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Highlights:
- 27% Profit Growth: Paragon Banking Group reported a substantial 27% increase in pre-tax profits, reaching £254 million for the year ending September 2024.
- Confidence in Buy-to-Let Market: Despite challenges in the sector, the group maintained strong trading momentum and highlighted robust pipelines for the upcoming year.
- Dividend Increase: The full-year dividend rose by 8%, reflecting confidence in the
Paragon Banking Group PLC (LSE:PAG) has reported impressive financial results for the year ending September 2024, shrugging off concerns surrounding the buy-to-let market. The group recorded a 27% increase in pre-tax profits to £254 million, with operating profits rising by 5.4% to £293 million. These results were accompanied by a bullish outlook for the upcoming financial year.
Strong Performance Despite Sector Challenges
The buy-to-let market has faced significant challenges due to rising mortgage rates and changes in the taxation of second homes introduced in the recent Budget. However, Paragon Banking Group’s chief executive, Nigel Terrington, expressed confidence in the group’s resilience and future prospects.
“We have seen accelerating momentum throughout the year, with new lending levels reaching the upper range of our expectations and strong customer retention,” Terrington stated. “Improving customer sentiment, robust year-end pipelines, and our strategic focus on specialist markets give us confidence as we enter the new financial year.”
Financial Highlights
Paragon’s financial performance underscored its ability to navigate a challenging market environment. Impairments rose slightly to £24.5 million from £18.0 million in the previous year, reflecting a cost of risk of 16 basis points compared to 12 basis points in 2023. Despite this, the group maintained a strong financial position and continued to deliver growth.
The full-year dividend increased by 8% to 40.4p, reflecting the group’s commitment to shareholder returns and confidence in its long-term strategy.
Strategic Focus on Specialist Markets
Paragon’s results highlight the benefits of its strategic focus on specialist lending markets. The group’s approach has enabled it to retain customers and achieve robust new lending levels, even as broader market conditions remain uncertain. The company emphasized its commitment to these markets as a key driver of its continued success.
Market Reaction
Shares in Paragon Banking Group rose by 3.3% to 772p following the announcement, reflecting investor confidence in the group’s performance and future prospects.
Looking Ahead
As the group enters the new financial year, its leadership remains optimistic about its ability to navigate ongoing challenges in the buy-to-let market. With a strong financial foundation, robust pipelines, and a strategic focus on specialist lending, Paragon Banking Group is well-positioned to build on its impressive performance in 2024.
