Paragon Banking sees profits slump
Paragon Banking Group has posted a 28% slump in half-year underlying profit, as it booked a £27.7 million pound charge due to the Covid-19 pandemic and set aside millions more to cover expected loan losses because of the crisis.
The Solihull-headquartered financial services company reported underlying profit of £57.2 million for the six months ended March 31, compared with £79.8 million a year earlier.
It booked a charge of £30 million for expected credit losses due to the coronavirus crisis.
Reduced demand across the economy will hit lending volumes, Paragon said, adding that income therefore will be “hard to predict in the near term, with an inevitable knock-on to the longer-term size of the portfolio”.
Nigel Terrington, chief executive of Paragon, said: “Our priorities during the outbreak of Covid-19 have been to support our customers and suppliers, protect our people, safeguard our capital base and preserve the long-term value of our business. We reacted quickly and with agility, achieving full operational stability and making all products and services available. The group is also providing funding to our SME customers through the UK Government’s CBILS and BBLS schemes.
“Whilst it is difficult to predict the full impact of the pandemic, we have made provisions for £27.7 million in additional charges, based on careful economic modelling and customer analysis.
“The group made strong progress up to the commencement of the UK lockdown, with lending volumes and yields broadly in line with expectations. We have a high-quality loan book, 98 per cent of which is secured, and strong capital and liquidity, and our business stands ready to meet the changing needs of our customers throughout this challenging period and into the next business cycle.”
