Paragon Banking Group (PAG) H2 2024 earnings summary

Executive summary

• Achieved record underlying operating profit of £292.7 million, with all guidance metrics met or exceeded and underlying EPS up 7.3% to 101.1p.

• Loan book grew 5.6% to £15.7 billion, with deposit balances up 22.9% and strong new lending momentum.

• Maintained a low-risk, low-volatility operating model, compounding stable loan growth and margin enhancement over a decade.

• Strategic focus on diversification, digitalization, and sustainability advanced, with commercial lending now 27% of group income.

• Full-year dividend increased 8% to 40.4p, with an additional £50m share buy-back announced for 2025.

Financial highlights

• Net interest income rose 7.6% to £483.2m; total operating income up 6.5% to £496.4m year-over-year.

• Net interest margin widened to 3.16%, above guidance; cost-to-income ratio improved to 36.1%, lowest since 2015.

• Operating profits rose 5.4% to £292.7 million; reported pre-tax profits up 27%.

• Underlying ROTE at 20.3%, within the medium-term target range of 15–20%.

• Total ECL coverage ratio at 0.48%; Mortgage Lending coverage 0.26%, Commercial Lending 1.77%.

Outlook and guidance

• Upgraded 2025 lending guidance: Buy-to-let £1.6–1.8bn, Commercial £1.2–1.4bn, NIM around 3%, opex c.£185m.

• Margins expected to remain robust, with technology and digitalisation driving further opportunities.

• Property market backdrop improving, with rates expected to fall and strong growth in new lending volumes anticipated.

• Continued focus on organic growth, capital generation, and readiness for sector consolidation.