Paragon Banking Group (PAG) investor relations material

Executive summary

• Underlying operating profit reached £146 million in H1 2026, with EPS up 2.9% and return on tangible equity at 17.4%.

• Delivered robust financial and operational performance for the six months to 31 March 2026, with margin upgrades despite market volatility.

• Net loan book grew 3.8% year-on-year to £16.6bn, supported by strong customer retention and diversified funding.

• Strategic focus on disciplined growth, diversification, and sustainable shareholder returns, underpinned by technology and operational agility.

• Continued investment in digital transformation and AI to enhance efficiency and customer experience.

Financial highlights

• Net interest income rose 2.2% year-on-year to £253.4m; total operating income up 2.0% to £259.2m.

• Underlying operating profit was £145.7m, down 2.5% year-on-year; profit before tax £133.2m, down 4.9%.

• Loan book grew 3.8% year-on-year; buy-to-let loans up 6.7% (underlying), commercial loans up 9.2%.

• Cost-income ratio at 35.5%, reflecting productivity gains from technology investments.

• Bad debts and impairment charges increased, mainly from legacy development finance, with annualised cost of risk at 26bps.

Outlook and guidance

• FY 2026 NIM guidance raised to around 300bps; opex guidance improved to ~£185m.

• Full-year loan volumes expected at the lower end of guidance, offset by improved customer retention.

• Return on tangible equity guidance reaffirmed at 15%-20% range.

• No expectation of macroeconomic improvement or rate cuts factored into outlook.

• Share buy-backs for FY 2026 increased to up to £100m.