Paragon Banking Group (PAG) H1 2024 earnings summary

Executive summary

• Delivered strong financial and operational performance in H1 2024, with underlying profit before tax up 13.5% to £146.3m and underlying EPS up 17.4%.

• Statutory profit before tax increased 138.4% to £110.6m, reflecting lower fair value reversals.

• Deposit book grew 24.4% year-over-year to £14.8bn, supporting early TFSME repayment.

• Buy-to-let and development finance pipelines up 47% and 21% respectively since H2 2023.

• Interim dividend up 20% to 13.2p per share; share buy-back programme increased to £100m for FY24.

Financial highlights

• Net interest income rose 12.9% year-over-year to £239.9m; total operating income up 12.0% to £246.6m.

• NIM for H1 at 3.19%, above guidance, with full-year NIM now expected above 3.1%.

• Cost-to-income ratio improved to 36.5%; operating costs expected to remain below £180m for the year.

• Underlying ROTE reached 20.8%; CET1 ratio at 14.7%; total capital ratio at 16.6%.

• EPS increased by over 17%, aided by share buybacks.

Outlook and guidance

• Upgraded 2024 guidance: buy-to-let volumes £1.4bn–£1.6bn, commercial lending £1.1bn–£1.2bn, NIM above 3.1%.

• Return on tangible equity guidance reconfirmed at the top end of 15%-20% range.

• Operating costs to remain tightly controlled despite ongoing tech investment.

• Share buy-back programme increased to up to £100m for FY24.

• Expect stronger growth in 2025 if positive market sentiment persists.