RBC Capital upgrades Paragon Banking Group

RBC Capital Markets upgraded Paragon Banking Group on Wednesday to ‘outperform’ from ‘sector perform’ and hiked the price target to 850p from 700p.

"One of our key takeaways from this reporting season was that we had underappreciated the quality of PAG," it said.

"In our view, the bank has irresistible momentum going into next year."

RBC said operating trends are "impressive", and there are potential catalysts from a softening of Basel 3.1 and IRB approval.

"Do we prefer PAG or One Savings Bank here? It's a tough call, as OSB's valuation is more depressed, but PAG seems like the cleaner story going into 2024," it added.