Final Results

Paragon Banking Group PLC

03 December 2024

 

RNS Announcement

Paragon Banking Group PLC

3 December 2024

Another year of strong operational and financial performance

Paragon Banking Group PLC ('Paragon' or 'the Group'), the specialist lender and banking group, today announces its full year results for the year ended 30 September 2024

The full text of the results announcement can be accessed at http://www.rns-pdf.londonstockexchange.com/rns/5078O_1-2024-12-2.pdf and via the Paragon Group website at:

https://www.paragonbankinggroup.co.uk/investors/reports-results-presentations

The results announcement will also be submitted to the National Storage Mechanism and will shortly be available for inspection at:

https://data.fca.org.uk/#/nsm/nationalstoragemechanism

This announcement is made in accordance with DTR 6.3.5R(1A).

Nigel Terrington, Chief Executive of Paragon said:

"It has been another year of strong financial and operational performance, building on our consistent track record over the past decade, underpinned by the strength of our business model and long-term strategy.

We have seen accelerating momentum throughout the year, with new lending levels reaching the upper range of our expectations and strong customer retention. Improving customer sentiment, robust year-end pipelines, and our strategic focus on specialist markets, gives us confidence as we enter the new financial year.

Our savings franchise also continues to grow at pace, with retail deposits up almost 23%, outperforming the market, supporting our growth ambitions and providing strong liquidity.

Paragon's consistent focus on sustainable growth, enabled by an increasingly diversified and digitalised operating model, together with strong internal capital generation, puts us in a strong position to continue delivering superior returns to our shareholders whilst continually supporting our customers' ambitions."

Financial highlights

·    Operating profit before fair value items increased by 5.4% to £292.7 million (2023: £277.6 million)

·    Statutory profit before tax increased by 27.0% to £253.8 million (2023: £199.9 million) 

·    Net interest margin widened by 7 basis points year-on-year to 316 basis points

·    Cost efficiency remains strong, cost-to-income ratio 36.1% (2022: 36.6%)

·    Cost-of-risk rose slightly, to 16 basis points from 12 basis points in 2023, reflecting the higher interest rate environment

·    Underlying basic EPS increased 7.3% to 101.1p (2023: 94.2p) and statutory basic EPS increased 28.8% to 88.5p (2023: 68.7p)

·    Capital ratios remain strong: CET1 ratio 14.2% (2023: 15.5%), reflecting strong growth and significant capital returns

·    Underlying Return on Tangible Equity at top of target range 20.3% (2023: 20.2%)

·    30 September 2024 Tangible Net Asset Value per share £6.11 (2023: £5.79)

·    Total dividend rose 8.0% to 40.4p (2023: 37.4p)

·    £92.5 million of the £100.0 million FY24 share buy-back completed. Balance of £7.5 million together with a further £50.0 million announced for FY25

Operational highlights

·    Total new lending of £2.73 billion (2023: £3.01 billion) delivered in line with guidance:

o  Mortgage Lending advances totalled £1.49 billion (2023: £1.88 billion)

o  Commercial Lending advances totalled £1.24 billion (2023: £1.13 billion)

·    Year-end pipelines strong, driving volumes for FY25

o  Buy-to-let pipeline up 48.2% year-on-year to £0.88 billion (2023: £0.59 billion)

o  Development finance pipeline up 31.0% year-on-year to £0.20 billion (2023: £0.15 billion)

·    Net loan book grew by 5.6% to £15.7 billion (2023: £14.9 billion)

·    Buy-to-let 3-month plus arrears 0.38% (2023: 0.34%) 

·    Buy-to-let portfolio loan-to-value ratio at 62.8% (2023: 62.8%)

·    Strong liquidity. Retail deposits up 22.9% to £16.3 billion (2023: £13.3 billion)

·    £2.0 billion of TFSME repaid in the year, with £0.75 billion outstanding

·    Digitalisation process continues apace, with new buy-to-let broker portal roll-out continuing during final quarter of 2024

·    Continued engagement with PRA on modelling requirements for IRB. Near-final rules for Basel 3.1 reduce potential exposure to 104 basis points like-for-like with original consultation paper, where estimated impact was 210 basis points

For further information, please contact:

Paragon Banking Group PLC	Headland Consultancy
Nigel Terrington, Chief Executive	[e-mail]
Richard Woodman, Chief Financial Officer	Lucy Legh / Charlie Twigg
0121 712 2505	020 3805 4822

The Group will be holding a call for sell-side analysts on Tuesday 3 December 2024 at 9:30am at UBS, 5 Broadgate, London EC2M 2QS.

This will be webcast live at: https://secure.emincote.com/client/paragon/full-year-results-2024

A recording of the presentation will be available on our corporate website www.paragonbankinggroup.co.uk/investors from 2:30pm that day. The presentation material will be available on the website at 7:00am on the same day.

Cautionary statement

Sections of this Announcement may contain forward-looking statements with respect to certain of the plans and current goals and expectations relating to the future financial condition, business performance and results of the Group. These statements can be identified by the fact that they do not relate strictly to historical or current facts. They use words such as 'anticipate', 'estimate', 'expect', 'intend', 'will', 'project', 'plan', 'believe', 'target' and other words and terms of similar meaning in connection with any discussion of future operating or financial performance but are not the exclusive means of identifying such statements. These have been made by the directors in good faith using information available up to the date on which they approved this report, and the Group undertakes no obligation to update or revise these forward-looking statements for any reason other than in accordance with its legal or regulatory obligations (including under the UK Market Abuse Regulation, UK Listing Rules and the Disclosure Guidance and Transparency Rules of the Financial Conduct Authority ('FCA')).

By their nature, all forward-looking statements involve risk and uncertainty because they relate to future events and circumstances that are beyond the control of the Group and depend upon circumstances that may or may not occur in the future that could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements. There are also a number of factors that could cause actual future financial conditions, business performance, results or developments to differ materially from the plans, goals and expectations expressed or implied by these forward-looking statements and forecasts. As a result, you are cautioned not to place reliance on such forward-looking statements as a prediction of actual results or otherwise.

These factors include, but are not limited to: material impacts related to foreign exchange fluctuations; macro-economic activity; the impact of outbreaks, epidemics or pandemics, and the extent of their impact on overall demand for the Group's services and products; potential changes in dividend policy; changes in government policy and regulation (including the monetary, interest rate and other policies of central banks and other regulatory authorities in the principal markets in which the Group operates) and the consequences thereof; actions by the Group's competitors or counterparties; third party, fraud and reputational risks inherent in its operations; the UK's exit from the EU; unstable UK and global economic conditions and market volatility, including currency and interest rate fluctuations and inflation or deflation; the risk of a global economic downturn; social unrest; acts of terrorism and other acts of hostility or war and responses to, and consequences of those acts; technological changes and risks to the security of IT and operational infrastructure, systems, data and information resulting from increased threat of cyber and other attacks; general changes in government policy that may significantly influence investor decisions (including, without limitation, actions taken in support of managing and mitigating climate change and in supporting the global transition to net zero carbon emissions); societal shifts in customer financing and investment needs; and other risks inherent to the industries in which the Group operates.

Nothing in this Announcement should be construed as a profit forecast.

 

END