* Profit before taxation rises to $49.2 million
* RoE up 10 percentage points to 30 percent
* Net interest margin improves by 121 basis points (Adds details, background, quote)
LONDON, Aug 27 (Reuters) - New British lender OneSavings Bank said underlying pretax profit rose four-fold to 29.7 million pounds ($49.2 million) in the first half of the year.
The bank, which became the first UK bank to list for more than a decade in June, said loans and advances grew by 13 percent during the period to 3.4 billion pounds and underlying return on equity rose 10 percentage points to 30 percent.
OneSavings is one of a number of smaller banks which has emerged to challenge the dominance of Britain's 'big 4' banks - Lloyds Banking Group, Royal Bank of Scotland, Barclays and HSBC - which have cut back on lending since the 2008 financial crisis and are focused on building capital to meet tougher regulatory requirements.
It focuses on residential mortgages, buy-to-let and small business lending. Its brands include Kent Reliance, Prestige and Heritable in the UK and Jersey Home Loans and Guernsey Home Loans in the Channel Islands.
OneSavings, in which U.S. private equity group J.C. Flowers holds a 65 percent stake, said high-margin new lending and reduction in funding costs helped net interest margins improve by 121 basis points to 282 in the first half of the year.
The bank was created in 2011 when the struggling Kent Reliance building society was rescued through a 50 million pounds capital injection from J.C. Flowers.
OneSavings said it was targeting a dividend pay-out ratio of at least 25 per cent of underlying profit. ($1 = 0.6042 British Pounds) (Reporting by Nishant Kumar; editing by Matt Scuffham)