OneSavingsBank plc - 2023 Annual Report and Accounts
LEI: 213800WTQKOQI8ELD692
*OneSavings Bank plc - 2023 Annual Report and Accounts*
In fulfilment of its obligations under section 4.1.3 and 6.3.5(1) of the Disclosure Guidance and Transparency Rules, OneSavings Bank plc (the "Company") hereby releases the unedited full text of its 2023 Annual Report and Accounts for the year ended 31 December 2023.
The document is now available on the Company's website at:
www.osb.co.uk
A copy of the above document has been submitted to the National Storage Mechanism and will shortly be available for inspection at:
https://data.fca.org.uk/#/nsm/nationalstoragemechanism
Enquiries:
*OSB GROUP PLC*
Dionne Mortley-Forde
Group Head of Company Secretariat t: 01634 848 944
*Investor relations*
Alastair Pate
Group Head of Investor Relations
Email: osbrelations@osb.co.uk t: 01634 838 973
*Brunswick *
Robin Wrench/Simone Selzer t: 020 7404 5959
*About OSB GROUP PLC*
OSB began trading as a bank on 1 February 2011 and was admitted to the main market of the London Stock Exchange in June 2014 (OSB.L). OSB joined the FTSE 250 index in June 2015. On 4 October 2019, OSB acquired Charter Court Financial Services Group plc (CCFS) and its subsidiary businesses. On 30 November 2020, OSB GROUP PLC became the listed entity and holding company for the OSB Group. The Group provides specialist lending and retail savings and is authorised by the Prudential Regulation Authority, part of the Bank of England, and regulated by the Financial Conduct Authority and Prudential Regulation Authority. The Group reports under two segments, OneSavings Bank and Charter Court Financial Services.
*OneSavings Bank*
OSB primarily targets market sub-sectors that offer high growth potential and attractive risk-adjusted returns in which it can take a leading position and where it has established expertise, platforms and capabilities. These include private rented sector Buy-to-Let, commercial and semi-commercial mortgages, residential development finance, bespoke and specialist residential lending, secured funding lines and asset finance.
OSB originates mortgages organically via specialist brokers and independent financial advisers through its specialist brands including Kent Reliance for Intermediaries and InterBay Commercial. It is differentiated through its use of highly skilled, bespoke underwriting and efficient operating model.
OSB is predominantly funded by retail savings originated through the long-established Kent Reliance name, which includes online and postal channels as well as a network of branches in the South East of England. Diversification of funding is currently provided by securitisation programmes and the Bank of England’s Term Funding Scheme with additional incentives for SMEs.
*Charter Court Financial Services Group *
CCFS focuses on providing Buy-to-Let and specialist residential mortgages, mortgage servicing, administration and retail savings products. It operates through its brands: Precise Mortgages and Charter Savings Bank.
It is differentiated through risk management expertise and best-of-breed automated technology and systems, ensuring efficient processing, strong credit and collateral risk control and speed of product development and innovation. These factors have enabled strong balance sheet growth whilst maintaining high credit quality mortgage assets.
CCFS is predominantly funded by retail savings originated through its Charter Savings Bank brand. Diversification of funding is currently provided by securitisation programmes and the Bank of England’s Term Funding Scheme with additional incentives for SMEs.
*OneSavings Bank plc*
Annual Report and Financial Statements
For the Year Ended 31 December 2023
Company Number: 07312896
*OneSavings Bank plc*
*Company Information*
Company Information 2
Strategic Report 3
Directors’ Report 63
Statement of Directors’ Responsibilities in respect of the Strategic Report, the Directors' Report and the Financial Statements 69
Independent Auditor’s Report 70
Statement of Comprehensive Income 85
Statement of Financial Position 86
Statement of Changes in Equity 87
Statement of Cash Flows 89
Notes to the Financial Statements 90
DIRECTORS Kalvinder Atwal
Andrew Golding
Noël Harwerth
Sarah Hedger
Rajan Kapoor
April Talintyre
Simon Walker
David Weymouth
COMPANY SECRETARY Jason Elphick
REGISTERED OFFICE Reliance House
Sun Pier
Chatham
Kent
ME4 4ET
United Kingdom
REGISTERED NUMBER 07312896 (England and Wales)
AUDITOR Deloitte LLP Statutory Auditor Birmingham
United Kingdom
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*OneSavings Bank plc *
*Strategic Report*
For the Year Ended 31 December 2023
The Directors present their Annual Report, including the Strategic Report, Directors’ Report and Statement of Directors’ Responsibilities, together with the audited Consolidated Financial Statements and Auditor’s Report for the year ended 31 December 2023.
OneSavings Bank plc (the Company or OSB) is a wholly-owned subsidiary of OSB GROUP PLC (OSBG). The Group comprises OSB and its subsidiaries; the OSB Group comprises OSBG and its subsidiaries.
*Our business model*
The Group is a leading specialist mortgage lender, primarily focused on carefully selected sub-segments of the UK mortgage market. Our specialist lending is predominantly supported by our Kent Reliance and Charter Savings Bank (CSB) retail savings franchises. Our purpose is to help our customers, colleagues and communities prosper.
*Resources and relationships*
Brands and heritage
We have a family of specialist lending brands targeting selected segments of the mortgage market which are underserved by large UK banking institutions. We have well-established savings franchises through Kent Reliance, with its 160-year heritage, and the CSB brand.
Colleagues
Our team of highly skilled employees possess expertise and in-depth knowledge of the lending, property, capital and savings markets, underwriting and risk assessment, and customer management.
Infrastructure
We benefit from cost and efficiency advantages provided by our wholly-owned subsidiaries, OSB India, as well as credit expertise and mortgage administration services provided by Charter Court Financial Services (CCFS).
Relationships with intermediaries and customers
Our strong and deep relationships with the mortgage intermediaries that distribute our products continue to win us industry recognition.
Capital strength
We have a strong common equity tier one (CET1) ratio and capability to generate capital through profitability.
*Our business model explained*
The Group operates its lending business through two segments: OSB and CCFS.
*OneSavings Bank*
Through our brands we tailor our lending proposition to the specific needs of our borrowers. Under our Kent Reliance and Interbay brands all of our loans are underwritten by experienced and skilled underwriters, supported by technology to reduce the administrative burden on underwriters and mortgage intermediaries. We refer to scorecards and bureau data to support our skilled underwriter loan assessments. We consider each loan on its own merits, responding quickly and flexibly to offer the best solution for each of our customers. No case is too complex for us, and for those borrowers with more tailored or larger borrowing requirements, our Transactional Credit Committee meets three times each week, demonstrating our responsiveness to customer needs.
*Buy-to-Let/Small and Medium Enterprises (SME) sub-segments*
Buy-to-Let
We provide loans to limited companies and individuals, secured on residential property held for investment purposes. We target experienced and professional landlords or high net worth individuals with established and extensive property portfolios.
Commercial mortgages
We provide loans to limited companies and individuals, secured on commercial and semi-commercial properties held for investment purposes or for owner-occupation.
Residential development
We provide development loans to small and medium sized developers of residential property.
Funding lines
We provide loans to non-bank finance companies secured against portfolios of financial assets, principally mortgages.
Asset finance
We provide loans under hire purchase, leasing and refinancing arrangements to UK SMEs and small corporates to finance business-critical assets.
*Residential sub-segment*
First charge
We provide loans to individuals, secured by a first charge against their residential home. Our target customers include those with a high net worth and complex income streams, and near-prime borrowers. We are also experts in shared ownership, lending to first-time buyers and key workers buying a property in conjunction with a housing association.
*Our business model explained *(continued)
*Charter Court Financial Services*
Specialist lending business
Our Precise Mortgages brand uses an automated underwriting platform to manage mortgage applications and to deliver a rapid decision in principle, based on rigorous lending policy rules and credit scores. The platform is underpinned by extensive underwriting expertise, enabling identification of new niches and determining appropriate lending parameters. It allows for consistent underwriting within the Group’s risk appetite. Quick response times help the Group to compete for the ‘first look’ at credit opportunities, while a robust manual verification process further strengthens the disciplined approach to credit risk.
Buy-to-Let
We provide products to professional and non-professional landlords with good quality credit histories, through a wide product offering, including personal and limited company ownership.
Residential
We provide a range of competitive products to prime borrowers and complex prime borrowers, including self-employed, as well as near-prime borrowers.
Bridging
We focus on lending to customers with short-term cash flow needs, for example, to cover light refurbishments, home improvements, auction purchases and to ‘bridge’ delays in obtaining mortgages and ‘chain breaks’.
Second charge
Second charge products under the Precise Mortgage brand were withdrawn in the first half of 2022 and are no longer available to new customers.
*Retail savings*
The Group is predominantly funded by retail savings deposits sourced through two brands: Kent Reliance and Charter Savings Bank.
Kent Reliance is an award-winning retail savings franchise with over 160 years of heritage and nine branches in the South East of England. It also takes deposits via post, telephone and online, while CSB, a multi award-winning retail savings bank, offers its products online.
Both Banks have a wide range of savings products, including easy access, fixed term bonds, cash ISAs and business savings accounts. CSB and Kent Reliance have diversified their retail funding sources through pooled funding platforms with a range of products offered, including easy access, longer term bonds and non-retail deposits.
In 2023, our savings products received industry recognition: Charter Savings Bank won Best Overall Savings Provider for the sixth year running from Personal Finance Awards and ISA Provider of the Year from Moneyfacts Consumer Awards. Moneynet Personal Finance Awards named Kent Reliance as Best Fixed Rate Savings Provider.
*Our business model explained *(continued)
Kent Reliance’s proposition for savers is simple: to offer consistently good-value savings products that meet customer needs for cash savings and loyalty rates for existing customers.
CSB’s philosophy is to maintain and develop its award-winning business, offering competitively priced savings products. Operating with an agile, nimble approach, CSB can respond quickly to the funding requirements of the business.
*Our securitisation platforms*
The Group accesses the securitisation market to provide attractive long-term wholesale funding to complement its retail deposit franchise and to optimise its funding mix. Securitisations also provide efficient access to commercial and central bank repo facilities.
The Group’s strategy is to be fleet-of-foot and dynamic rather than deterministic with its securitisation issuance plans. This enables it to maximise opportunities with repeat issuances during periods of buoyant market activity and to use other funding when the market is less favourable.
The Group is a programmatic issuer of high-quality prime residential mortgage-backed securities through the Precise Mortgage Funding (PMF), Charter Mortgage Funding (CMF) and Canterbury Finance securitisation programmes. OSB has also issued three deals of owner-occupied and Buy-to-Let acquired mortgages via Rochester Financing since 2013.
In 2023, the Group issued its second Simple, Transparent and Standardised securitisation, CMF 2023-1, a publicly marketed transaction that securitised c.£330m of mortgage loans, and issued c.£300m of AAA rated senior bonds. In total, the Group has completed 23 securitisations worth more than £11.4bn since 2013.
The Group also uses a secured warehouse facility which provides access to funding on a contingent basis secured on a portfolio of residential mortgages. £250m of this facility was drawn at the year end.
*Unique operating model*
Customer service
The Group operates customer service functions in multiple locations across the UK including Chatham, Wolverhampton, Fareham, London and Fleet. These, together with our wholly-owned subsidiary OSB India, help us deliver on our aim of putting customers first.
The Group has proven collections capabilities and expertise in case management and supporting customers in financial difficulty.
This offers valuable insights into, as well as the opportunity to learn from, the performance of mortgage loan products. We have deep credit expertise through strong data analytical capabilities.
We deliver cost efficiencies through excellent process design and management. We have strong IT security and continue to invest in enhancing our digital offering as customer demand changes.
*Our business model explained *(continued)
OSB India
OSB India (OSBI) is a wholly-owned subsidiary based in Bangalore and Hyderabad, India.
OSBI puts customer service at the heart of everything it does and we reward our colleagues based on the quality of service they provide to customers, demonstrated by our excellent customer Net Promoter Score (NPS).
At OSBI, we employ highly talented and motivated colleagues at a competitive cost. We benchmark our processes against industry best practice, challenging what we do and eliminating customer pain points as they arise. We continue to invest in developing skills that enable highly efficient service management, matching those to business needs both in India and the UK.
Various functions are also supported by OSBI, including Support Services, Operations, IT, Finance and Human Resources. We have a one team approach between the UK and India. The employee turnover in India improved considerably in the year with the regretted attrition rate to 12% for 2023 demonstrating strong culture and the Company’s compelling employee proposition.
OSBI operates a fully paperless office – all data and processing are in the UK.
*Environmental, social and governance (ESG)*
We operate in a sustainable way with relevant ESG matters at the heart of all everything we do.
As a specialist lender, we have been long aware of our responsibilities and the positive impact we can make in society through our activities.
We will be publishing our Climate Transition Plan with the annual report where we laid foundations for progressing towards Net Zero by the 2050 target. The Company strives to create a more diverse and inclusive workplace, and in the year, we reached our target of having 33% women in senior management roles in the UK and made enhancements to maternity and family benefits. We also donated over £288k to charitable causes in the year.
*Relationships with our key stakeholders *
Building strong relationships with all of our stakeholders through regular engagement and open dialogue is fundamental to achieving the Group’s purpose to help our customers, colleagues and communities prosper. Our relationships with our stakeholders are central to the Group’s strategy and culture; and are embedded in the Board’s responsibilities.
We outline below how the Group and its Directors engaged with key stakeholders, and in doing so, discharged their duties under section 172 of the Companies Act 2006.
*Relationships with our key stakeholders *(continued)
*Colleagues*
Our colleagues are our key asset and our success to date have been driven by the 2,459 talented individuals we employ.
We have always favoured interactive communication between management and our colleagues through regular town hall meetings, informal sessions with management and opportunities to ask questions anonymously directly to the Chief Executive Officer (CEO), with the questions and responses available on the intranet. These methods of engagement proved popular with employees and have contributed to many initiatives that were undertaken by the business during the year, including enhancements to UK Family Benefits.
Board engagement with colleagues
The Group has adopted a combination of methods for engaging with its workforce, including the establishment of a formal Workforce Advisory Forum (Our Voice) and a designated Non-Executive Director (NED) for the people. In May 2023, Sarah Hedger replaced Mary McNamara as the Chair of the Group Remuneration and People Committee and the Board appointed People Champion, responsible for representing the workforce at Board and Committee level. Sarah is a permanent member of Our Voice where she engages directly with employee representatives and gains an insight into employee concerns, morale and culture.
Our Voice is represented by a broad range of employees. Their views support the Board’s decision-making and provides additional points of reflection when determining metrics around strategic performance and the Executive Director remuneration, culture and governance. The areas of discussion at Our Voice meetings in 2023 focused on employee end of year ratings and policies, UK employee benefits, employee share schemes, employee morale and updates from the OSB India team. Employee are encouraged to be open and honest in their feedback at each meeting.
The Board also reviewed the results of the annual Best Companies to Work For survey. 86.4% of UK employees responded to the survey in 2023 demonstrating a high level of engagement. Following the results of the survey, the Group received a 2-star accreditation which means that it was recognised as an ‘Outstanding’ company to work for. The Board and Group Executive Committee reviewed the results, considered the key themes that had emerged from the responses and discussed what steps could be taken to capitalise on the positive themes and also address areas for improvement. The Board is also exploring opportunities for receiving more diverse metrics in relation to employee engagement surveys. OSB India participates in a separate engagement survey and was officially certified a ‘Great Place to Work’ for a seventh consecutive year in 2023.
The Board and its Committees also received regular updates on matters impacting employees from senior management and the Group’s HR function. The Group Nomination and Governance Committee oversees the Group’s talent management initiatives and senior management succession planning.
*Relationships with our key stakeholders *(continued)
Finally, the Board, through the Group Audit Committee has oversight of the Group’s whistleblowing activity, and the Group Remuneration and People Committee reviews and approves the Group’s gender pay gap reporting and its commitment to the Women in Finance Charter.
The Board monitors the effectiveness of its methods of engaging with employees and adapts them where necessary.
Outcomes following engagement
· Completed an extensive review of the UK family benefits package including significant enhancements to the Maternity, Adoption and Parental leave policies.
· The Board approved the new People and Culture Strategy which sets out a range of initiatives to be progressed over the next three years.
· The Board explored opportunities to receive a more diverse range of metrics around employee engagement.
· Approved a higher salary increase for over 80% of employees in 2023 in light of the high rate of inflation. This was focused towards less senior employees.
*Customers*
We pride ourselves on building strong, long-term relationships with our customers. Our continued commitment to providing excellent service to borrowers and savers and delivering good outcomes for our customers remained a priority in 2023.
We offered our savers an opportunity to let us know how we are doing whenever they call or interact with the Banks by listening to their views and acting upon what they tell us. Customer feedback is collected throughout the year and satisfaction scores produced as a result. During 2023, there was an increase in the savings and broker NPS compared to 2022.
Board engagement with customers
The Board’s engagement with customers is indirect and Directors are kept informed of customer-related matters through regular reports, feedback and research. Satisfaction scores and retention rates, together with the number of complaints and resolution times, form part of the management and Board monthly reporting packs, ensuring the visibility of our customers’ experiences. Customer satisfaction scores and customer outcomes are also used as part of the Executive remuneration assessment, and form the basis of new initiatives and actions which continually improve customer experience.
During 2023, the Board had its annual deep dive on the customer experience focusing on customer performance, vulnerable customers and customer complaints.
*Relationships with our key stakeholders *(continued)
A key focus for the Board was ensuring that the new Financial Conduct Authority (FCA) Consumer Duty requirements were embedded across the Group. Simon Walker as our Consumer Duty Champion and the Board received regular updates and assurance around the implementation of the Consumer Duty Programme throughout 2023, the embedding of which will continue in 2024.Customers and intermediaries may be consulted when the business is considering the launch of a new product to ensure it meets their needs and any concerns raised are addressed.
Outcomes following engagement with customers
· A Customer and Product Committee was established to ensure customer outcomes remain at the heart of the Group’s product proposition.
· Simon Walker, Group Risk Committee chair, was appointed the Board’s Consumer Duty Champion.
· Conducted all-employee training and Consumer Duty roadshows to support with embedding the Group’s Consumer Duty programme.
The savings NPS for Kent Reliance in 2023 was +71 (2022: +64), for Charter Savings Bank was 62 (2022: +61) and for OSB and CCFS broker NPS +57 (2022: OSB +37, CCFS +39).
*Intermediaries*
Our lending products, with the exception of funding lines and residential development loans, are distributed via mortgage brokers. Mortgage brokers are vital to our success; it is important for us to understand the challenges they face and what they are trying to achieve in terms of serving their customers, so we can adapt the way in which we support them, to provide an even better service.
How the Board has engaged with intermediaries
The Board’s engagement with intermediaries is indirect and Directors are kept informed of intermediary-related matters through regular updates at Board meetings. Broker and borrower satisfaction scores are tracked on a regular basis, along with details of all complaints, and are reviewed by the Board and management monthly.
We pride ourselves in providing unique and consistent lending propositions across all lending brands, which fulfil our goal of making it easier for intermediaries to serve their customers, our borrowers. Regular engagement with the broker community extends beyond our propositions and enables us to continuously enhance the service we provide, with our business development managers working closely with intermediaries to discuss cases and help to obtain swift and reliable decisions.
The Group’s Sales teams participated in 259 physical and virtual intermediary events during 2023 and 44 hospitality events. The events are an opportunity for the Sales team to interact with brokers, discuss their requirements and keep up to date with industry developments.
Outcomes following engagement with intermediaries
· The Board reviewed the trends in NPS scores for intermediary brokers.
· Early exposure to the development of our digitalisation platform.
In 2023, the Group’s representatives participated in over 259 physical and virtual events with brokers to understand their evolving requirements and to keep up to date with industry developments. We used this understanding to continue to improve our customer propositions and the Group’s efforts were recognised in the improved broker NPS of +57 for both OSB and CCFS in 2023 (2022: OSB +37 and CCFS +39).
*Relationships with our key stakeholders *(continued)
*Suppliers*
Our business is supported by a large number of suppliers, which allows the Group to provide high standards of service to our customers.
Board engagement with suppliers
The Board does not interact directly with the Group’s suppliers; however, during the year the Board maintained oversight of key supplier relationships, including engagement between the Group Audit Committee and the external auditor. The Board also considered the risks associated with suppliers and the framework for assurance and oversight of key supplier relationships.
Supplier payment practice reports are published on a six-monthly basis and approved and signed by the CFO and Chief Operating Officer on behalf of the main operating entities. The Group enters into standard terms with suppliers, which include terms requiring payment within 30 days of the invoice date following receipt of a valid invoice. Over 97% of all invoices are paid within 30 days in line with the standard payment period for qualifying contracts. The average time taken to pay invoices ranges from five to nine days across the Group. The maximum contractual payment period agreed varies between 30 days to 45 days. There have been no changes to the standard payment terms in the reporting period.
Any complaints received in respect of invoice payments are considered as part of the dispute resolution process. During the year, the Group did not deduct any sums from payments under qualifying contracts as a charge for remaining on a supplier list.
We are committed to complying with both the law and best practice in respect of Modern Slavery, workforce rights and the environment. We expect our suppliers to share that commitment by complying with our Vendor Code of Conduct and Ethics.
The Group’s Modern Slavery and Human Trafficking Statement is reviewed and approved on an annual basis by the Board and can be found on our website at www.osb.co.uk.
ESG is being embedded into every aspect of our business and part of doing so is to ensure that our suppliers share similar values and aspirations to our own.
During 2023, our suppliers and business partners were asked to complete a questionnaire in order for us to understand how they are addressing topics suchas climate change, Diversity, Equity and Inclusion and Modern Slavery and to identify areas of focus in the future. We understand that organisations will be at various stages of their own ESG and sustainability journey and we continue to encourage and support our suppliers with their transition to an ESG strategy that aligns to the Group’s ambitions.
Outcomes following engagement with suppliers
·
The Group engaged with suppliers to understand their aspirations ad approach towards ESG and to ensure that they are aligned with the Group’s ESG Strategy.
*Relationships with our key stakeholders *(continued)
*Regulators*
The Board recognises the importance of having an open and continuous dialogue with all of our regulators, as well as other government bodies, trade associations and UK Finance.
Board engagement with Regulators
The Board and Group Executive Committee maintains a proactive dialogue with the Prudential Regulation Authority (PRA) and FCA. Engagement typically takes the form of regular and ad hoc meetings attended by both members of the Board and Group Executives, as well as subject matter experts.
The Board and its Committees receive regular updates in respect of the broader regulatory developments and compliance considerations. The PRA was invited to and attended one Board meeting during 2023, presenting their Periodic Summary for the year. The regulator is also given the opportunity to discuss thematic areas with the Board including operational resilience and integration of IT related matters in the overall risk management framework.
The Group regularly interacts with the Bank of England and His Majesty’s Revenue & Customs (HMRC), amongst others, helping the Group’s alignment with the relevant regulatory frameworks and developments in the financial services industry.
Outcomes following engagement
· Meetings held with regulators during the year covered, amongst other topics, operational resilience, integration of IT related matters in the overall risk management framework and the Group’s strategic plans. These are all areas that have been considered by the Board in its meetings.
· Agreed the Group/s approach to future engagement with the regulator.
*Communities*
The Group partners with national and local charities, which offer employees the chance to make a difference both nationwide and closer to home.
The Board engagement with communities
The Board and management actively encourage and fully support engagement with our local communities to make a positive impact. Giving something back to our community is important to all of us, whether it is through volunteering, fundraising or efforts that help protect our environment, and aligns with the Group’s Values. Our nominated charity partners are chosen by employees with the aim of making a meaningful impact to these charities and to the lives of those that the charities help.
Outcomes following engagement with communities
· Charities, organisations and good causes benefitted by £288k from donations, employee fundraising, and the annual donation linked to the Demelza Children’s Savings Account offered under the Kent Reliance brand.
*Relationships with our key stakeholders *(continued)
*Environment*
Sustainability remains an important topic for the Board and management. The Group operates under the highest governance and ethical standards and is focused on reducing its impact on the environment.
The Board and management are mindful of the impact of social and environmental change on our business and stakeholders and regularly promote awareness of such issues among our employees, as well as adhering to our plan to become a greener organisation and comply with enhanced regulation and disclosures.
The Board is responsible for approving the Group’s ESG Strategy and ESG Operating Framework which sets out how the Group will monitor ESG matters that are material to the Group’s Purpose, Vision, Values and Stakeholder expectations. The Board oversees an environmentally friendly culture and ensures that the business is ready to respond to the growing impact of climate change on the Group’s activities in line with its Stewardship value.
*Section 172 statement*
The Directors are bound by their duties under section 172(1)(a) to (f) of the Companies Act 2006 and the manner in which these have been discharged; in particular their duty to act in the way they consider, in good faith, promotes the success of the Company for the benefit of its shareholders as a whole.Pages 119 to 125 in the Corporate Governance Report in the OSB Group’s Annual Report demonstrates how the Board has engaged with the Group’s key stakeholders (customers, intermediaries, colleagues, shareholders, suppliers, regulators and the local communities in which we are located). Examples of strategic decisions which have impacted the Group’s key stakeholders are set out below. Pages 7 to 12 and those that follow, set out examples of how Directors complied with the requirements of section 172 during the year.
*Decision making*The Board recognises that considering our stakeholders in key business decisions is fundamental to our ability to deliver the Group’s strategy in line with our long-term values and operating the business in a sustainable way. Balancing the needs and expectations of our key stakeholders is essential to achieving our purpose of helping our customers, colleagues and communities prosper.
*Section 172 statement *(continued)
*Key strategic decisions in the year*
People and Culture Strategy
During the year the Board approved the People and Culture Strategy which sets out the Group’s ambition to be a number one employer of choice. The strategy includes a range of initiatives to be progressed over the course of the next three years and aims to develop a culture of embracing change and new ways of working.
Employees are able to engage directly with the CEO via the “Ask Andy” online portal and a key theme this year was improving the employee family benefits package. Following consideration of employee views, the Group Executive Committee approved enhancements to the UK employee family benefits offering which have received positive feedback from colleagues.
Effective Interest Rate (EIR) adjustment
The Board supported the adverse effective interest rate adjustment in the first half of the year on the Precise Brand which reflected the mortgages product design, impact on customer behaviour and the IFRS 9 accounting treatment.
Customer Experience and Consumer Duty
During the year the Board oversaw the embedding of the Consumer Duty programme across the Group. The Group Risk Committee Chair was appointed as the Consumer Duty Champion to support the Board’s oversight in relation to delivering good outcomes for customers, particularly, those who require additional support.
As part of the embedding process a number of enhancements have been made across the Group including all-employee training and Consumer Duty roadshows.
The Board continued to monitor the evolution of customer reporting and enhancements to the management information presented to the Board to ensure it has the appropriate information in order to assess performance against the Consumer Duty principles, as well as the ongoing monitoring of good customer outcomes.
Digitalisation Programme
The Board received regular updates in relation to the Group’s digitisation journey and enhancing digital solutions to enable us to meet the needs of our customers, brokers and wider stakeholders, whilst delivering further operational efficiencies. Enhancing the customer proposition through digitisation will be a key focus for the Board in the coming years.
*Market review*
*The UK housing and mortgage market*
Housing market activity was constrained during 2023, primarily by affordability pressures generated through the higher cost of living and borrowing. As a result, property transactions and mortgage completions both fell. However product transfers increased, as borrowers reaching the end of their initial term sought to lock in their monthly repayments to protect against further interest rate rises .
Inflationary prices which began in 2022 carried on into 2023 with prices rising by 10.1% in 12 months to January 2023.
The Bank of England implemented five successive increases in the base rate in 2023, with the objective of reducing inflation towards its 2.0% target. Overall, the base rate rose to 5.25% by August 2023 an increase of 1.75% from the start of the year.
The BOE’s response contributed to an easing of CPI inflation which fell steadily throughout 2023, leading the Monetary Policy Committee to vote to hold rates steady at the final three meetings of the year in September, November and December, with CPI of 4.0% at the end of the year.
Mortgage interest rates increased significantly following the Government’s mini-budget in September 2022 and higher rates persisted throughout 2023 with some moderation through the early part of the year. The average rate on a new two-year fixed rate mortgage at 75% loan to value fell from 5.14% in January 2023 to 4.60% in April according to the Bank of England, before rising again during a period of volatile interest rate swap pricing, hitting a peak of 6.22% in July. Mortgage rates then eased to the end of the year, with the average two-year fixed rate product offered at 5.03% in December 2023.House prices also continued to increase in the first half of the year, despite weakening demand, before turning negative from July onwards. UK house prices fell by 1.4% in the 12 months to December 2023.
The combination of these factors greatly suppressed overall activity in the housing and mortgage markets, with the number of residential property transactions in the UK falling by 19% to 1.02m in 2023 (2022: 1.26m).
The number of approvals for new mortgages falling by 30%to 1.02m (2022: 1.46m) and total UK gross mortgage lending falling by 29% to £224bn in 2023 (2022: £313bn).
*The UK savings market*
Savings balances in the UK reduced by 0.9% in 2023 to close the year at £2,182.2bn, compared to growth of 3.1% a year earlier, as cost of living pressures weighed on households’ disposable income.
Consumer preference pivoted in favour of term savings accounts over instant access and current accounts, with term deposits and cash ISA balances increasing by 36.3% and 16.3% respectively during the year. This performance is a marked shift to the declining balances reported in these product types in 2022, as higher interest rates motivated consumers to lock into term savings in 2023.
Pricing on one-year fixed term accounts increased from an average of 3.64% in 2022 to a peak of 5.45% in 2023, reflecting a higher SONIA yield curve and signs of increasing competition in the second half of the year. At the end of December 2023, 1,918 savings products were promoted in the market, which represented a step-up from the 1,690 accounts advertised a year earlier.
The Bank of England base rate increased by 175bps during the year. The majority of this benefit was passed through to savers with interest rates on instant access savings products increasing by an average of 161bps in 2023.
*Market review *(continued)
*The Group’s lending sub-segments*
*Buy-to-Let*
Buy-to-Let gross advances totalled £29.0bn in 2023, a 49% decrease from £57.2bn in 2022, reflecting affordability concerns, with rising borrowing costs and pressures stemming from higher energy prices and increasing maintenance costs. UK Buy-to-Let mortgage balances outstanding fell by 0.2% to £301bn during the year, and it is evident that a limited number of landlords have chosen to exit the market. However, it is likely that this activity was more concentrated towards amateur landlords with single properties or small portfolios. Research conducted by BVA BDRC on behalf of the Group showed that single property landlords were the least likely to make a profit, the least likely to acquire new properties and the most likely to exit the private rented sector in the next 12 months. The research also showed that of all landlords who planned to purchase new properties in the next 12 months, the majority (63%) planned to do so within a limited company structure. This illustrates that professional, multi-property landlords that form the Group’s customer base will play an increasing role in the sector’s future.
Data collected by RICS shows that the private rented sector still has a critical role to play in the provision of housing in the UK. RICS members reported increasing tenant demand in every survey since mid-2020, with supply remaining weak. This was also the case in 2023, as evidenced by a decline in landlord instructions coming to market, further magnifying supply and demand imbalance.
This imbalance exerted growing pressure on rents during 2023. The ONS reports that rents on the existing rental stock increased by 6.2% in the 12 months to December 2023, while Rightmove reported that asking rents for newly let properties increased by 9.2% in Q4 2023 compared to a year earlier. Research conducted by BVA BDRC suggests that over half (51%) of landlords plan to increase rents in the next six months, with most suggesting an increase is necessary to cover the running costs of the property.
*Residential*
According to UK Finance, total Residential loans to homeowners reached £186bn in 2023, a decrease of 26% from £250bn in 2022. Within this total, purchase activity declined by 28% to £121bn (2022: £168bn) while remortgaging fared slightly better, down 21% to £65bn (2022: £82bn).
Refinancing volumes during the year were likely dampened by the growing popularity of product transfers within an existing lender which are not included in gross lending totals. This trend was in part driven by the Mortgage Charter, under which signatory lenders agreed to allow customers who are approaching the end of their fixed rate term the opportunity to lock in a new fixed rate product up to six months in advance. Product transfers totalled £240bn in 2023, a 21% year-on-year increase (2022: £198bn), and represented 78% of all regulated refinancing activity during the year (2022: 69%).
*Commercial*
There was a sense of confidence in commercial property during the first half of 2023, supported by stable of slightly increasing capital and rental values. This positive momentum reversed in some segments during the second half of the year, with declines becoming more pronounced in the fourth quarter. Data for ‘all property’ showed capital values fell by 3.9% in 2023, with varying degrees of impact across commercial property sub-categories.
*Market review *(continued)
UK office investment remained at low levels throughout 2023 and the traditional end-of-year surge in activity did not materialise. According to CoStar Research, annual office investment stood at £8.8bn, a 14-year low and less than half the ten-year annual average of £23.7bn. The reduction in trading was most pronounced for higher-value properties. Prices fell as a result of weak investor sentiment, higher borrowing costs and rising vacancies as hybrid working continued. In response to this, cash-rich investors have been entering the market seeking high quality offices in desirable locations or, in some cases, seeing an opportunity to capitalise on the increasing occupier preference for energy efficient offices by retrofitting older buildings.
Investor sentiment towards the retail sector has generally deteriorated in recent years amid multiple lockdowns and a wave of store closures and company administrations. There were however, some pockets in good high street locations in affluent commuter towns and established market towns that are bucking this trend. Average yields increased at the end of 2023, with retail property trading at a big discount to industrial properties in a complete reversal from a decade earlier. Rising interest rates, inflationary pressures and faltering retail sales made retail property appear less attractive and financing more difficult to secure, with the last two quarters of the year representing the weakest for investment in the last three years. Overall, retail leasing demand continued to decline in the second half of 2023.
The strong levels of occupier and investor demand for industrial property, witnessed through the height of the pandemic, faded in 2023, amid higher inflation and interest rates. However, the sector continued to benefit from structural factors such as e-commerce, supply chain reconfiguration and the push towards net zero carbon emissions. Although occupiers scaled back growth plans which weighed on take up, vacancies remained relatively low at 4.1% nationally. Industrial properties with the highest energy-efficiency ratings posted stronger rental growth than their lower rated or unrated counterparts. Sector-wide rental growth rates eased from record levels as vacancies increased and occupiers faced growing cost pressures.
*Residential development*
A lower level of activity in the residential development sector reflected the subdued wider housing market as developers reduced the number and scale of projects in response to the higher cost of financing and lower demand from homebuyers. New build completions were 9% lower in Q3 2023 than Q3 2022, whilst new build starts were down 47%.
Demand for new properties remained relatively resilient for housing that was affordable to local populations, in contrast to the broader market. However, as mortgage pricing began to fall towards the end of the year there was anecdotal evidence of increased activity in the new build sector.
*Key performance indicators (KPIs)*
Throughout the Strategic report the Key performance indicators (KPIs) are presented on a statutory and an underlying basis.
Management believes that the underlying results and the underlying KPIs provide a more consistent basis for comparing the Group’s performance between financial periods. Underlying KPIs exclude integration costs and other acquisition-related items.
For a reconciliation of statutory results to underlying results, see page 28.
*1. Gross new lending*
Statutory £4.7bn (2022: £5.8bn)
Definition - Gross new lending is defined as gross new organic lending before redemptions.
2023 performance:
Gross new lending decreased 20% in the year and reflecting subdued mortgage market due to rising interest rates and affordability pressures.
*2. Loan loss ratio*
Statutory 20bps (2022: 13bps)
Underlying 20bps (2022: 14bps)
Definition - Loan loss ratio is defined as impairment losses expressed as a percentage of a 13 point average of gross loans and advances. It is a measure of the credit performance of the loan book.
2023 performance:
Statutory and underlying loan loss ratios increased in the year largely due to updated macroeconomic scenarios, changes in the risk profile of borrowers as they transitioned through modelled IFRS 9 impairment stages, loan book growth and an increase in balances in arrears of three months or more.
*3. Net interest margin (NIM) *
Statutory 231bps (2022: 278bps)
Underlying 251bps (2022: 303bps)
Definition - NIM is defined as net interest income as a percentage of a 13 point average of interest earning assets (cash, investment securities, loans and advances to customers and credit institutions). It represents the margin earned on loans and advances and liquid assets after swap expense/income and cost of funds.
2023 performance:
Both statutory and underlying NIM reduced in 2023, largely due to the adverse EIR adjustment and as the benefit of the lower cost of retail funding was partially offset by the impact of lower mortgage lending during a period of extreme swap spread volatility.
*Key performance indicators *(continued)
*4. Cost to income ratio*
Statutory 36% (2022: 27%)
Underlying 33% (2022: 25%)
Definition - Cost to income ratio is defined as administrative expenses as a percentage of total income. It is a measure of operational efficiency.
2023 performance:
Statutory and underlying cost to income ratios increased in 2023 primarily as a result of lower income due to the adverse EIR adjustment and a net fair value loss on financial instruments compared with a gain in the prior year.
*5. Management expense ratio *
Statutory 82bps (2022: 81bps)
Underlying 81bps (2022: 80bps)
Definition – Management expense ratio is defined as administrative expenses as a percentage of a 13 point average of total assets. It is a measure of operational efficiency.
2023 performance: Statutory and underlying management expense ratios remained broadly flat in the year demonstrating the Group’s focus on cost discipline and efficiency.
*6. Return on equity*
Statutory 19% (2022: 20%)
Underlying 20% (2022: 23%)
Definition - Return on equity (RoE) is defined as profit attributable to ordinary shareholders, which is profit after tax and after deducting coupons on AT1 securities, gross of tax, as a percentage of a 13 point average of shareholders’ equity (excluding £150m of AT1 securities).
2023 performance:
The lower statutory and underlying return on equity reflected the reduction in profitability due to the adverse EIR adjustment.
*7. OSB solo CRD IV Common Equity Tier 1 capital ratio*
The PRA has granted the Company a waiver to comply with the Capital Requirements Regulation (CRR) as an individual consolidation which includes the Company and subsidiaries except for the offshore servicing entity OSBI, Special Purpose Vehicles (SPVs) relating to securitisations and the CCFS entities acquired in October 2019, defined as OSB solo.
OSB solo 16.9% (2022: 18.4%)
Definition
This is defined as CET1 capital as a percentage of risk-weighted assets (calculated on a standardised basis) and is a measure of the capital strength of the Company.
2023 performance:
The CET1 ratio remained strong, although reduced marginally as capital generation from profitability in the year as a result of the adverse EIR adjustment loan book growth, foreseeable and paid dividends and the impact of the £150m share repurchase programme completed in 2023.
*Key performance indicators *(continued)
*8. Savings customer satisfaction – Net Promoter Score*
OSB +71 (2022: +64)
CCFS +62 (2022: +61)
Definition - The NPS measures customers’ satisfaction with services and products. It is based on customer responses to the question of whether they would recommend us to a friend. The response scale is 0 for absolutely not to 10 for definitely yes. Based on the score, a customer is a detractor between 0 and 6, a passive between 7 and 8 and a promoter between 9 and 10. Subtracting the percentage of detractors from promoters gives an NPS of between -100 and +100.
2023 performance:
Savings customer NPS increased due to fair savings products offering and excellent customer service.
*Financial review*
*Summary statutory results for 2023 and 2022*
For the year ended
31 December
2023 For the year ended
31 December
2022
Summary Profit or Loss £m £m
Net interest income 658.9 709.9
Net fair value gain on financial instruments (4.4) 58.9
Gain on sale of financial instruments - –
Other operating income 3.9 6.6
Administrative expenses (233.8) (206.5)
Provisions (0.4) 1.6
Impairment of financial assets (48.8) (29.8)
Impairment of intangible assets - –
Integration costs - (7.9)
Exceptional items - –
Profit before taxation 375.4 532.8
Profit after taxation 283.6 411.3
Key ratios
Net interest margin 231bps 278bps
Cost to income ratio 36% 27%
Management expense ratio 82bps 81bps
Loan loss ratio 20bps 13bps
Return on equity 19% 20% As at
31 December
2023 As at
31 December
2022
Extracts from the Statement of Financial Position £m £m
Loans and advances to customers 25,765.0 23,612.7
Retail deposits 22,126.6 19,755.8
Total assets 29,594.2 27,567.5 *Financial Review *(continued)
*Statutory Profit*
The Group’s statutory profit before tax decreased by 30% to £375.4m (2022: £532.8m) after acquisition-related items of £51.7m (2022: £59.6m). The benefit of net loan book growth was more than offset by the total net adverse statutory effective interest rate adjustment of £210.7m. The decrease in statutory profit before tax was also due to a net fair value loss on financial instruments compared with a gain in the prior year, higher administration costs and a higher impairment charge.
Statutory profit after tax was £283.6m in 2023, a decrease of 31% from £411.3m in the prior year, and included acquisition related items of £37.1m (2022: £38.7m).
The Group’s effective tax rate increased to 24.6% due to higher corporation tax rates, partially offset by a lower proportion of the profits being subject to the bank surcharge (2022: 24.0%).
Statutory return on equity for 2023 was 19% (2022: 20%).
*Net Interest Income*
Statutory net interest income decreased by 7% in 2023 to £658.9m (2022: £709.9m), as the benefit of the net loan book growth was more than offset by the adverse EIR adjustment of £210.7m on a statutory basis.
Statutory net interest margin (NIM) was 231bps compared to 278bps in the prior year, down 47bps, largely due to the adverse EIR adjustment and as the benefit of the lower cost of retail funding was partially offset by the impact of some lower margin lending during a period of extreme swap spread volatility. The total net adverse EIR adjustment accounted for 72bps of statutory NIM for the year ended 31 December 2023.
*Net fair value gain on financial instruments *
Statutory net fair value loss on financial instruments of £4.4m in 2023 (2022: £58.9m gain) included a £11.1m net loss on unmatched swaps (2022: £57.1m gain) following a reduction in swap prices in the fourth quarter and a gain of £2.0m (2022: £8.1m loss) in respect of the ineffective portion of hedges.
The Group also recorded a £6.4m net gain (2022: £10.2m gain) from the unwind of acquisition-related inception adjustments, a £4.3m loss (2022: £1.2m gain) from the amortisation of hedge accounting inception adjustments and a gain of £2.6m from other items (2022: £1.5m loss).
The net loss on unmatched swaps related primarily to fair value movements on mortgage pipeline swaps prior to them being matched against completed mortgages, and was caused by a reduction in the interest rate outlook on the SONIA forward curve in the fourth quarter. Conversely, the net gain recognised in the prior year reflected a step up in interest rate outlook on the SONIA yield curve largely in response to the actions announced in the September 2022 mini budget. The Group economically hedges its committed pipeline of mortgages and this unrealised gain unwinds over the life of the swaps through hedge accounting inception adjustments.
*Financial review *(continued)
*Other operating income*
Statutory other operating income of £3.9m (2022: £6.6m) mainly comprised CCFS’ commissions and servicing fees, including those from servicing securitised loans that have been derecognised from the Group’s balance sheet.
*Administrative expenses*
Statutory administrative expenses increased by 13% to £233.8m in 2023 (2022: £206.5m) largely due to the balance sheet growth and the anticipated impact of inflation and planned investment in people and operations, including digital solutions and enhancing our customer propositions.
The statutory management expense ratio was unchanged at 82bps in 2023 (2022: 81bps) reflecting the Group’s focus on cost discipline and efficiency.
The Group’s statutory cost to income ratio increased to 36% (2022: 27%) primarily as a result of lower income following the adverse EIR adjustment and a net fair value loss on financial instruments compared with a gain in the prior year.
*Impairment of financial assets *
The Group recorded a statutory impairment charge of £48.8m in 2023 (2022: £29.8m) representing a statutory loan loss ratio of 20bps (2022: 13bps).
The updated forward-looking macroeconomic scenarios used in the Group’s IFRS 9 models accounted for a £6.4m charge, while enhancements to models and post model adjustments resulted in a net release of £1.0m. Changes in the risk profile of borrowers as they transitioned through modelled IFRS 9 impairment stages and loan book growth amounted to a charge of £21.9m and an increase in provisions relating to accounts with arrears of three months or more amounted to a charge of £14.1m. The increase in individually assessed provisions and other items amounted to a charge of £7.4m.
As at 31 December 2023, the Group’s balance sheet provisions were further reduced by write-offs of £33.6m, where loans are written off against the related provision when the underlying security is sold. This amount did not form part of the year end impairment charge as it was expensed to the profit and loss when the provisions were raised.
In the prior year, the impairment charge was largely due to the Group’s adoption of more severe forward-looking macroeconomic scenarios in its IFRS 9 models and post model adjustments to account for the rising cost of living and borrowing concerns.
*Financial review *(continued)
*Integration costs *The Group ceased recognising expenses as the integration costs on the third anniversary of combination with CCFS in October 2022. In the prior year, £7.9m of integration costs largely related to redundancy costs and advice on the Group’s future operating structure.
*Balance sheet growth*
On a statutory basis, net loans and advances to customers grew by 9% to £25,765.0m in 2023 (2022: £23,612.7m), supported by originations of £4.7bn in the year and strong retention.
Total assets also grew by 7% to £29,594.2m (2022: £27,567.5m), largely due to the growth in loans and advances to customers.
On a statutory basis, retail deposits increased by 12% to £22,126.6m as at 31 December 2023 from £19,755.8m in the prior year, as the savers continued to choose the Group’s consistently fair and attractively priced products.
The Group complemented its retail deposits funding with drawings under the Bank of England’s schemes. Drawings under the Term Funding Scheme for SMEs as at 31 December 2023 reduced to £3.3bn as at 31 December 2023 as the Group repaid £900m of the funding using retail deposits and wholesale funding in the second half of the year (31 December 2022: £4.2bn). The company repaid £450m. Drawings under the Index Long-Term Repo scheme were £10.1m (2022: £300.9m).
*Liquidity*
OSB and CCFS operate under the Prudential Regulation Authority’s liquidity regime and are managed separately for liquidity risk. Each Bank holds its own significant liquidity buffer of liquidity coverage ratio (LCR) eligible high-quality liquid assets (HQLA).
Each Bank operates within a target liquidity runway in excess of the minimum LCR regulatory requirement, which is based on internal stress testing. Each Bank has a range of contingent liquidity and funding options available for possible stress periods.
As at 31 December 2023, OSB had £1,155.7m and CCFS had £1,514.0m of HQLA (2022: £1,494.1m and £1,522.8m, respectively).*Financial review *(continued)
OSB and CCFS also held portfolios of unencumbered prepositioned Bank of England level B and C eligible collateral in the Bank of England Single Collateral Pool.
As at 31 December 2023, OSB had an LCR of 208% and CCFS 139% (31 December 2022: 229% and 148%, respectively) and the Group LCR was 168% (31 December 2022: 185%), all significantly in excess of the regulatory minimum of 100% plus Individual Liquidity Guidance.
*Capital *
The OSB solo capital position remained strong with a CET1 capital ratio of 16.9% as at 31 December 2023 (2022: 18.4%).
*Summary cash flow statement*
* * *For the year ended *
*31 December *
*2023* *For the year ended *
*31 December *
*2022*
*Profit before tax* *375.4* 532.8
Net cash generated/(used in): * *
Operating activities *421.3* 428.2
Investing activities *(301.2)* 63.2
Financing activities *(650.2) * (184.0)
Net increase in cash and cash equivalents *(530.1)* 307.4
*Cash and cash equivalents at the beginning of the period* *3,044.1* 2,736.7
*Cash and cash equivalents at the end of the period* *2,514.0* 3,044.1
*Cash flow statement*
The Group’s cash and cash equivalents decreased by £530.1m during the year to £2,514.0m as at 31 December 2023.
In 2023, loans and advances to customers increased by £2,200.5m, primarily funded by £2,370.8m of deposits from retail customers. The Group repaid £336.9m of cash collateral on derivative exposures and received £38.8m of initial margin, reflecting a reduction in swap pricing in the fourth quarter. Cash used from financing activities of £650.2m included finance repaid: TFSME scheme repayments of £450m and repayments of the ILTR scheme of £290.8m. It also included interest on financing of £205.4m and distributions to shareholders of £185.0m of dividend payments and £335.0m of share repurchase which were partially offset by funding through securitisations, senior notes and subordinated liability issuances raising £1,141.6m. Cash used in investing activities was £301.2m.
In 2022, loans and advances to customers increased by £2,563.1m during the year, partially funded by £2,229.4m of deposits from retail customers. The Group received £434.3m of cash collateral on derivative exposures and paid £137.5m of initial margin, reflecting new derivatives during the year. Cash used from financing activities of £184.0m included £300.9m drawings under the ILTR scheme offset by £193.6m repayment of debt securities, £102.0m share repurchases, £133.1m dividend payments and £45.3m interest on financing liabilities. Total drawings under the Bank of England’s TFSME scheme remained unchanged at £4.2bn. Cash generated from investing activities was £63.2m.
*Financial review *(continued)
*Summary of underlying results for 2023 and 2022 *
*For the year ended *
*31 December *
*2023* For the year ended
31 December
2022
*Summary Profit or Loss* *£m * £m
Net interest income *715.0* 769.1
Net fair value (loss)/gain on financial instruments *(10.8)* 48.5
Gain on sale of financial instruments *–* –
Other operating income *3.9* 6.6
Administrative expenses *(232.1)* (202.7)
Provisions *(0.4)* 1.6
Impairment of financial assets *(48.5)* (30.7)
Profit before taxation *427.1* 592.4
Profit after taxation *320.7* 450.0 * *
*Key ratios* * *
Net interest margin *251bps* 303bps
Cost to income ratio *33%* 25%
Management expense ratio *81bps* 80bps
Loan loss ratio *20bps* 14bps
Return on equity *20%* 23% * *
*Extracts from the Statement of Financial Position * *As at *
*