OSB Group (LON: OSB), the specialist buy-to-let and residential mortgage lender, saw its shares fall sharply after it cut its 2026 profitability guidance alongside half-year results. The specialist lender reported profit before tax of £187.2m for the first half, down 3% from £192.3m a year earlier.
Shares closed at 507p yesterday, down 10.9% from Wednesday’s close of 569p. That leaves the stock close to its 52-week low of 466.8p, and well below the 52-week high of 618.6p reached earlier in the period.
Management pointed to persistently elevated retail funding costs, which have made deposits more expensive relative to SONIA, the sterling benchmark rate. That pressure pushed the loan loss ratio up to 12 basis points from 2 basis points a year earlier, as the impairment charge rose to £15.8m from £2.0m. Outgoing group chief executive Andy Golding said: “We have made the conservative assumption that these pressures will not ease, if that is the case, we now expect net interest margin for 2026 to be 215bps to 220bps.”
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That marks a cut from prior guidance of circa 225bps, after net interest margin, the spread between lending and funding rates, fell to 223bps in the first half from 230bps a year earlier. The board also lowered its 2026 return on tangible equity guidance to c.12.5%, down from a previous “low teens” target. The lender’s net loan book still grew 1.3% to £26.3bn, with total originations up 10% to £2.3bn, while the interim dividend rose 5% to 11.8p per share.
The scale of the reaction shows how sensitive challenger-bank valuations are to forward margin signals, even where headline profit and dividend growth hold up. The guidance cut was disclosed alongside news that Golding will step down as chief executive at the end of August.
The CET1 capital ratio, a measure of core capital strength, stood at 15.2% at the end of June, down from 15.8% at the end of last year, giving some sense of the balance sheet cushion behind the reduced profitability outlook.
