Paragon capital levels 'strong' as underlying earnings rise marginally

Specialist lender and banking group, the Paragon Group of Companies, announced its half year results for the six months to 31 March on Tuesday, with underlying profit increasing 1.0% to £70.1m, as the company absorbed £5.5m of Tier 2 bond costs.

The FTSE 250 firm made a statutory profit before tax of £69.4m, which was down 0.1% year-on-year.

Paragon Bank’s underlying profit grew to £14.2m, swinging from a loss of £0.8m year-on-year, which the board said highlighted its increasing maturity and importance within the group.

Earnings per share were up 7.3% to 20.5p, and the company’s return on tangible equity increased to 13.5% from 12.7%.

The board said capital levels remained “strong”, with a CET1 ratio of 15.9% - down slightly from 16.1%.

The board confirmed a dividend increase of 9.3% to 4.7p, which it said reflected the group's confidence in its outlook.

“I am delighted to report another strong performance for the period to March 2017, with Paragon delivering improving earnings, dividends and RoTE, the latter progressing towards our medium-term target of 15%,” said Paragon chief executive Nigel Terrington.

“Importantly, this has all been achieved whilst continuing the process of strategically repositioning the group as a more broadly based specialist banking business, benefitting from the structural changes emerging in the UK retail banking sector.

“With the buy-to-let pipeline having more than doubled this year, and all other areas of the Group experiencing buoyant growth, we approach the period ahead with confidence and optimism in being able to meet our expectations.”