Commercial lending unit boosts Paragon Banking profits
Underlying pre-tax profit at specialist lender Paragon Banking rose in the year to the end of September thanks to strength in the commercial lending division.
Underlying pre-tax profit was up 5% at £164.4m as lending volumes rose 8.5% to £2.53bn. The net interest margin - the difference between what it earns from loans and pays for deposits - improved to 229 basis points from 221 basis points in 2018 and the dividend was lifted 9.3% to 21.2p a share.
The cost income ratio increased to 42.1% from 40.6% and retail deposit balances grew 20.7% to £6.39bn.
The results were boosted by a solid performance from the commercial lending division, which saw new loans and advances rise 36.3% to £968m, while the net loan book grew 28.1% to £1.45bn.
Chief executive Nigel Terrington said: "We are delighted to report another excellent financial and operational performance, underpinned by our effective diversification strategy and focus on specialist lending. Volumes, profits and dividends are up strongly, and we are moving closer to our medium-term target of over 15% return on tangible equity.
"Paragon's transformation to a broadly based specialist banking group has continued over the last year. Our customers have increasingly complex needs which are supported by ongoing technology investments and the deep experience of our employees. This approach, alongside a disciplined and prudent risk appetite, has enabled us to achieve strong lending growth at improving margins, whilst maintaining an exemplary credit performance."