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Investing.com -- Moody’s Ratings has affirmed OSB GROUP PLC’s Baa2 senior unsecured rating and changed the outlook to stable from negative, according to a Thursday announcement.
The rating agency also affirmed several other ratings for the group, including its Baa3 subordinate rating and OneSavings Bank plc’s baa2 Baseline Credit Assessment. Additionally, Moody’s upgraded OneSavings Bank’s Counterparty Risk Ratings to A2/P-1 from A3/P-2.
The stable outlook reflects Moody’s expectation that the group’s asset quality will stabilize as lower interest rates ease borrower affordability pressures. Moody’s also anticipates OSB Group will maintain its market position despite competitive pressures.
The Baa2 senior unsecured rating for OSB GROUP PLC is based on the bank’s Adjusted BCA of baa2, moderate loss severity expectations for the holding company’s senior unsecured debt, and low probability of UK government support.
OSB’s asset quality has weakened, with problem loans rising to 4.2% by June 2025 from 2.5% at the end of 2022. This increase stems from reduced borrower affordability amid higher interest rates, the aging loan portfolio, and the group’s focus on specialist loans like buy-to-let mortgages.
Despite these challenges, the group reported net income of £142.1 million in the first half of 2025, with an annualized return on tangible assets of 0.9%. While this is below the 1.4%-1.5% return seen in 2021-2022, Moody’s describes the earnings as resilient.
OSB Group has maintained strong capitalization with a Common Equity Tier 1 ratio of 15.7% as of June 2025, which Moody’s expects to decline to the group’s target level of 14% after Basel 3.1 rules implementation in January 2027.
Moody’s indicated that an upgrade could occur if the group shows material improvement in asset quality and sustained profitability without increasing its loan portfolio risk profile. Conversely, a downgrade might follow material weakening in asset quality, reduced market position, declining capitalization, or deteriorating liquidity.
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