British lender OSB earnings fall on fraud-related provisions

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-British bank OSB Group posted a 9% drop in annual earnings on Thursday, even as lending picked up, bogged down by impairment provisions set aside to cover a potential third-party fraud.

OSB set aside 20 million pounds ($27.53 million) as a provision for the isolated incident, smaller than the 28.6 million pounds in potential credit losses that the company flagged last month.

The specialist mortgage lender had delayed publishing its annual results in March and hired forensic expert Smith & Williamson to investigate after the company became aware of the potential fraud at a non-bank lender it provided secured funding to.

Underlying pretax profit fell to 346.2 million pounds in the 12 months to Dec 31, 2020, from 381.1 million pounds a year earlier, while its net loan book grew 4% to 19.2 billion pounds, as mortgage lending picked up sharply towards the end of the year.

The company, which specializes in buy-to-let, commercial mortgages and residential development finance, recommended a final dividend of 14.5 pence, after cancelling payout last year citing COVID-19 pandemic challenges.

OSB warned that its lending portfolio would be impacted if interest rates were to go below zero, but added that negative rates would be unlikely to cause an issue until it touches -75 bps or lower.

($1 = 0.7264 pounds)

(Reporting by Chris Thomas and Muvija M in Bengaluru; Editing by Amy Caren Daniel)

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