Paragon Banking Group plc (LON: PAG) said in a Thursday announcement that its annual profit had fallen by 27% year-on-year. The company attributed the decline to the ongoing coronavirus pandemic, which interrupted lending in the recently completed financial year. Paragon said:
” The pipelines in key business areas have returned to pre-COVID-19 levels and in some cases are approaching record levels.
Over the year ended 30 September, Paragon reported underlying profits of £120 million, a 27% decline on an annualised basis, due to credit losses which valued the FTSE 250 listed company at £48.3 million. Analysts, however, had forecast an annual profit of £111 million.
Paragon’s directors declare 14.4 pence as a share of the annual dividend
Despite a profit swing, the Board decided to resume dividend payments and declared 14.4 pence as a share of the full year dividend on Thursday. In a separate announcement from the UK on Thursday, Countryside Properties plc said that Chairman David Howell would step down from the Board in 2021.
Banks in the UK have suffered a double blow from the COVID 19 crisis this year as it forced companies to cut spending, thereby affecting lending – while lower interest rates also weighed on margins. In its June H1 report, Paragon had reported an annualized decline of 28% in underlying earnings on an annual basis due to the COVID 19 crisis.
The novel influenza-like virus has so far infected more than 1.6 million people in the UK and caused over 59 thousand deaths. The net interest margin, the mortgage lender added, slipped from 2.29% to 2.24% last fiscal year.
Paragon closed the fiscal year with a 3.7% increase in the total loan portfolio.
Paragon also said on Thursday that it will close the fiscal year 2020 with a 3.7% increase in its total loan portfolio. However, the progress of mortgage loans decreased to 1.26 billion pounds, which is a decrease of about 20%.
The Paragon Banking Group opened an equity market on Thursday with a gain of about 1% and gained another 8% in the next hour. Shares in the Solihull-based company, which you can buy online here, are now trading at £4.52, down from a much lower price of £2.38 in March due to the COVID 19 disruption.
Paragon started the year at £5.53 per share. At the time of writing this article, the company is valued at £1.15 billion and has a price-earnings ratio of 10.31.