Paragon Banking H1 profits drop, loan book up

(Sharecast News) - Paragon Banking reported a rise in its first-half net loan book on Tuesday, but a drop in profits as it was hit by impairments, while mortgage lending fell. In the six months to the end of March, statutory pre-tax profits declined to £133.2m from £140.1m in the same period a year earlier.

The company said it incurred an impairment charge of £21.5m during the period, up from £6.2m in the first half of 2025. The majority of the charge arose in its development finance business, which accounted for £15.8m.

Underlying pre-tax profit fell 2.5% to £145.7m and the adjusted return on tangible equity was 17.4%, down from 17.8% a year earlier.

The net interest margin - a key profitability measure - dipped to 3.08% from 3.13%, although this was ahead of expectations.

Paragon also said that new mortgage lending fell 4.7% to £0.77bn, reflecting a smaller opening pipeline of business. Looking to the full year, the bank now expects mortgage lending to be towards the lower end of the guidance range of £1.5bn to £1.7bn.

Paragon also announced a further buyback of up to £50m.

Chief executive Nigel Terrington said: "Paragon delivered a strong performance in the first half, reflecting our long-term, disciplined approach to managing the business. Our net loan book grew 3.8% year-on-year and net margins were ahead of expectations, supported by our increasingly diversified funding options.

"Whilst we are mindful of the volatile external environment, our deep experience, strong capital ratios and ongoing technology improvements, mean that we remain well placed to support our customers, deliver sustainable growth and capitalise on any opportunities that may arise."

At 0935 BST, the shares were down 0.5% at 734p.