Continued growth for challenger bank Paragon
Specialist lender and challenger bank Paragon has seen continued growth in its operation as it looks to position itself as a specialist banking group.
The Solihull-based group saw underlying profit increase by 1% for the six months to March 31, 2017, rising to £70.1m (H1 2016: 69.4m). This was while absorbing £5.5m of Tier 2 bond costs.
Paragon Bank underlying profit saw a dramatic turnaround, growing to £14.2m compared to a first half loss of £0.8m this time last year.
Interim earnings per share were up by 7.3% to 20.5p (2016 H1: 19.1p), while the dividend is up by 9.3% to 4.7p, reflecting the group’s confidence in its outlook.
It said it was now seeing increasingly diversified new business flows, with very strong growth in buy-to-let lending anticipated in the second half.
New buy-to-let lending stood at £556.2m, down on the first half of last year, which stood at £823.6m. However, the buy-to-let lending pipeline was up 111.7% to £742.3m (2016 H1: £350.6m).
Non buy-to-let new business as a proportion of total group new business increased to 35.6% (2016 H1: 28.9%), while asset finance lending was up strongly to £106.6m (2016 H1: £57.7m), with the group saying it was confident of continued growth prospects.
Paragon Bank deposit balances increased by 64.6% to £2.35bn (H1 2016: £1.43bn).
In outlook, it said: “The group has moved a long way in a relatively short period and is transitioning towards a more broadly based UK specialist banking business.
“The bank is now delivering strong profits, the vast majority of the group’s new funding requirements and represents the foundation for growth going forward.”
