SHARES in Paragon Bank surged nearly eight per cent yesterday morning after the FTSE 250 lender reported record interim profits and significant deposit inflows.

In the first half of the year, Paragon's underlying profit jumped 22 per cent to £128.9m as the bank benefitted from rising interest rates.

The bank's net interest margin (NIM), the difference between what it pays out and receives in interest payments, widened to 2.95 per cent. This helped its net interest income to jump to £212.4m from £175.2m last year.

Paragon upgraded its full year NIM guidance to around 3.0 per cent, signalling further gains to come.

New mortgage lending in the period was 19 per cent higher than the first half of last year. Paragon specialises in loans to professional landlords. It upgraded its guidance for full year mortgage lending to between £1.75bn and £1.9bn.

Paragon raised its interim dividend by 17 per cent and also announced an additional £50m buyback.

Chief executive Nigel Terrington told City A.M. he was "really pleased with the results".

The bank's deposit base grew by £11.9bn with the lender saying there was "no disruption to deposit gathering from the events in the US".

(c) 2023 City A.M., source Newspaper