Paragon Bank: Shares jump 10 per cent as specialist buy-to-let lender announces new buyback

Paragon Bank published positive results today.

Specialist lender Paragon Bank’s underlying pre-tax profit before fair value items increased by 25.4 per cent to £277.6m, up from £221.4m recorded in 2022. It also recorded loan book growth of 4.7 per cent of £14.9bn, up from £14.2bn.

The Solihull-headquartered bank specialises in providing finance to buy-to-let landlords and SMEs.

Its total new lending was slightly down from last year’s £3.2bn to £3bn, as its mortgage lending advances dropped to £1.88bn (2022: £1.91bn) and its commercial lending advances fell to £1.1bn (2022: £1.3bn).

The bank has continued to pick up business despite the darkening outlook for the buy-to-let sector. Research, from Octane Capital has shown cases of buy-to-let arrears have doubled in a single year as landlords struggle with high interest rates.

The bank completed £100m in share buyback programme over the 2023 financial year with a further £50m announced today for the 2024 financial year.

Nigel Terrington, Paragon’s chief executive, said: “We have today announced a further £50m 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 £948.5m 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,” he added.

The stock traded 10 per cent higher in early deals in London on Wednesday morning.