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Paragon Banking Group PLC on Wednesday said it is increasing its share buyback programme reflecting a robust capital position and strong loan growth in the first-half. The Solihull, England-based bank said pretax profit jumped 27% to £140.1 million in the six months ended March 31 from £110.6 million a year prior. This includes a £6.5 million provision for motor finance, although Paragon stressed this is a small part of its business. Excluding this and fair value adjustments, underlying profit increased 2.1% to £149.4 million from £146.3 million while the loan book grew 4.9% year-on-year. Net interest margin was 3.13% in the first-half down from 3.19% a year ago and above the ’around 300 basis points’ guided to for the full year. Margins are expected to tighten a little in the second-half, but less than originally anticipated. As a result, Paragon’s NIM guidance for the full year is upgraded to ’over 300 basis points’. ‘Strong margins, tight cost control and an increased loan book were the main drivers of underlying profit growth,’ Paragon said in a statement. Combined with the ‘favourable effects’ of the share buy-back programme, this generated a 9.6% increase in underlying basic earnings per share to 54.7 pence from 49.9p a year ago. Statutory EPS rose 31% to 50.1p from 38.4p. Paragon said its capital base remains strong with the CET1 ratio of 14.2% down from 14.7% a year prior. Underlying return on tangible equity rose to 17.8% from 17.4%. Chief Executive Nigel Terrington said the ‘robust’ capital position has enabled the firm to increase its share buy-back programme to up to £100.0 million for the full year from up to £50 million before. The programme, to be managed by UBS AG, will commence immediately and is expected to end no later than the end of September, the firm added. Paragon said new mortgage lending rose 25% to £812.2 million although new commercial lending fell 3.7% to £568.0 million. Shares in the Solihull, England-based bank were down 0.2% to 900.50p each in London on Wednesday morning. ‘With strong momentum and a resilient business model, we are well placed to navigate the evolving external environment and remain optimistic about the remainder of the financial year and beyond,’ Terrington added. The interim dividend was increased by 3.0% to 13.6p per share from 13.2p a year ago. Copyright 2024 Alliance News Ltd. All Rights Reserved.
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