Paragon Banking Group (PAG) H2 2025 earnings summary

Executive summary

• Underlying operating profits reached £294 million, with EPS up 8.5% and return on tangible equity at 17.5% for FY2025, reflecting disciplined loan book growth, tight cost control, and resilient net interest margin.

• Disciplined loan book growth of 4% year-over-year, with a 10-year CAGR of 5%.

• Strategic focus on growth, diversification, digitalization, capital management, and sustainability continues to drive strong returns and platform for future growth.

• Customer retention remains high, with 82% of maturing fixed-rate buy-to-let customers retained and 77% of fixed-rate savings maturities taking additional products.

• Technology investments, including cloud migration and AI adoption, have improved customer experience, productivity, and data quality.

Financial highlights

• Net interest income rose 4.0% to £502.3m; total operating income up 3.8% to £515.1m year-over-year.

• Pre-provision profits rose 5.9% year-over-year to just under £336 million, driven by better-than-expected margins and cost controls.

• Underlying operating profit increased 0.4% to £293.9m; profit before tax up 1.1% to £256.5m.

• Cost-to-income ratio improved to 34.8%, and headcount is 10% below two years ago.

• Dividend per share rose 8.7% to 43.9p, with a new £50 million buyback announced.

Outlook and guidance

• FY26 guidance: Buy-to-let lending £1.5–1.7bn, commercial lending £1.2–1.4bn, NIM 290–300bps, opex under £190m, underlying ROTE mid 15–20% range.

• Operating costs expected to rise to just under £190 million in FY26 as tech investments continue.

• Property lending expected to improve as rates decline; margins to trend lower before resuming upward path.

• Continued strong growth expected for Spring savings product and further product innovation.

• Continued investment in technology and product suite expansion.