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OneSavings more keen on lending to professional landlords after EU vote

By Noor Zainab Hussain

(Reuters) - OneSavings Bank Plc (OSBO.L) said it had increased its focus on professional landlords and tightened lending criteria for financing smaller residential developments after Britain voted to leave the European Union.

The bank also said underlying pretax profit jumped 36 percent to 64.6 million pounds , ahead of consensus estimates, as it issued more mortgages and loans to small and medium-sized businesses over the six months to June 30.

The lender's shares jumped as much as 13.7 percent to 269.7 pence on the London Stock Exchange on Wednesday. Its stock has lost over 28 percent since the June 23 referendum.

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OneSavings, one of the banks aiming to challenge Britain's "Big 5" lenders, said that while it was not directly exposed to the EU, its business could be hurt by a slowdown in the housing market and demand for mortgages, in case of an economic downturn.

Property has been one of the sectors hardest hit by Brexit, with an index by consultant Knight Frank showing that house prices in London's most expensive areas fell at their fastest rate in nearly seven years in July.

Concerns are that a slowdown in the economy could further reduce buy-to-let housing investments, which have already slumped following the introduction of a property tax in April.

OneSavings said it had tightened its lending criteria on projects backed by smaller investors as they were more heavily reliant on liquidity of UK housing stocks.

The new criteria would evaluate if the development would still be profitable enough for the loan to be paid back in case sales prices fell significantly and costs overshot.

"We're just tweaking criteria around the smaller businesses. It won't effect the operating model, we won't change any of our brands," Chief Executive Officer Andy Golding told Reuters.

Golding also said UK lenders could look to team up, especially with palpable concerns of an economic downturn.

"Adding to scale... insulates businesses from any issues that might occur and it really starts to create something sizable that can lock out the competition," he said.

"We will be involved in and have been involved in a number of talks on other things... And when we see (a deal) we're ready and we've got the right tools in the armoury to have a discussion around that," he added.

Golding declined to specify whether OneSavings was in any active deal talks.

(Reporting by Noor Zainab Hussain and Esha Vaish in Bengaluru; Editing by Sunil Nair)