OneSavings Bank share price climbs after reporting robust lending in the first quarter  

The boss: Andy Golding said the company had seen an encouraging increase in new opportunities

The boss: Andy Golding said the company had seen an encouraging increase in new opportunities

OneSavings Bank was a top performer on the FTSE All Share Index today after the specialist lender said first quarter net loans and advances grew by £455million.

The bank, which listed on the stock market last June and offers residential mortgages and buy-to-let and small business loans, said in a trading update that it was boosted by its purchase of a portfolio of UK-based second-charge mortgages.

It added that it was confident of achieving interest margins ahead of expectations - buoyed by the absence of competition in its main markets.

Chief executive, Andy Golding, said: 'We have seen an encouraging increase in new business opportunities at attractive margins and our capital position remains solid.'

OneSavings share price was up 5 per cent, or 13.2p at 304.4p in late afternoon trade.

Shore Capital analyst Gary Greenwood said he found OneSavings in an advantageous position relative to the mainstream banks and also the mainstream 'challenger' banks.

He said: 'OneSavings lends in more specialist areas, so their ability to defend margins and spur those margins is greater than the mainstream lenders.' 

OneSavings, which saw growth in lending backed by a recovery in the buy-to-let market, said the housing market remained supportive of buy-to-let mortgages. 

Referring to tomorrow's UK election, Golding said that the bank was not experiencing pressure on margins despite an uncertain political backdrop, with both of the two major parties tied neck and neck and neither expected to win an outright majority.

OneSavings' rivals Aldermore and Shawbrook are seen as the major challengers to Britain's 'Big Five' banks - namely Lloyds, HSBC, Royal Bank of Scotland, Barclays and Santander UK.

However analysts at broker Numis Securities think OneSavings could also join that challenger list.

In a note they said: 'Until Lloyds, RBS etc. start to turn the taps on, we believe attractive volumes and margins will remain freely available to the specialist providers like OneSavings Bank.' 

OneSavings was formed following the recapitalisation of Kent Reliance Building Society by US private equity group JC Flowers in 2011.

In March, after more than doubling its annual profit, the bank said that it would be open to takeover offers and expected more consolidation among smaller banks in the wake of the offer for TSB from Spain's Banco Sabadell.

Golding said at the time: 'If an offer came over the hill for us, to our board, and there was a good premium, of course the board would consider it, and we would consider recommending to shareholders.' 

Broker Barclays Capital raised its target price for OneSavings shares to 360p from 300p, and maintained an overweight rating on the stock.