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RBC Capital Markets raises target price on Paragon Banking

By Iain Gilbert

Date: Monday 20 Jun 2022

RBC Capital Markets raises target price on Paragon Banking

(Sharecast News) - Analysts at RBC Capital Markets raised their target price on specialist finance provider Paragon Banking Group from 560.0p to 600.0p on Monday following the firm's first-half results.
RBC Capital Markets said its full-year adjusted pre-tax profits estimates for Paragon increased by 4%, driven largely by higher net interest income from higher-than-expected rates and lower-than-expected deposit betas, partially offset by higher costs and cost of risk.

The Canadian bank also stated that on a divisional basis, the increase in its full-year pre-tax profit estimates was driven by Paragon's mortgages and commercial divisions.

"Our model now reflects PAG's upgraded NIM guidance for FY22 (NIM expansion in FY22 greater than 20bps, RBCe: +23bps). We also include higher lending volumes in FY22 following upgraded company guidance (RBCe loan growth of 8% 22/21). Our FY23E reported RoTE of 15.0% compares to PAG's guidance of medium-term RoTE above 15%," said the analysts.

RBC also reiterated its 'sector perform' rating on Paragon.

Reporting by Iain Gilbert at Sharecast.com


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