RNS
ANNOUNCEMENT
26 January
2024
PARAGON BANKING GROUP
PLC
Trading update
POSITIVE START TO THE NEW YEAR: FULL YEAR GUIDANCE
RECONFIRMED
Paragon Banking Group PLC ("the
Group" or "Paragon") today publishes its trading update based on
the business performance from 1 October to 31 December
2023.
The Group's trading performance has
been in line with the Board's expectations for the first quarter of
its 2023/24 financial year and full year guidance is
reiterated.
Nigel Terrington, Chief Executive,
said:
"The first quarter of the new year
has started well. The positive momentum seen in the business in
2023 has continued, alongside robust margins and a resilient credit
performance. This, coupled with a notable improvement in sentiment,
gives us encouragement for the remainder of the year."
Operational highlights
We have seen an encouraging start to
the financial year with improved customer sentiment leading to
rising enquiry levels. We expect this to translate to improving
volumes as the year progresses. New lending across the business for
the quarter to 31 December 2023 totalled £610.7 million compared to
£861.7 million in 2023 Q1. Within this, buy-to-let lending totalled
£336.3 million (2023 Q1: £591.1 million) and Commercial Lending
advances were £274.4 million (2023 Q1: £270.6 million). The
buy-to-let pipeline ended the quarter at £559.6 million (September
2023: £594.6 million) but is now comfortably above the 2023 year
end level.
Buy-to-let redemption rates
continued to fall during the quarter, with £204.5 million of loans
redeeming at an annualised redemption rate of 6.4% (2023 Q1: £407.8
million / 13.5%), reflecting strong retention levels at product
maturity.
Net balance sheet loans grew by 1.1%
to £15.04 billion during the quarter.
The Group's loan portfolios continue to display
strong credit resilience. Arrears remain below the industry average
and although the variable rate legacy buy-to-let book continues to
be impacted by the higher rate environment, the new buy-to-let book
and all the commercial portfolios are seeing low and stable
arrears.
Capital and
funding
Deposit balances grew by 7.0% during
the quarter, supporting growth and providing strong liquidity,
taking the year-on-year growth to 26.5%. This strong flow supported
a £400 million repayment of the Group's TFSME drawing during the
quarter and leaves the Group with strong liquidity levels after
having made the repayments. We expect to make further accelerated
TFSME repayments in the current quarter.
After allowing for half of an
interim dividend in line with policy and the remaining element of
the announced 2023 buy-back, the Group's unverified CET1 and total
capital ratios remained strong at 14.7% and 16.7%
respectively.
The Group continues to make progress
with the PRA on its buy-to-let IRB application.
Guidance and
outlook
The Board's FY24 guidance for
margins, new business flows, operating costs and RoTE remain
unchanged, although margins are currently running slightly ahead of
expectations.
For further information,
please contact:
Paragon Banking Group
PLC
|
Headland
|
Nigel Terrington,
Chief Executive
Richard Woodman, Chief Financial Officer
|
Lucy Legh/Charlie
Twigg
|
|
paragon@headlandconsultancy.com
|
|
|
Tel: 0121 712
2505
|
Tel: 020 3805
4822
|
Paragon is
expected to release its half-year results for the six months to 31
March 2024 on Wednesday 5 June 2024.