Paragon Bank shares top FTSE 250 after firm posts best ever half-year operating profits


Paragon Bank shares storm to top of FTSE 250 charts after firm posts best ever half-year operating profits

  • Paragon revealed half-year operating profits expanded by 22.2% to £128.9m
  • New mortgage loans climbed to over £1bn despite greater market volatility
  • The Solihull-based firm declared another £50m share repurchase scheme

Paragon Bank shares were the FTSE 250 Index’s top riser after the lender reported record half-year earnings and announced a further share buyback scheme.

The Solihull-based company revealed operating profits expanded by 22.2 per cent to £128.9million for the six months ending March on the back of interest rate hikes and higher lending volumes.

New home loans to customers climbed by 19.1 per cent to over £1billion during the period despite greater market volatility after last autumn’s controversial mini-budget sent mortgage rates soaring.

Performance: Paragon has revealed record half-year operating profits of £128.9million on the back of interest rate hikes and higher lending volumes

Performance: Paragon has revealed record half-year operating profits of £128.9million on the back of interest rate hikes and higher lending volumes

Paragon attributed the result to its continued reliance on specialist landlords in the buy-to-let sector, which is benefiting from a growing demand in Britain for rental properties and a supply shortfall.

Meanwhile, its net interest margin – the difference between what it earns in interest payments and the amount handed to customers – tipped up to 2.95 per cent.

It has now raised its full-year guidance for mortgage lending from at least £1.6billion to a range of £1.75billion to £1.9billion, alongside an increase in its net interest margin outlook to about 300 basis points.

Reflecting the positive result, the FTSE 250 business has declared an additional £50million share repurchase scheme for the second half of the financial year. 

Paragon Bank shares rose 9.4 per cent to £5.51 on Tuesday, although their value remains lower than at the start of January.

Paragon also declared its half-year profits before tax slumped by over two-thirds to £46.4million because of the unwinding of some gains made the previous year on interest rate swaps. 

Nigel Terrington, chief executive of Paragon, said: ‘We are delighted to deliver another strong financial and operational performance, achieving record interim operating profits, alongside robust growth in our loan book.’

He added: ‘We are well placed to continue to support our customers and deliver strong returns for our shareholders as we look to capitalise on the opportunities that the environment will inevitably produce.’

The Bank of England has hiked the UK’s base rate on 12 successive occasions since December 2021 in response to inflation jumping due to skyrocketing energy prices in the aftermath of Russia’s full-scale invasion of Ukraine.

Many of Britain’s banks and building societies have subsequently raised the rate on home loans much faster than the interest on savings accounts, providing them with a significant windfall but causing some public controversy as well. 

Further interest rate increases are predicted to happen given that the UK Consumer Prices Index currently stands at 8.7 per cent, far above the BoE’s 2 per cent target. 





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