Paragon Banking posts record H1 profits, upgrades FY guidance

14th Jun 2022 09:51

(Sharecast News) - Paragon Banking Group upgraded its full-year guidance on Tuesday as it reported record first-half profits, driven by an improving rate environment and strong new business pipeline.

In the six months to the end of March, underlying profits rose 27.3% to £105.5m, while statutory pre-tax profit was 49% higher at £143.6m.

New lending was up 32.2% on the same half a year ago to £1.49bn and the company hailed a "strong" new business pipeline, with the buy-to-let pipeline up 44.4% to £1.34bn.

Paragon also said on Tuesday that it was extending its share buyback programme for this year by an additional £25m.

Paragon upgraded its FY22 guidance. It said mortgage lending advances are now expected to increase to £1.8bn+ from previous guidance of £1.7bn+, while commercial lending advances are set to rise to £1.2bn+ from £1.1bn+ previously.

Net interest margin expansion is set to increase to 20 basis points+, from 5bps previously. Operating expenses are expected to be unchanged, versus previous guidance of low £150ms and the buyback has been increased to up to £75m from £50m.

Chief executive Nigel Terrington said: "These excellent results demonstrate the considerable progress we have made in fulfilling our strategic ambitions. Strong growth in new lending at attractive margins has supported the group's earnings and return on tangible equity progression while capital levels remain comfortably in excess of our regulatory requirements, providing the foundation for further growth and additional capital returns in the future.

"Whilst the UK economy faces headwinds, we have a high quality loan book and we are confident in our momentum, and have upgraded our guidance for the full year."

At 0950 BST, the shares were up 8.6% at 510.50p.