Paragon slashes dividend as profits fall on Covid impact
Lender Paragon Bank paid a reduced dividend as it set aside £48m for bad debts due to the Covid-19 pandemic and reported lower in annual profits.
The bank said underlying profit fell to £120m from £164.4m while statutory pre-tax profit declined to £118.4m from £159m.
A full year dividend of 14.4p a share was declared “in line with policy reflecting the resilient performance and strong capital position supporting the growing momentum in the business”. The bank paid 21.2p last year.
While the total loan book rose by 3.7% in the year to September 30, advances in mortgage lending slipped by almost a fifth to £1.26bn as the housing market ground to a halt during the lockdown.
Paragon’s capital ratio - a measure of financial strength - stood at 14.3% compared with 13.7% in 2019. Net interest margin, the difference between rates charged on loans and paid on savings, reduced to 2.24% from 2.29%, reflecting the reduction in base rates during the year.
Looking forward, the bank said its new business pipeline was £868.1m at the year end, down from £911.7m, showing business returning to more normal levels heading into the new financial year.