8th Jun 2021 09:22
(Alliance News) - Paragon Banking Group PLC on Tuesday reported a record half-year profit and announced a share buyback programme, as the buy-to-let mortgage specialist rides the wave of the UK housing market boom.
The company made net interest income of GBP147.5 million in the six months ended March 31, up 4.3% year-on-year from GBP141.4 million. Pretax profit jumped 68% to GBP96.4 million from GBP57.1 million.
Paragon reinstated its interim dividend of 7.2p per share, half the level of its 14.4p-per-share final dividend for the 2020 financial year. It will also buy back GBP40.0 million of shares.
Shares were up 5.6% to 540.50 pence in London, making Paragon the top performer in the FTSE 250 index.
The first half saw "strong new business pipelines in buy-to-let and development finance," Paragon said. The company's buy-to-let portfolio increased 4.7% year-on-year to GBP10.9 billion. For the first time in four years, more landlords are planning to increase the size of their portfolio than cut it, according to independent research commissioned by the bank.
Customer savings deposits also grew strongly, improving margins and unwinding the effect of the Bank of England's interest rate cuts in 2020, Paragon said.
There are uncertainties over the prospects of small- and medium-size business and retail customers as government support schemes end, Paragon said. The Solihull-based lender has maintained its levels of impairment coverage as a result.
But overall, the company's markets have seen "healthy quarter-on-quarter improvements" and the business is building momentum.
"We have delivered record half-year profits and go into the second half of 2021 with strong momentum, healthy new business pipelines and enhanced margins," Chief Executive Nigel Terrington said.
By Ivan Edwards; [email protected]
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