RBC Capital Markets raises target price on Paragon Banking
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