Last checked at 6 Dec 2023 07:00
RNS Announcement
Paragon Banking Group PLC
6 December 2023
Strong financial performance in volatile environment
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 2023
The full text of the results announcement can be accessed 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:
"The Group's performance for 2023 again demonstrates the strength of our business model, with underlying profits up 25.4%, loan book growth of 4.7% and retail deposits increasing 24.3% to £13.3 billion, outperforming the market, providing strong liquidity and supporting growth.
The Group's diversification strategy and focus on specialist markets across buy-to-let and our commercial divisions provides resilience. Our digitalisation programme continues at pace, providing better user experience for our customers and intermediaries, along with delivering operational efficiencies.
We have today announced a further £50.0 million share buy-back for the 2024 financial year. Reflecting the sustained performance of the Group, strength of our capital ratios and liquidity level, since 2015, the Group has returned over £948.5 million to shareholders via share buybacks and dividends.
Whilst the external environment remains dynamic with high interest rates and inflation, the Group remains well placed to continue supporting its customers in its chosen specialist markets. The strength of the business model and through-the-cycle experience of the management team provides strong foundations to capitalise on opportunities and continue to deliver strong returns for shareholders."
Financial highlights
· Underlying profit before fair value items increased by 25.4% to £277.6 million (2022: £221.4 million) *
· Reflecting the unwinding of non-cash accounting fair value gains reported in 2022, statutory profit before tax fell by 52.2% to £199.9 million (2022: £417.9 million including £4.6 million of one-off gains)
· Underlying EPS increased 34.8% to 94.2p (2022: 69.9p) *, reported EPS fell 46.8% to 68.7p (2022: 129.2p) reflecting fair value unwinds
· Underlying cost:income ratio improved further to 36.6% (2022: 39.4%)
· Cost of risk at 12 basis points (2022: 10 basis points) continues to reflect high quality customer base
· Capital ratios remain strong: CET1 ratio 15.5% (2022: 16.3%)
· Net interest margin widened by 40 basis points year-on-year to 309 basis points
· Underlying Return on Tangible Equity increased to 20.2% (2022: 16.0%)
· Tangible Net Asset Value per share at 30 September 2023 of £5.79 (2022: £5.33)
· Total dividend up 30.8% to 37.4p (2022: 28.6p), in line with policy ?
· £100.0 million share buyback programme completed in the 2023 financial year with a further £50.0 million announced for the 2024 financial year
Operational highlights
· Total new lending of £3.01 billion (2022: £3.21 billion):
o Mortgage Lending advances totalled £1.88 billion (2022: £1.91 billion)
o Commercial Lending advances totalled £1.13 billion (2022: £1.30 billion)
· Enhanced customer retention of over 80% at product maturity and new advances support net loan book growth of 4.7% to £14.9 billion (2022: £14.2 billion)
· Buy-to-let three-month plus arrears 0.34% (2022: 0.15%), remaining significantly below the industry average
· Buy-to-let portfolio loan-to-value ratio at 62.8% (2022: 57.9%), providing substantial security cover
· Retail deposits increased 24.3% to £13.3 billion (2022: £10.7 billion), outperforming the market, supporting growth and providing strong liquidity
· Further progress on delivery of digitalisation strategy, with benefits already available to customers and intermediaries, helping to drive operational efficiencies
· Continuing engagement with PRA on IRB application process
* Appendix A of the results announcement
? A final dividend for the year of 26.4 pence per share will be paid on 8 March 2024 to shareholders on the register at 2 February 2024, subject to approval at the forthcoming Annual General Meeting of the Company
For further information, please contact:
Paragon Banking Group PLC | Headland Consultancy |
Nigel Terrington, Chief Executive | Lucy Legh / Charlie Twigg |
Richard Woodman, Chief Financial Officer | |
Email: paragon@headlandconsultancy.com | |
Tel: 0121 712 2505 | Tel: 020 3805 4822 |
The Group will be holding a results presentation for sell-side analysts on Wednesday 6 December 2023 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-2023
The presentation material will be available on the Group's corporate website at www.paragonbankinggroup.co.uk/investors from 7:00am on the same day, with a webcast replay available from 2:00pm.
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.