Our strategic framework

Our goals

2019 Progress

Grow loan originations at attractive margins in our chosen market segments

• Target market segments that offer attractive returns on a risk-adjusted basis

• Deliver incremental, non-organic business

• Invest in highly responsive, customer-focused culture

• Innovate to secure sustainable long-term market leadership

• Organic originations of £4.1bn on a statutory basis. On a pro forma underlying basis organic originations were £6.5bn, up 10% from £5.9bn in 2018
• OSB commercial business loan book £888m, up 62%
• Multiple awards for Kent Reliance including Best Specialist Lender and Best Buy-to-Let Lender from Mortgage Strategy Awards and Best Specialist Lender by the L&G Mortgage Club
• CCFS was awarded Mortgage Lender of the Year and Specialist Lender of the Year by Mortgage Introducer

• Continue to evaluate the attractiveness and growth opportunities in our current market sub‑segments
• Deploy greater scale and resources on organic growth opportunities
• Identify new market sub-segments with high returns on a risk-adjusted basis
• Identify potential revenue synergies

• Market conditions affecting long-term demand
• Increased regulatory pressure
• Continued political and economic uncertainty
• New specialist lenders entering the market

Organic originations, pro forma underlying

£6.5bn

2018: £5.9bn

Our goals

2019 Progress

High-quality decisions protecting the business

• Use deep credit experience to deliver high-quality lending decisions

• Leverage CCFS’ automated approach in conjunction with OSB’s skilled manual underwriting capabilities and in-house real estate expertise

• Deliver a quality, differentiated service supported by highly responsive decision-making

• Clear decisions recognised by intermediaries for their quality and fairness – a critical friend

• The OSB Transactional Credit Committee met twice a week in 2019 to assist with more complex or larger new mortgage applications
• Increased stress testing in specialist sub-segments
   

• Bring together OSB’s and CCFS’ credit experience in a best-of-both approach
• Leverage differentiated but complementary underwriting capabilities to enhance customer propositions
• Increase underwriting efficiency to better serve borrower needs across complementary brands
• Create enhanced data insight and analysis by combining OSB and CCFS data sets and analytic capabilities
   

• Changing regulation for underwriting
• More complex underwriting requirements
• Difficulty in recruiting experienced staff
• Increasing intermediary demands
• Demands of ever-changing technology

Loan loss ratio, pro forma underlying

10bps

2018: 7bps

Our goals

2019 Progress

Increase partner reach in response to demand

• Access to specialist products developed by listening to intermediary partners

• Be accessible and available to intermediaries

• Complementary distribution models for OneSavings Bank and CCFS brands

• Gain intermediary recognition for delivering sustainable propositions

• Deliver bespoke solutions to meet intermediary and customer needs
   

• The Kent Reliance Choices programme had another successful year with retention rates in 2019 of 69%
• CCFS enhanced service standards including direct to broker second charge proposition
• Increased attendance at intermediary events across our target geographies for both OneSavings Bank and CCFS to 521 in total
• Published thought leadership pieces including periodic market-leading Kent Reliance ‘Buy-to-Let Britain’ reports

• Continue to deliver direct relationships with high‑quality intermediaries
• Increase breadth of channels to market via the direct to broker and packager channels
• Leverage best practice of OneSavings Bank and CCFS across the combined Group to maintain and further enhance best-in-class service performance to brokers
   

• Loss of key broker relationships
• Competition reducing pricing below the Group’s risk-adjusted return appetite
• More complex underwriting requirements slowing the process

OSB broker NPS

+27

2018: +28

CCFS broker NPS

+18

2018: +41

Our goals

2019 Progress

Expertise in funding options

• Create resilient and diversified funding platform to support future growth and ensure liquidity requirements are met through the economic cycle, and cost of funds is optimised
• Be primarily funded through attracting and retaining a loyal retail savings customer base

• Maintain a sophisticated securitisation funding and balance sheet management capability

• Deliver a proposition offering transparent, straightforward savings products, providing longterm value combined with excellent service levels
   

• Gained c. 67,000 new savings customers across both Banks for full year 2019
• Achieved 91% customer retention for Kent Reliance and 88% for Charter Savings Bank
• Charter Savings Bank accessed four new third party funding pools of savings bringing the total to six
• Received multiple awards for savings products, including Best Business Easy Access Account Provider from Savings Champion for Kent Reliance, and Best Bank Savings Provider and ISA Provider of the Year by Moneyfacts for Charter Savings Bank

• Continue to invest in the established Kent Reliance retail deposit franchise
• Ensure optionality to benefit from the potential to execute structured balance sheet management transactions across the combined Group’s enlarged balance sheet
• Utilise CCFS’ in-house expertise to enable efficient access to capital markets

• Increased competition for retail funds
• Increased customer expectation for technology
• Volatility of capital markets
• Increased burden of regulatory compliance – for example, Open Banking (which currently does not apply to the OSB Group)

17

securitisations since 2013 across OSB and CCFS worth over

£5.7bn

Our goals

2019 Progress

Best-in-class customer service

• Have customer service at the heart of everything that we do

• Maintain centres of excellence across OSB’s and CCFS’ existing locations in Chatham, Wolverhampton and Bangalore, India

• Extend activity in OSBIndia (‘OSBI’), developing high-quality areas of excellence

• Deliver cost efficiencies through excellent process design and management

• Investments in training and process development contributed to enhanced customer NPS of +66 for Kent Reliance and +72 for Charter Savings Bank
• Continued to develop deep credit know-how through proprietary data analytics at Exact Mortgage Experts
• Increased number of employees in OSBI to 490 from 445 in 2018

• Use greater scale to deliver efficient, scalable and resilient infrastructure including IT security
• Deliver cost efficiencies and operational enhancements by leveraging OSBI’s lending, savings and support operations and capabilities
• Deliver efficiencies and enhanced capabilities in centres of excellence
• Use robotics technology and improve workflows to further enhance primary servicing
   

• Difficulty in continuous service improvement as OSB grows
• Global economic uncertainty increasing costs in India
• Increasing complexity from compliance with changing regulation
• Lack of operational resilience due to rapid growth

Cost to income ratio, pro forma underlying

29%

2018: 28%