, Ltd
Mortgage servicer
Reliance House
100%
Interbay ML, Ltd
Mortgage provider
Reliance House
100%
Jersey Home
Mortgage provider
Reliance House
100%
Loans Limited
Jersey Home Loans
Mortgage provider
Jersey
100%
Limited (Jersey)
Keys Warehouse
Special purpose vehicle
Churchill Place
–
No.1 Limited
OSB India
Back office processing
India
100%
Private Limited
Indirect investments
Activity
Registered office
Ownership
PMF 2024-1 plc
Special purpose vehicle
Churchill Place
–
Prestige
Mortgage originator and servicer
Reliance House
100%
Finance Limited
Reliance Property
Mortgage provider
Reliance House
100%
Loans Limited
Rochester
Mortgage provider
Reliance House
100%
Mortgages Limited
WSE Bourton
Land lease investment
OSB House
100%
Road Limited
1. On 18 March 2024 Charter Court Financial Services Group Plc changed its name to CCFSG Holdings Limited.
A list of the Company’s direct and indirect subsidiaries as at 31 December 2023 is shown
below:
Direct investments
Activity
Registered office
Ownership
OneSavings Bank plc
Mortgage lending and deposit taking
Reliance House
100%
Indirect investments
Activity
Registered office
Ownership
5D Finance Limited
Mortgage servicer and provider
Reliance House
100%
Broadlands
Mortgage administration services
Charter Court
100%
Finance Limited
Canterbury Finance
Special purpose vehicle
Churchill Place
–
No.2 plc
Canterbury Finance
Special purpose vehicle
Churchill Place
–
No.3 plc
Canterbury Finance
Special purpose vehicle
Churchill Place
–
No.4 plc
Canterbury Finance
Special purpose vehicle
Churchill Place
–
No.5 plc
CCFSG Holdings
Holding company
Charter Court
100%
Limited
(formerly: Charter
Court Financial
Services Group Plc)
1
2. Investments in subsidiaries and intercompany loans continued
261OSB GROUP PLC | Annual Report and Accounts 2024
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Governance Financial StatementsOverview Appendices
Indirect investments
Activity
Registered office
Ownership
Charter Court
Mortgage lending and deposit taking
Charter Court
100%
Financial Services
Limited
Charter Mortgage administration and
Charter Court
100%
Mortgages Limited analytical services
CMF 2020-1 plc
Special purpose vehicle
Churchill Place
–
CMF 2023-1 plc
Special purpose vehicle
Churchill Place
–
Easioption Limited
Holding company
Reliance House
100%
Exact Mortgage
Group service company
Charter Court
100%
Experts Limited
Guernsey Home
Mortgage provider
Reliance House
100%
Loans Limited
Guernsey Home
Mortgage provider
Guernsey
100%
Loans Limited
(Guernsey)
Heritable
Mortgage originator and servicer
Reliance House
100%
Development
Finance Limited
Inter Bay Financial I
Limited
Holding company
Reliance House
100%
InterBay Asset
Asset finance and mortgage provider
Reliance House
100%
Finance Limited
Interbay Funding, Ltd
Mortgage servicer
Reliance House
100%
Interbay ML, Ltd
Mortgage provider
Reliance House
100%
Jersey Home
Mortgage provider
Reliance House
100%
Loans Limited
Jersey Home Loans
Mortgage provider
Jersey
100%
Limited (Jersey)
Keys Warehouse
Special purpose vehicle
Churchill Place
–
No.1 Limited
OSB India
Back office processing
India
100%
Private Limited
Notes to the Company Financial Statements continued
Indirect investments
Activity
Registered office
Ownership
Prestige
Mortgage originator and servicer
Reliance House
100%
Finance Limited
Reliance Property
Mortgage provider
Reliance House
100%
Loans Limited
Rochester
Mortgage provider
Reliance House
100%
Mortgages Limited
WSE Bourton
Land lease investment
OSB House
100%
Road Limited
1. On 18 March 2024 Charter Court Financial Services Group Plc changed its name to CCFSG Holdings Limited.
All investments are in the ordinary share capital of each subsidiary.
OSB India Private Limited is owned 70.28% by OneSavings Bank plc, 29.72% by Easioption
Limited and 0.001% by Reliance Property Loans Limited.
SPVs which the Group controls are treated as subsidiaries for accounting purposes.
All of the entities listed above have been consolidated into the Group’s consolidated financial
statements. The location of the entities listed above are disclosed in note 46 to the Group’s
consolidated financial statements.
The investment and intercompany receivables are reviewed annually for indicators of
impairment. If impairment indicators are identified an impairment review of the investment is
conducted which will quantify if the carrying value is in excess of the recoverable amount or an
impairment has occurred. In determining recoverable amount, the fair value less costs to sell
and the value in use are assessed, with the value in use being an estimate of the present value
of future cash flows generated by the investment. Impairment of intercompany receivables is
considered within the scope of IFRS 9 for ECL.
The following are the registered offices of the subsidiaries:
Charter Court – 2 Charter Court, Broadlands, Wolverhampton, WV10 6TD
Churchill Place – 5 Churchill Place, 10th Floor, London, E14 5HU
Guernsey – 2nd Floor, Lefebvre Place, Lefebvre Street, St Peter Port, Guernsey GY1 2JP
India – Salarpuria Magnificia No. 78, 9th & 10th floor, Old Madras Road, Bangalore, India, 560016
Jersey – 26 New Street, St Helier, Jersey, JE2 3RA
OSB House – Quayside, Chatham Maritime, Chatham, England, ME4 4QZ
Reliance House – Reliance House, Sun Pier, Chatham, Kent, ME4 4ET
2. Investments in subsidiaries and intercompany loans continued
OSB GROUP PLC | Annual Report and Accounts 2024262
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Governance Financial StatementsOverview Appendices
3. Other liabilities
2024
£m
2023
£m
Falling due within one year
Other creditors 0.5 –
Share repurchase liability 10.0 –
10.5 –
For details see note 32 Other liabilities of the Group’s consolidated financial statements on
page 230.
4. Senior notes, subordinated liabilities, share capital, and other
equityinstruments
For details see note 34 Senior notes, 35 Subordinated liabilities, 38 Share capital and 39 Other
equity instruments of the Group’s consolidated financial statements from page 231 to 233.
5. Reconciliation of cash flows from financing activities
The tables below show a reconciliation of the Company’s liabilities classified as financing
activities within the Company statement of cash flows:
Senior notes
(see note 4)
£m
Subordinated
liabilities
(see note 4)
£m
Total
£m
As at 1 January 2023 – – –
Cash movements:
Principal drawdowns 298.4 248.7 5 47.1
Interest paid – (6.3) (6.3)
Non-cash movements:
Interest charged 9.1 17.1 26.2
As at 31 December 2023 307.5 259.5 5 67.0
Cash movements:
Principal drawdowns 398.0 – 398.0
Interest paid (46.3) (25.0) (71.3)
Non-cash movements:
Interest charged 63.5 25.3 88.8
As at 31 December 2024 722.7 259.8 982.5
Notes to the Company Financial Statements continued
6. Other reserves
The Company’s other reserves are as follows:
2024
£m
2023
£m
Share-based payment 14.3 11.6
Capital redemption and transfer 66.5 66.3
Own shares (0.9) (1.0)
79.9 76.9
Capital redemption and transfer reserve
The capital redemption reserve represents the shares cancelled through the Group’s share
repurchase programme.
The transfer reserve represents the difference between the net assets of the Group at the point
of insertion of OSBG as the listed holding company and the fair value of the newly issued
share capital of OSBG.
For own shares see note 40 of the Group’s consolidated financial statements.
7. Directors and employees
The Company has no employees. OneSavings Bank plc provides the Company with employee
services and bears the costs, along with other subsidiaries in the Group, associated with the
Directors of the Company. These costs are not recharged to the Company.
8. Risk management
The principal financial risks that the Company is exposed to, as a holding company for its
subsidiaries, are those that its subsidiaries are exposed to. These risks are managed at Group
level, through the Group’s risk governance framework reporting to the Group Risk Committee.
For further information see note 42 of the Group’s consolidated financial statements.
9. Controlling party
As at 31 December 2024 there was no controlling party of OSB GROUP PLC.
263OSB GROUP PLC | Annual Report and Accounts 2024
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OSB GROUP PLC  Annual Report and Accounts 2024 Strategic Report Governance Financial StatementsOverview Appendices264
Appendices
265 Forward-looking statements
266 Independent Assurance Statement
268 Independent Limited Assurance Report
271 Alternative Performance Measures
274 Independent auditor’s reasonable assurance report
275 Glossary
276 Company Information
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Strategic Report Governance Financial StatementsOverview Appendices 265
Appendix 1
Forward-looking statements
This document is not audited and contains certain forward-looking statements with respect
to the business, strategy and plans of OSB GROUP PLC (OSBG), its current goals, beliefs,
intentions, strategies and expectations relating to its future financial condition, performance
and results, and ESG ambitions, targets and commitments described herein. Such forward-
looking statements include, without limitation, those preceded by, followed by or that include
the words ‘targets’, ‘believes’, ‘estimates’, ‘expects’, ‘aims’, ‘intends’, ‘will’, ‘may’, ‘anticipates’,
‘projects’, ‘plans’, ‘forecasts’, ‘outlook’, ‘likely’, ‘guidance’, ‘trends’, ‘future’, ‘would’, ‘could’,
‘should’ or similar expressions or negatives thereof but are not the exclusive means of
identifying such statements. Statements that are not historical or current facts, including
statements about OSBG’s, its directors’ and/or management’s beliefs and expectations, are
forward-looking statements. By their nature, forward-looking statements involve risk and
uncertainty because they relate to events and depend upon circumstances that may or may
not occur in the future that could cause actual results or events to differ materially from those
expressed or implied by the forward-looking statements. Factors that could cause actual
business, strategy, plans and/or results (including but not limited to the payment of dividends)
to differ materially from the plans, objectives, expectations, estimates and intentions expressed
in such forward-looking statements made by OSBG or on its behalf include, but are not limited
to: general economic and business conditions in the UK and internationally, including any
changes in global trade policies; market related trends and developments; fluctuations in
exchange rates, stock markets, inflation, deflation, interest rates, energy prices and currencies;
policies of the Bank of England, the European Central Bank and other G7 central banks; the
ability to access sufficient sources of capital, liquidity and funding when required; changes to
OSBG’s credit ratings; the ability to derive cost savings; changing demographic developments,
and changing customer behaviour, including consumer spending, saving and borrowing
habits; changes in customer preferences; changes to borrower or counterparty credit quality;
instability in the global financial markets, including Eurozone instability, the potential for
countries to exit the European Union (the EU) or the Eurozone, and the impact of any sovereign
credit rating downgrade or other sovereign financial issues; technological changes and risks
to cyber security; natural and other disasters, adverse weather and similar contingencies
outside OSBG’s control; inadequate or failed internal or external processes, people and
systems; acts of war and terrorist acts or hostility and responses to those acts; geopolitical
events and diplomatic tensions; the impact of outbreaks, epidemics and pandemics or other
such events; changes in laws, regulations, taxation, ESG reporting standards, accounting
standards or practices, including as a result of the UK’s exit from the EU; regulatory capital
or liquidity requirements and similar contingencies outside OSBG’s control; the policies and
actions of governmental or regulatory authorities in the UK, the EU or elsewhere including the
implementation and interpretation of key legislation and regulation; the ability to attract and
retain senior management and other employees; the extent of any future impairment charges
or write-downs caused by, but not limited to, depressed asset valuations, market disruptions
and illiquid markets; market relating trends and developments; exposure to regulatory scrutiny,
legal proceedings, regulatory investigations or complaints; changes in competition and pricing
environments; the inability to hedge certain risks economically; the adequacy of loss reserves;
the actions of competitors, including non-bank financial services and lending companies;
the success of OSBG in managing the risks of the foregoing; and other risks inherent to the
industries and markets in which OSBG operates.
Accordingly, no reliance may be placed on any forward-looking statement. Neither OSBG,
nor any of its directors, officers or employees provides any representation, warranty or
assurance that any of these statements or forecasts will come to pass or that any forecast
results will be achieved. Any forward-looking statements made in this document speak only
as of the date they are made and it should not be assumed that they have been revised or
updated in the light of new information of future events. Except as required by the Prudential
Regulation Authority, the Financial Conduct Authority, the London Stock Exchange PLC or
applicable law, OSBG expressly disclaims any obligation or undertaking to release publicly
any updates or revisions to any forward-looking statements contained in this document to
reflect any change in OSBG’s expectations with regard thereto or any change in events,
conditions or circumstances on which any such statement is based. For additional information
on possible risks to OSBG’s business, (which may cause actual results to differ materially from
those expressed or implied in any forward-looking statement), please see the “Risk review”
sectionabove.
Nothing in this document or any subsequent discussion of this document constitutes or forms part
of a public offer under any applicable law or an offer or the solicitation of an offer to purchase
or sell any securities or financial instruments. Nor does it constitute advice or a recommendation
with respect to such securities or financial instruments, or any invitation or inducement to engage
in investment activity under section 21 of the Financial Services and Markets Act 2000. Past
performance cannot be relied on as a guide to future performance. Statements about historical
performance must not be construed to indicate that future performance, share price or results
in any future period will necessarily match or exceed those of any prior period. Nothing in this
document is intended to be, or should be construed as, a profit forecast or estimate for any period.
Contents Generation – Page Contents Generation – Sub Page
Contents Generation – Section
Independent Assurance Statement
OSB GROUP PLC  Annual Report and Accounts 2024
Strategic Report Governance Financial StatementsOverview Appendices266
Our assurance conclusion
We have performed an independent reasonable assurance engagement on the Alternative
Performance Measures (collectively, the APMs) set out below for the financial year ended 31
December 2024. The assured APMs are highlighted with the symbol  throughout the OSB
GROUP PLC (OSB Group) 2024 Annual Report and Accounts (ARA). The definition and the
basis of preparation for each of the assured APMs is described in the Appendix to the 2024
ARAon pages 271 to 273 (OSB Group’s APM Definitions and Basis of Preparation).
Statutory basis
• Gross new lending
• Net interest margin
• Cost to income
• Management expense ratio
• Loan loss ratio
• Dividend per share
• Basic earnings per share
• Return on equity
Underlying basis
• Net interest margin
• Cost to income
• Management expense ratio
• Loan loss ratio
• Basic earnings per share
• Return on equity
In our opinion, the assured APMs for the financial year ended 31 December 2024 have been
prepared, in all material respects, in accordance with OSB Group’s APM Definitions and
Basisof Preparation.
Directors’ responsibilities
The Directors are responsible for preparing an Annual Report which complies with the requirements
of the Companies Act 2006 and for being satisfied that the Annual Report, taken as a whole, is
fair, balanced and understandable.
The Directors are also responsible for:
• selecting APMs with which to describe the entity’s performance and appropriate criteria
(asset out in the Group’s APM Definitions and Basis of Preparation) to measure them;
• designing, implementing and maintaining internal controls relevant to the preparation and
presentation of the assured APMs that are free from material misstatement, whether due
tofraud or error; and
• preparing, measuring, presenting and reporting the APMs in accordance with the Group’s
APM Definitions and Basis of Preparation.
Our responsibilities
Our responsibility is to express an opinion on the assured APMs, based on our assurance
work. We performed a reasonable assurance engagement in accordance with International
Standard on Assurance Engagements (ISAE) 3000 (Revised), Assurance Engagements other
than Audits or Reviews of Historical Financial Information, issued by the International Auditing
and Assurance Standards Board (IAASB), in order to state whether the Selected KPIs have been
prepared, in all material respects, in accordance with the applicable criteria.
We are required to plan and perform our procedures in order to obtain reasonable assurance
as to whether the assured APMs have been prepared, in all material respects, in accordance
with OSB Group’s APM Definitions and Basis of Preparation.
The nature, timing and extent of the assurance procedures selected depended on our judgment,
including the assessment of the risks of material misstatement, whether due to fraud or error, of
the assured APMs. In making those risk assessments, we considered internalcontrols relevant to
the preparation of the assured APMs.
Based on that assessment we carried out testing which included:
• Agreeing amounts used in the calculation of APMs which are derived or extracted from the
audited financial statements of OSB Group for the year ended 31 December 2024 to the
financial statements.
• For amounts used in the calculation of APMs which were not derived or extracted from the
financial statements of OSB Group for the year ended 31 December 2024 testing, on a
sample basis, the underlying data used in determining the assured APMs.
• Checking the mathematical accuracy of the calculations used to prepare the assured APMs
and testing whether they were prepared in accordance with OSB Group’s APM Definitions
and Basis of Preparation.
• Reading the 2024 ARA and assessing whether the assured APMs were presented and
described consistently.
We were not asked to give, and therefore have not given any assurance over (i) any APMs other
than the assured APMs or (ii) other data in the ARA as part of this engagement.
We believe that the evidence obtained is sufficient and appropriate to provide a basis for
ouropinion.
Appendix 2
Independent assurance statement by Deloitte LLP to OSB GROUP PLC on selected Alternative Performance Measures
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OSB GROUP PLC  Annual Report and Accounts 2024 Strategic Report Governance Financial StatementsOverview Appendices 267
Appendix 2 continued
Independent assurance statement by Deloitte LLP to OSB GROUP PLC on selected Alternative Performance Measures continued
Our independence and quality control
We have complied with the independence and other ethical requirements of the FRC’s Ethical
Standard and the ICAEW Code of Ethics. The ICAEW Code is founded on fundamental
principles of integrity, objectivity, professional competence and due care, confidentiality
andprofessional behaviour.
We applied the International Standard on Quality Management (UK) 1 ‘ISQM (UK) 1’, issued by
the Financial Reporting Council. Accordingly, we maintain a comprehensive system of quality
control including documented policies and procedures regarding compliance with ethical
requirements, professional standards and applicable legal and regulatory requirements.
Use of our report
This assurance report is made solely to the Directors of OSB GROUP PLC in accordance with
the terms of the engagement letter between us. Our work has been undertaken so that we
might state to the Directors of OSB GROUP PLC those matters we are required to state to them
in an independent reasonable assurance report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other than OSBGROUP
PLC for our assurance work, for this assurance report or for the conclusions wehave formed.
Deloitte LLP, London
12 March 2025
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Independent Limited Assurance Report
OSB GROUP PLC  Annual Report and Accounts 2024 Strategic Report Governance Financial StatementsOverview Appendices268
Independent limited Assurance Report by Deloitte LLP to the Directors of OSB Group PLC
on the description of activities undertaken to meet the Recommendations of the Task Force
on Climate-related Financial Disclosures (“TCFD”) and selected Environmental, Social and
Governance metrics (together the “Selected Information”) within the Annual Report for the
reporting year ended 31 December 2024.
Our assurance conclusion
Based on our procedures described in this report, and evidence we have obtained, nothing has
come to our attention that causes us to believe that the Selected Information for the year ended
31 December 2024, and as listed below and indicated with a
in the Annual Report has not
been prepared, in all material respects, in accordance with the Applicable Criteria defined by
thedirectors as set out here: https://www.osb.co.uk/sustainability/our-environment
Scope of our work
OSB Group PLC has engaged us to perform an independent limited assurance engagement in
accordance with International Standard on Assurance Engagements 3000 (Revised) Assurance
Engagements Other than Audits or Reviews of Historical Financial Information (“ISAE 3000
(Revised)”) and the International Standard on Assurance Engagements 3410 Assurance
engagements on greenhouse gas statements (ISAE 3410) issued by the International Auditing
andAssurance Standards Board (“IAASB”) and our agreed terms of engagement.
The Selected Information in scope of our engagement for the year ended 31 December 2024 as
indicated with a
in the Annual Report, is as follows:
Selected Information Applicable Criteria
Greenhouse Gas (“GHG”) emissions:
• Total direct (Scope 1) emissions (tonnes CO
2
e)
• Total indirect (Scope 2) emissions – Market-based
(tonnes CO
2
e)
• Total indirect (Scope 2) emissions – Location-based
(tonnes CO
2
e)
Greenhouse Gas Protocol:
A Corporate Accounting
and Reporting Standard,
RevisedEdition (2004).
Plus, any applicable methodology
as published by theCompany
(commonly referred to as a
‘basisof reporting’).
GHG Intensity:
• Scope 1 and 2 (location-based) metric tonnes of CO
2
e
per full-time employee (FTE)
• Scope 1 and 2 (location-based) metric tonnes of CO
2
e
per £m turnover
Selected Information Applicable Criteria
TCFD
The description of activities undertaken to meet the
Recommendations of the TCFD included within the
2024Annual Report.
Section D (“Supplemental
Guidance for the Financial
Sector”) part 1 (Banks) of
the TCFD Annex entitled
“Implementing the
Recommendations of the Task
Force on Climate-related
Financial Disclosures (October
2021), incorporating guidance
for All Sectors and Supplemental
Guidance for Banks”.
The Selected Information, as listed in the above table, needs to be read and understood together
with the Applicable Criteria available here: https://www.osb.co.uk/sustainability/our-environment
Inherent limitations of the Selected Information
We obtained limited assurance over the preparation of the Selected Information in accordance
with the Applicable Criteria. Inherent limitations exist in all assurance engagements. Any internal
control structure, no matter how effective, cannot eliminate the possibility that fraud, errors
or irregularities may occur and remain undetected and because we use selective testing in our
engagement, we cannot guarantee that errors or irregularities, if present, will be detected.
The self-defined Applicable Criteria, the nature of the Selected Information, and absence of
consistent external standards allow for different, but acceptable, measurement methodologies
to be adopted which may result in variances between entities. The adopted measurement
methodologies may also impact comparability of the Selected Information reported by different
organisations and from year to year within an organisation as methodologies develop.
Appendix 3
Independent limited Assurance Report to the Directors of OSB Group PLC
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OSB GROUP PLC  Annual Report and Accounts 2024 Strategic Report Governance Financial StatementsOverview Appendices 269
Directors’ responsibilities
The Directors are responsible for preparing an Annual Report which complies with the
requirements of the Companies Act 2006 and for being satisfied that the Annual Report,
taken as a whole, is fair, balanced and understandable.
The Directors are also responsible for:
• Selecting and establishing the Applicable Criteria.
• Preparing, measuring, presenting and reporting the Selected Information in accordance
with the Applicable Criteria.
• Publishing the Applicable Criteria publicly in advance of, or at the same time as, the
publication of the Selected Information.
• Designing, implementing, and maintaining internal processes and controls over information
relevant to the preparation of the Selected Information to ensure that they are free from
material misstatement, including whether due to fraud or error.
• Providing sufficient access and making available all necessary records, correspondence,
information and explanations to allow the successful completion of our limited
assuranceengagement.
Our responsibilities
We are responsible for:
• Planning and performing procedures to obtain sufficient appropriate evidence in order to express
an independent limited assurance conclusion on the Selected Information.
• Communicating matters that may be relevant to the Selected Information to the appropriate
party including identified or suspected non-compliance with laws and regulations, fraud or
suspected fraud, and bias in the preparation of the Selected Information.
• Reporting our conclusion in the form of an independent limited Assurance Report to the Directors.
Our independence and competence
In conducting our engagement, we complied with the independence requirements of the FRC’s
Ethical Standard and the ICAEW Code of Ethics. The ICAEW Code is founded on fundamental
principles of integrity, objectivity, professional competence and due care, confidentiality and
professional behaviour.
We applied the International Standard on Quality Management 1 (“ISQM 1”) issued by
the International Auditing and Assurance Standards Board. Accordingly, we maintained a
comprehensive system of quality management including documented policies and procedures
regarding compliance with ethical requirements, professional standards and applicable legal and
regulatory requirements.
Key procedures performed
We are required to plan and perform our work to address the areas where we have identified that
a material misstatement in respect of the Selected Information is likely to arise. The procedures
we performed were based on our professional judgment. In carrying out our limited assurance
engagement in respect of the Selected Information, we performed the following procedures:
• Performed an assessment of the Applicable Criteria selected to determine whether they
were suitable for the engagement circumstances, and, where necessary, discussed with the
Directors the need for a ‘Basis of Reporting’.
• Performed analytical review procedures to understand the underlying subject matter and
identify areas where a material misstatement of the Selected Information was likely to arise.
• Through inquiries of management, obtained an understanding of the Company, its
environment, processes and information systems relevant to the preparation of the Selected
Information sufficient to identify and further assess risks of material misstatement in the
Selected Information, and provide a basis for designing and performing procedures to
respond to assessed risks and to obtain limited assurance to support a conclusion.
• Through inquiries of management, obtained an understanding of internal controls relevant
to the Selected Information, the quantification process and data used in preparing the
Selected Information, the methodology for gathering qualitative information, and the
process for preparing and reporting the Selected Information. We did not evaluate the
design of particular internal control activities, obtain evidence about their implementation
or test their operating effectiveness.
• Through inquiries of management, documented whether an external expert had been
used in the preparation of the Selected Information, then evaluated the competence,
capabilities and objectivity of that expert in the context of the work performed and also the
appropriateness of that work as evidence.
• Inspected documents relating to the Selected Information, including Board Committee
minutes and where applicable internal audit outputs to understand the level of
management awareness and oversight of the Selected Information.
• Performed procedures over the Selected Information, including recalculation of relevant
formulae used in manual calculations and assessment whether the data had been
appropriately consolidated.
• Performed procedures over underlying data on a statistical sample basis to assess whether
the data had been collected and reported in accordance with the Applicable Criteria,
including verifying to source documentation.
• Performed procedures over the Selected Information including assessing management’s
assumptions and estimates.
• Accumulated misstatements and control deficiencies identified, including assessing
whethermaterial.
• Read the narrative accompanying the Selected Information with regard to the Applicable
Criteria, and for consistency with our understanding of OSB Group PLC.
Appendix 3 continued
Independent limited Assurance Report to the Directors of OSB Group PLC continued
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Appendix 3 continued
Independent limited Assurance Report to the Directors of OSB Group PLC continued
In relation to TCFD information only, we:
• Reviewed documentation relating to the governance, strategy and financial planning and
risk management processes;
• Inquired with those responsible within the organisation to understand:
– the role of the Board in relation to climate-related risk and opportunities and
management’s role in assessing and managing climate-related risks and opportunities;
– the nature of climate-related risk and opportunities identified including time horizons;
the impact of climate-related risks and opportunities on the business, strategy and
financial planning; and the impact of identified and considered climate scenarios on
thestrategy;and
– the process for identifying climate-related risks; the process for managing climate-related
risks; and how these processes are integrated into the overall risk management; and
• Evaluated and reviewed the TCFD disclosure for consistency of knowledge and
understanding obtained during course of our work.
The procedures performed in a limited assurance engagement vary in nature and timing from,
and are less in extent than for, a reasonable assurance engagement. Consequently, the level of
assurance obtained in a limited assurance engagement is substantially lower than the assurance
that would have been obtained had a reasonable assurance engagement beenperformed.
We performed our engagement to obtain limited assurance over the preparation of the Selected
Information in accordance with the Applicable Criteria. TCFD as applied by all companies
includes information based on climate-related scenarios that are subject to inherent uncertainty
because of incomplete scientific and economic knowledge about the likelihood, timing, or
effect of possible future physical and transitional climate-related impacts. For the avoidance of
doubt, the scope of our engagement and our responsibilities did not involve us performing work
necessary for any assurance on the reliability, proper compilation or accuracy of the prospective
information provided as part of the TCFD scenario analysis and transition plans.
Use of our report
This report is made solely to the Directors of OSB Group PLC in accordance with ISAE 3000
(Revised), and our agreed terms of engagement. Our work has been undertaken so that we
might state to the Directors of OSB Group PLC those matters we have agreed to state to
themin this report and for no other purpose.
Without assuming or accepting any responsibility or liability in respect of this report to any
party other than the Company and the Directors of OSB Group PLC, we acknowledge that
the Directors of OSB Group PLC may choose to make this report publicly available for others
wishing to have access to it, which does not and will not affect or extend for any purpose or
on any basis our responsibilities. To the fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than OSB Group PLC and the Directors of OSB Group
PLC as a body, for our work, for this report, or for the conclusions we have formed.
Deloitte LLP
12 March 2025
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Appendix 4
Alternative Performance Measures (APMs)
In this Annual Report, the Group used APMs when presenting underlying results in 2024 and
2023 as Management believe they provide a more consistent basis for comparing the Group’s
performance between financial periods. Underlying results exclude acquisition-related items.
In 2024, the acquisition-related items were fully amortised and therefore, from 2025 the
Group’s results will be presented on a statutory basis only.
APMs reflect an important aspect of the way in which operating targets are defined and
performance is monitored by the Board. However, APMs in this Annual Report are not a
substitute for IFRS measures and readers should consider the IFRS measures as well.
Below we provide definitions and the calculation of APMs used throughout this Annual Report.
Net interest margin (NIM)
NIM is defined as net interest income as a percentage of a 13 point average
1
of interest earning
assets (cash, investment securities, loans and advances to customers and credit institutions).
It represents the margin earned on loans and advances and liquid assets after swap expense/
income and cost of funds.
2024
£m
2023
£m
Net interest income A 666.4 658.6
Add back: acquisition-related items
2
24.2 56.1
Net interest income – underlying B 690.6 714.7
13 point average of interest earning assets C 30,098.7 28,549.4
13 point average of interest earning assets – underlying D 30,082.6 28,498.3
NIM equals A/C 2.21% 2.31%
NIM underlying equals B/D 2.30% 2.51%
Cost to income ratio
Cost to income ratio is defined as administrative expenses as a percentage of total income.
It is a measure of operational efficiency.
2024
£m
2023
£m
Administrative expenses A 258.1 234.6
Add back: acquisition-related items
2
(0.7) (1.7)
Administrative expenses – underlying B 257.4 232.9
Total income C 667.2 658.1
Add back: acquisition-related items
2
23.0 49.7
Total income – underlying D 690.2 707.8
Cost to income equals A/C 39% 36%
Cost to income underlying equals B/D 37% 33%
Management expense ratio
Management expense ratio is defined as administrative expenses as a percentage of a 13 point
average
1
of total assets. It is a measure of operational efficiency.
2024
£m
2023
£m
Administrative expenses (as in cost to income ratio above) A 258.1 234.6
Administrative expenses – underlying (as in cost to income
ratioabove) B 257.4 232.9
13 point average of total assets C 30,398.4 28,767.1
13 point average of total assets – underlying D 30,383.0 28,719.7
Management expense ratio equals A/C on an annualised basis 0.85% 0.82%
Management expense ratio underlying equals B/D on an
annualised basis 0.85% 0.81%
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Appendix 4 continued
Alternative Performance Measures (APMs) continued
Loan loss ratio
Loan loss ratio is defined as expected credit losses as a percentage of a 13 point average
1
of
gross loans and advances. It is a measure of the credit performance of the loan book.
2024
£m
2023
£m
Impairment of financial assets A (11.7) 48.8
Add back: acquisition-related items
2
(1.1) (0.3)
Impairment of financial assets – underlying B (12.8) 48.5
13 point average of gross loans C 26,158.4 24,855.0
13 point average of gross loans – underlying D 26,143.0 24,804.9
Loan loss ratio equals A/C on an annualised basis (0.04)% 0.20%
Loan loss ratio underlying equals B/D on an annualised basis (0.05)% 0.20%
Return on equity (RoE)
RoE is defined as profit attributable to ordinary shareholders, which is profit after tax and after
deducting coupons on AT1 securities, gross of tax, as a percentage of a 13 point average
1
of
shareholders’ equity (excluding £150m of AT1 securities).
2024
£m
2023
£m
Profit after tax 308.1 282.6
Coupons on AT1 securities (9.0) (9.0)
Profit attributable to ordinary shareholders A 299.1 273.6
Add back: acquisition-related items
2
17.9 37.1
Profit attributable to ordinary shareholders – underlying B 317.0 310.7
13 point average of shareholders’ equity (excluding AT1 securities) C 2,038.4 1,964.1
13 point average of shareholders’ equity (excluding AT1 securities)
– underlying D 2,026.9 1,929.9
Return on equity equals A/C on an annualised basis 15% 14%
Return on equity underlying equals B/D on an annualised basis 16% 16%
Basic earnings per share
Basic earnings per share is defined as profit attributable to ordinary shareholders, which is
profit after tax and after deducting coupons on AT1 securities, gross of tax, divided by the
weighted average number of ordinary shares in issue.
2024
£m
2023
£m
Profit attributable to ordinary shareholders
(as in RoE ratio above) A 299.1 273.6
Profit attributable to ordinary shareholders – underlying
(as in RoE ratio above) B 317.0 310.7
Weighted average number of ordinary shares in issue C 385.6 414.2
Weighted average number of ordinary shares in issue –
underlying D 385.6 414.2
Basic earnings per share equals A/C 7 7.6 66.1
Basic earnings per share – underlying equals B/D 82.2 75.0
1. 13 point average is calculated as an average of opening balance and closing balances for 12 months of the financialyear.
2. The acquisition-related items are detailed in the reconciliation of statutory to underlying results in the Financialreview.
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Appendix 4 continued
Alternative Performance Measures (APMs) continued
Calculation of final dividend
The table below shows the basis of calculation of the Company’s recommended final dividend:
2024
£m
2023
£m
Profit after tax 308.1 282.6
Less: coupons on AT1 securities classified as equity (9.0) (9.0)
Profit attributable to ordinary shareholders 299.1 273.6
Add back: amortisation of fair value adjustment 24.4 56.8
Add back: amortisation of inception adjustment (1.2) (6.4)
Add back: amortisation of cancelled swaps (0.2) (0.7)
Add back: amortisation of intangible assets acquired 0.7 1.7
Release of deferred taxation on the above amortisation
adjustments (6.9) (14.6)
Add back: ECL on Combination 1.1 0.3
Underlying profit attributable to ordinary shareholders 317.0 310.7
Total dividend: 40% (2023: 41%) of underlying profit
attributable to ordinary shareholders 126.0 126.6
Less: interim dividends paid (40.8) (40.9)
Recommended final dividend 85.2 85.7
Number of ordinary shares in issue 372,145,792 393,187,681
Recommended final dividend per share (pence) 22.9 21.8
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OSB GROUP PLC  Annual Report and Accounts 2024 Strategic Report Governance Financial StatementsOverview Appendices274
Appendix 5
Independent auditor’s reasonable assurance report to the Members of OSB GROUP PLC on the compliance of the Electronic Format
Annual Financial Report with Financial Conduct Authority (FCA) Disclosure Guidance and Transparency Rule (DTR) 4.1.15R-DTR 4.1.18R
Report on compliance with the requirements for iXBRL mark up (‘tagging’)
of consolidated financial statements included in the Electronic Format
Annual Financial Report
We have undertaken a reasonable assurance engagement on the iXBRL mark up of consolidated
financial statements for the year ended 31 December 2024 of OSB GROUP PLC (the “company”)
included in the Electronic Format Annual Financial Report prepared by the company.
Opinion
In our opinion, the consolidated financial statements for the year ended 31 December 2024
ofthe company included in the Electronic Format Annual Financial Report, are marked up,
inall material respects, in compliance with DTR 4.1.15R-DTR 4.1.18R.
The directors’ responsibility for the Electronic Format Annual Financial
Report prepared in compliance with DTR 4.1.15R-DTR 4.1.18R
The directors are responsible for preparing the Electronic Format Annual Financial Report.
Thisresponsibility includes:
• the selection and application of appropriate iXBRL tags using judgement where necessary;
• ensuring consistency between digitised information and the consolidated financial
statements presented in human-readable format; and
• the design, implementation and maintenance of internal control relevant to the application
of DTR 4.1.15R-DTR 4.1.18R.
Our independence and quality control
We have complied with the independence and other ethical requirements of Financial
Reporting Council’s (the ‘FRC’s’) Ethical Standard as applied to listed public interest entities,
and we have fulfilled our other ethical responsibilities in accordance with these requirements.
We apply International Standard on Quality Control 1 and, accordingly, maintain a
comprehensive system of quality control including documented policies and procedures
regarding compliance with ethical requirements, professional standards and applicable legal
and regulatory requirements.
Our responsibility
Our responsibility is to express an opinion on whether the iXBRL mark up of consolidated
financial statements complies in all material respects with DTR 4.1.15R-DTR 4.1.18R based on
the evidence we have obtained. We conducted our reasonable assurance engagement in
accordance with International Standard on Assurance Engagements (UK) 3000, Assurance
Engagements Other than Audits or Reviews of Historical Financial Information (‘ISAE (UK)
3000’) issued by the FRC.
A reasonable assurance engagement in accordance with ISAE (UK) 3000 involves performing
procedures to obtain reasonable assurance about the compliance of the mark up of the
consolidated financial statements with the DTR 4.1.15R-DTR 4.1.18R. The nature, timing
and extent of procedures selected depend on the practitioner’s judgement, including the
assessment of the risks of material departures from the requirements set out in DTR 4.1.15R-DTR
4.1.18R, whether due to fraud or error. Our reasonable assurance engagement consisted
primarily of:
• obtaining an understanding of the iXBRL mark up process, including internal control over
the mark up process relevant to the engagement;
• reconciling the marked up data with the audited consolidated financial statements of the
company dated 31 December 2024;
• evaluating the appropriateness of the company’s mark up of the consolidated financial
statements using the iXBRL mark-up language;
• evaluating the appropriateness of the company’s use of iXBRL elements selected from a
generally accepted taxonomy and the creation of extension elements where no suitable
element in the generally accepted taxonomy has been identified; and
• evaluating the use of anchoring in relation to the extension elements.
In this report we do not express an audit opinion, review conclusion or any other assurance
conclusion on the consolidated financial statements. Our audit opinion relating to the
consolidated financial statements of the company for the year ended 31 December 2024
issetout in our Independent Auditor’s Report dated 12 March 2025.
Use of our report
Our report is made solely to the company’s members, as a body, in accordance with ISAE
(UK) 3000. Our work has been undertaken so that we might state to the company those
matters we are required to state to them in this report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility to anyone other than
the company and the company’s members as a body for our work, this report, or for the
conclusions we have formed.
Ben Jackson, FCA (Senior statutory auditor)
For and on behalf of Deloitte LLP
Statutory Auditor
London United
Kingdom
01 April 2025
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Glossary
AGM Annual General Meeting
ALCO Group Assets and Liabilities Committee
BoE Bank of England
CCFS Charter Court Financial Services
CEO Chief Executive Officer
CET1 Common Equity Tier 1
CFO Chief Financial Officer
CRD IV Capital Requirements Directive and Regulation
CRO Chief Risk Officer
DSBP Deferred Share Bonus Plan
EAD Exposure at Default
ECL Expected Credit Loss
EIR Effective Interest Rate
EPS Earnings Per Share
EU European Union
FCA Financial Conduct Authority
FRC Financial Reporting Council
FSCS Financial Services Compensation Scheme
FSD Forced Sale Discount
FTSE Financial Times Stock Exchange
HMRC His Majesty’s Revenue and Customs
HPI House Price Index
IAS International Accounting Standards
IBOR Interbank Offered Rate
ICAAP Internal Capital Adequacy Assessment Process
ICR Interest Coverage Ratio
IFRS International Financial Reporting Standards
ILAAP Internal Liquidity Adequacy Assessment Process
ILTR Indexed Long-Term Repo
IPO Initial Public Offering
IRB Internal Ratings-Based approach to credit risk
ISA Individual Savings Account
KRFI Kent Reliance for Intermediaries
KRPS Kent Reliance Provident Society Limited
LCR Liquidity Coverage Ratio
LGD Loss Given Default
LIBOR London Interbank Offered Rate
LTIP Long-Term Incentive Plan
LTV Loan to value
NIM Net Interest Margin
NPS Net Promoter Score
OSB OneSavings Bank plc
OSBG OSB GROUP PLC
PD Probability of Default
PPD Propensity to go to Possession Given Default
PRA Prudential Regulation Authority
PSBs Perpetual Subordinated Bonds
PSP Performance Share Plan
RMBS Residential Mortgage-Backed Securities
RoE Return on equity
RWA Risk weighted assets
SAYE Save As You Earn or Sharesave
SDLT Stamp Duty Land Tax
SICR Significant Increase in Credit Risk
SID Senior Independent Director
SME Small and Medium Enterprises
SONIA Sterling Overnight Index Average
SRMF Strategic Risk Management Framework
TFS Term Funding Scheme
TFSME Term Funding Scheme with additional incentives
for SMEs
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OSB GROUP PLC  Annual Report and Accounts 2024 Strategic Report Governance Financial StatementsOverview Appendices
Company Information
Registered office and head office
OSB House
Quayside
Chatham Maritime
Chatham
Kent, ME4 4QZ
United Kingdom
Registered in England no: 11976839
www.osb.co.uk
Registrars
Equiniti Limited
Aspect House
Spencer Road
Lancing
West Sussex
BN99 8LU
United Kingdom
Telephone: 0371 384 2030
International: +44 121 415 7047
Investor relations
Email: osbrelations@osb.co.uk
Telephone: 01634 838973
Private shareholders are welcome to contact the Company Secretary
if they have any questions or concerns they wish to be raised with the Board.
276
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OSB GROUP PLC  Annual Report and Accounts 2024
Strategic Report Governance Financial StatementsOverview Appendices 277
CBP030000
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Printed on material from well-managed, FSC™ certified forests and other controlled sources.
Thispublication was printed by an FSC™ certified printer that holds an ISO 14001 certification.
100% of the inks used are HP Indigo ElectroInk which complies with RoHS legislation and meets the
chemical requirements of the Nordic Ecolabel (Nordic Swan) for printing companies, 95% of press
chemicals are recycled for further use and, on average 99% of any waste associated with this
production will be recycled and the remaining 1% used to generate energy.
The paper is Carbon Balanced with World Land Trust, an international conservation charity, who
offset carbon emissions through the purchase and preservation of high conservation value land.
Through protecting standing forests, under threat of clearance, carbon is locked-in, that would
otherwise be released.
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OSB Group PLCAnnual Report and Accounts 2024
OSB GROUP PLC
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www.osb.co.uk