Mortgage and commercial lending divisions underpin Paragon profits
By Michele Maatouk
Date: Wednesday 22 May 2019
(Sharecast News) - Paragon Banking Group reported an 8.7% jump in first-half underlying profits on Wednesday, with strong performances from both the mortgage and commercial lending divisions.
In the six months to the end of March, underlying profit rose to £79.8m from £73.4m in the same half the year before, with lending volumes up 30.2% at £1.29bn. Total new lending in the mortgage segment was up 15.7% to £833.9m, while lending in the commercial division increased 69.1% to £455.3m.
Retail deposit balances were up 11% during the half to £5.9bn and Paragon lifted its interim dividend by 27.3% to 7p a share.
Paragon's net interest margin improved by eight basis points to 224 basis points, underpinned by structural benefits from the portfolio mix, with new buy-to-let and commercial lending margins wider than those achieved on the legacy buy-to-let portfolio.
Chief executive Nigel Terrington said: "We have delivered a strong first half, with increased profits benefiting from good growth in lending and improved margins. This reflects our strategic transformation to become a more broadly based banking group focussed on supporting British SMEs and consumers in specialist lending markets.
"The half year performance provides further evidence of the success of Paragon's five-year transformation into a specialist banking group. Our diversification will enable us to continue to grow our customer base and deliver improving returns to shareholders."
At 0920 BST, the shares were down 1.9% at 463.60p.
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