(Alliance News) - Paragon Banking Group PLC on Wednesday said it expects to see an increase in lending activity during the second half of the financial year.

The Solihull, England-based mortgage and loan provider said in the first half ended March 31, pretax profit more than doubled to GBP110.6 million from GBP46.4 million the year prior.

Total operating income increased 12% to GBP246.6 million from GBP220.2 million.

Performance was driven by good loan growth, improved margins, tight cost control as well as lower fair value reversals.

Paragon raised its interim dividend 20% to 13.20 pence per share from 11.00p.

Chief Executive Nigel Terrington said: "There has been a strong recovery in customer demand with new business pipelines materially above the levels seen at the year-end, improving the outlook for lending volumes for the rest of this year. The deposit book saw continued strong growth to GBP14.8 billion, up 24%, outperforming the market."

Paragon upgraded full year guidance with mortgage lending advances expected to be between GBP1.4 billion to GBP1.6 billion, compared with GBP1.88 billion reported last year.

Commercial lending advances are now forecasted at GBP1.1 billion to GBP1.2 billion, similar to last year's GBP1.13 billion.

Paragon Banking shares were up 2.8% to 791.50 pence each in London on Wednesday morning.

By Elijah Dale, Alliance News reporter

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