Renting Success: Paragon’s Buy-to-Let Boom Defies the Gloom
Written after the half year report 4th June 2025
Paragon Banking Group: The Investment Case in a Nutshell
Paragon Banking Group: The Investment Case (H1 2025)
Profitability That Stacks Up:
Paragon’s profit before tax jumped 27% and underlying EPS rose nearly 10%—because apparently, slow and steady really does win the race.Digital Diligence:
The bank’s new buy-to-let origination platform and the “Spring” savings app aren’t just buzzwords—they’re actually making things faster, slicker, and more efficient, with a cost:income ratio now a lean 35.2%.Loan Book Still Growing:
Net loans grew 4.9% year-on-year, with buy-to-let advances up 25%—proof that landlords still like Paragon as much as Paragon likes landlords.Capital Strength (No Wobbling Here):
CET1 ratio holds steady at 14.2%, and the board doubled the share buyback to £100 million, so shareholders get a little extra love.Specialist Focus, Resilient Customers:
Paragon’s bread and butter is specialist landlords—folks who know what they’re doing and aren’t easily spooked by regulatory headlines or market jitters.Dividends and Buybacks:
Interim dividend up 3%, buybacks up 100%—if you like getting paid while you wait, Paragon’s got you covered.Risks? Sure, But Well-Managed:
Arrears ticked up but remain below market averages, and impairments are stable; the bank’s risk team is clearly earning their keep.Outlook:
Guidance is upbeat: margins are expected to stay above 3%, costs are under control, and Paragon’s digital and specialist strategy is delivering results—even if the UK economy is still trying to find its mojo.
Half Year Report : Lending Confidence, Borrowing Optimism
Sentiment:
The market sentiment toward Paragon Banking Group is positive following the latest half-year report. The group delivered strong financial results, outperformed analyst expectations on key metrics, and demonstrated resilience despite sector headwinds.
Key Highlights from the Half-Year Report
Profit and Returns:
Underlying profit rose 2.1% to £149.4 million; statutory pre-tax profit surged 26.7% to £140.1 million.
Underlying earnings per share (EPS) increased 9.6% to 54.7p.
Return on tangible equity (RoTE) improved to 17.8%.
Operational Performance:
Net interest margin (NIM) held steady at 3.13%, outperforming expectations despite a challenging rate environment.
Cost-to-income ratio improved to 35.2%, reflecting ongoing efficiency gains and flat operating expenses.
