The chief executive of Onesavings Bank (OSB) has seen his remuneration for last year slashed by 40 per cent after the lender posted a slump in annual profit.
The FTSE 250 bank – which specialises in subsections of the mortgage market like buy-to-let – announced in March that its annual pretax profit fell 30 per cent to £374.3m last year.
OSB’s results were dominated by a £181.6m adverse interest rate adjustment. The lender had warned that customers were choosing to refinance their mortgage earlier than expected, meaning they were spending less time on the higher rate which mortgages revert to at the end of a fixed-term deal.
The sharp change in customer behaviour came after the Bank of England started hiking interest rates in late 2021, driving up mortgage rates.
Borrowers responded by racing to secure new fixed deals before rates rose even higher, meaning the average time they spent on OSB’s reversion rate fell to about five months from 17 months.
The firm revealed in its annual report that chief Andy Golding, who joined OSB from Saffron Building Society in 2012, was handed £1.9m for his performance in 2023, down from more than £3.1m the year before.
His pay package was hit by a smaller annual bonus and lower pay under OSB’s long-term share awards scheme.
OSB said in the report that executives’ bonuses across the board were “much reduced” due to the “significant” adverse interest rate adjustment.
The bank’s shares tumbled 29 per cent when it first warned of the earnings hit last July, then 21 per cent last month following its annual results.
In another blow, OSB added last month that it expected its underlying net interest margin to stay “broadly flat” at 251 basis point due to the higher cost of funding, intense competition within the mortgage market and volatility in the swap rates which influence mortgage pricing.
The Times first reported the news of Golding’s pay cut.