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Paragon profits rise as funding flows remain strong
Specialist lender and banking company Paragon Banking Group issued its half year results for the six months ended 31 March on Thursday, reporting a 4.7% rise in underlying profit before tax to £73.4m.
The FTSE 250 firm's statutory profit before tax was up 11.2% to £77.2m, with earnings per share rising 15.6% to 23.7p.
Underlying earnings per share were 8.7% higher at 22.5p.
Paragon's return on tangible equity increased to 13.9% from 13.0% at the same time last year, while its underlying RoTE was ahead 13.3%, compared to 13.2% year-on-year.
Capital levels remained "strong", with the firm's CET1 ratio falling to 15.5% from 15.9%, while the board declared an interim dividend 17.0% higher at to 5.5p, in line with its policy announced in November.
On the operational front, Paragon reported "strong" new business flows in its mortgages and commercial lending divisions, with mortgage lending up 22.7% to £721.0m and a buy-to-let lending pipeline up 6.1% to £787.6m.
Commercial lending volume rose 49.0% to £269.3m, as the Iceberg professions finance business was acquired for £18.6m in December.
The company also reported a "strong" retail deposit flow, with deposit balances 82.6% higher year-on-year at £4.29bn.
It accessed the Bank of England Term Funding Scheme during the period, with drawings of £944.4m as at 31 March.
PM25 securitisation was completed in April, the board added, raising £435.3m of new external funding.
"The success of our changing business model has enabled the group to support an increasing number of customers, whether they be landlords, small businesses or consumers," said chief executive Nigel Terrington.
"We are helping to support individual investment and retirement plans, create jobs in the real economy and even build homes across the country."
Terrington said the firm's deposit products were providing "market leading rates" to customers starved of income in a low interest environment.
"We are building a leading specialist retail bank to deliver outstanding products and services to our customers with strong and sustainable returns to our shareholders.
"The group has delivered much in recent years on this journey but considerable opportunities exist to build on this progress for the future."