Paragon Banking (PAG) Share Price Spiked 13.4%, Later Fell Back

The Paragon Banking Group PLC (LON: PAG) share price spiked 13.43% after releasing its final results for the year ended 30 September 2023. The company revealed that its adjusted profit before accounting for fair value variations rose by 25.4% to £277.6 million compared to £221.4 million in the previous year.

Due to the reversal of non-cash accounting fair value gains from 2022, statutory pre-tax profit dropped 52.2% to £199.9 million (2022 included £417.9 million with £4.6 million as one-time gains). 

Adjusted earnings per share (EPS) climbed by 34.8% to 94.2p (from 69.9p in 2022), while reported EPS decreased by 46.8% to 68.7p (from 129.2p in 2022), affected by fair value adjustments.

The underlying cost-to-income ratio improved to 36.6% (from 39.4% in 2022). The cost of risk remained low at 12 basis points, up slightly from 10 basis points in 2022, reflecting a high-quality customer base. Capital ratios continued to be robust, with a CET1 ratio of 15.5% (down from 16.3% in 2022).

Net interest margin expanded by 40 basis points year-over-year to 309 basis points. Total new loans amounted to £3.01 billion, a slight decrease from £3.21 billion in 2022. Mortgage Lending stood at £1.88 billion (slightly down from £1.91 billion in 2022). Commercial Lending was £1.13 billion (down from £1.30 billion in 2022).

Today, the company disclosed an additional £50.0 million share buy-back plan for the 2024 fiscal year. This decision is a testament to the Group's consistent performance, robust capital ratios, and strong liquidity.

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 provide resilience. Our digitalisation programme continues at pace, providing a better user experience for our customers and intermediaries, along with delivering operational efficiencies.”

Paragon Banking (PAG) share price. 

The Paragon Banking share price spiked 13.43% higher to trade at 555.00p, from Tuesday’s closing price of 489.30p.