OSB GROUP PLC (Reuters) - OneSavings Bank Plc (>> OneSavings Bank PLC) reported a jump in its loan book during the first nine months of the year, but said it would keep lending criteria tight for financing smaller residential developments due to Brexit uncertainty.
The bank, which has increased its focus on professional landlords after Britain's vote to leave the European Union, said net loans and advances grew by 466 million pounds ($570 million) to 5.6 billion pounds in the period ended September.
OneSavings, one of the banks aiming to challenge Britain's "Big 5" lenders, said in August that the tightened criteria would assess whether the development would still be profitable enough for the loan to be paid back if sales prices fell significantly and costs overshot.
Although recent building company results and data have indicated that British property demand is recovering from a post-Brexit slump, data from mortgage lender Nationwide on Wednesday showed house price were unchanged in October after 15 consecutive months of monthly rises.
"Tightening (in loan criteria) that we talked about back in August is still in place... We've got the triggering of Article 50 (on leaving the EU) coming up in the new year. It is a bit of an unknown unknown," Chief Executive Officer Andy Golding told Reuters.
"While business feels good and the economy feels quite strong at the moment, I think (we're) just exercising a bit of caution."
OneSavings, based in the southern British county of Kent, said it had seen more regional demand and less central London demand from landlords, Golding said, and central London house prices were expected to look "quite inflated".
OneSavings said on Wednesday it would achieve its full-year net loan book growth target and double-digit growth in 2017.
"Application levels for the second half to date are significantly in excess of the first half and our pipeline of new business is at a record level," Golding said.
Rival Virgin Money Holdings Plc (>> Virgin Money Holdings (UK) PLC) on Tuesday said it had its strongest ever quarter for mortgage lending after the June referendum, but it had tightened credit scores for card applications.
Shares in OneSavings were down 2.3 percent at 285 pence at 1113 GMT. RBC analysts downgraded the stock to "sector perform", adding their 305 pence target price only offers a slight implied all-in return.
($1 = 0.8170 pounds)
(Reporting by Noor Zainab Hussain in Bengaluru; Editing by Sunil Nair/Ruth Pitchford)
By Noor Zainab Hussain
