The company's shares jumped more than 8% by 0827 GMT to a six-month high, topping the FTSE 250 mid-cap index.

"The pipelines across the key business lines have rebuilt to pre-Covid-19 levels and, in some cases, are close to record levels," Paragon said.

The company's underlying earnings for the year ended Sept. 30 dropped 27% to 120 million pounds, mainly due to 48.3 million pounds in credit loss charges. Analysts had expected full-year earnings of 111 million pounds, according to a company-compiled estimate.

Paragon also reinstated its dividend, declaring a full-year dividend of 14.4 pence per share.

The COVID-19 pandemic has dealt a double blow to the banking industry globally, a slowdown in lending as companies and individuals tighten their spending and a hit to margins from a low interest rate environment as central banks slash rates to reinvigorate their economies.

While Paragon's total loan book rose by 3.7% in the year ended Sept. 30, advances in mortgage lending, the company's biggest segment, slipped nearly 20% to 1.26 billion pounds as the housing market came to a standstill during the lockdowns.

The company's net interest margin, a key measure of profitability, dipped to 2.24% from 2.29%.

(Reporting by Muvija M and Priyanshi Mandhan in Bengaluru; Editing by Shounak Dasgupta)