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UK
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GER
ESP
ITA
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Highlights
- Strong Financial Performance: Operating profit rose 5.4% to £292.7 million, with EPS up 7.3% to 101.1p and net interest margin improving to 316 basis points.
- Solid Lending Growth: Total lending reached £2.73 billion, supported by a 48.2% increase in the buy-to-let pipeline and 31% growth in development finance.
- Strategic Progress: Retail deposits grew 22.9% to £16.3 billion, with advancements in digital transformation and favorable regulatory developments boosting future prospects.
Paragon Banking Group PLC (LSE:PAG), a specialist lender and banking group, announced robust financial and operational results for the fiscal year ending 30 September 2024. Despite challenges from the evolving interest rate environment, the Group achieved solid growth across key financial metrics and maintained a strong operational outlook.
Financial Performance
Paragon reported a 5.4% increase in operating profit before fair value items, reaching £292.7 million compared to £277.6 million in 2023. Statutory profit before tax saw a significant jump of 27.0%, climbing to £253.8 million from £199.9 million the previous year.
The Group’s net interest margin widened by seven basis points to 316 basis points, reflecting improved lending efficiency. While the cost-of-risk rose slightly to 16 basis points (2023: 12 basis points) amid a higher interest rate climate, Paragon maintained cost discipline with a cost-to-income ratio of 36.1%.
Earnings per share (EPS) showed strong growth, with underlying basic EPS rising 7.3% to 101.1p and statutory basic EPS up 28.8% to 88.5p. Paragon’s capital position remains robust, with a Common Equity Tier 1 (CET1) ratio of 14.2%, down from 15.5% due to substantial growth and capital returns.
Operational Highlights
The Group delivered total new lending of £2.73 billion, in line with guidance, despite a slight decline from £3.01 billion in 2023. Mortgage lending accounted for £1.49 billion, down from £1.88 billion, while commercial lending rose to £1.24 billion from £1.13 billion.
Year-end pipelines remain strong, indicating healthy volumes for FY25. The buy-to-let pipeline surged 48.2% year-on-year to £0.88 billion, while development finance pipeline increased by 31.0% to £0.20 billion. The net loan book grew by 5.6% to £15.7 billion.
Arrears in the buy-to-let portfolio remained low at 0.38% (2023: 0.34%), with a loan-to-value ratio stable at 62.8%. Retail deposits grew significantly, rising 22.9% to £16.3 billion, underscoring strong customer trust and liquidity.
Paragon repaid £2.0 billion of the Bank of England’s Term Funding Scheme for SMEs (TFSME) during the year, leaving £0.75 billion outstanding.
Strategic Developments and Outlook
Paragon continued its digital transformation with the rollout of a new buy-to-let broker portal during the final quarter of 2024. The Group also advanced its engagement with the Prudential Regulation Authority (PRA) on internal ratings-based (IRB) modelling requirements, benefiting from more favorable Basel 3.1 rules compared to earlier estimates.
