November 26, 2019 / 7:10 AM / 16 days ago

Paragon Banking profit rises on strength in commercial lending

(Reuters) - Paragon Banking (PARA.L) reported a 5% rise in underlying earnings for the fiscal year on Tuesday, as a sharper focus in commercial lending helped the lender offset a Brexit-led slowdown in its mortgage business.

The housing market in Britain has cooled since the country voted to leave the European Union in a referendum held over three years ago. That, along with stiff competition, regulatory and tax policy changes, has taken a toll on mortgage lenders.

“The performance of the UK mortgage and housing markets has remained subdued in the face of economic concerns arising from Brexit and the wider economy,” the company said.

However, a strong performance in its commercial lending business helped cushion the blow to Paragon during the year.

Lending at the segment surged 36.3% to 968 million pounds, while mortgage division saw a modest 3.5% rise compared to a near 11% jump in 2018.

The company said underlying pretax profit climbed to 164.4 million pounds for the 12 months ended Sept. 30, from 156.5 million pounds a year earlier.

The company’s net interest margin - the difference between what it earns from loans and pays for deposits - inched up to 229 basis points from 221 basis points.

Reporting by Muvija M in Bengaluru; Editing by Shailesh Kuber

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