Paragon Bank has reported a 13.5% jump in underlying profit to £146.3m in its latest half-year results.

The specialist banking group suggested that its performance was driven by good loan growth, improved margins and tight cost control.

For the six months to 31 March, Paragon also grew its deposit base to £14.8bn, up 24.4% from £11.9bn at the same point last year. The bank revealed that its continuing loan book growth means that new lending is now ahead of expectations, and Paragon has upgraded its guidance as a result.

Paragon chief executive, Nigel Terrington, said that t the group had overseen a “strong recovery in customer demand”, with new business pipelines “materially above” the levels seen at the year-end.

The group posted 2.7% in new commercial lending to £590m 0.59 billion, with growth in SME lending and structured lending offset by reduced activity in development finance and motor finance, reflecting the reduced level of the opening pipeline. The bank’s development finance pipeline also recovered well to end the period 3.9% higher, year-on-year, at £670m.

However, new mortgage lending was down by 36.2% at £650m, compared to £1.02bn in H1 last year, which reflected a largely reduced September 2023 pipeline.

Terrington said: “The strength of our business model, long-term track record, and improving customer sentiment, means the group is well placed to continue supporting our customers’ ambitions whilst delivering strong returns for our shareholders and capitalising on the opportunities in our chosen specialist markets.”

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