Final Results

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:

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

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

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.