REG - Paragon Banking Grp - Trading Update

Paragon BankingAnnouncement

28/01/2022 07:00

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RNS Number : 8927Z  Paragon Banking Group PLC  28 January 2022

RNS ANNOUNCEMENT

28 January 2022

 

PARAGON BANKING GROUP PLC

Trading update

STRONG START TO THE NEW FINANCIAL YEAR

 
Paragon Banking Group PLC ("the Group" or "Paragon") today publishes its trading update based on the business performance from 1 October to 31 December 2021.
The Group's trading performance has been strong and in line with the Board's expectations for the first quarter of its 2021/22 financial year.

Nigel Terrington, Chief Executive, said:

"The momentum that underpinned the delivery of our 2021 results has been maintained through the first quarter of our new financial year, with strong new business flows, improving margins and capital strength generated from our focus on specialist customers and markets."
Operational and financial highlights

Total new lending for the quarter to 31 December 2021 increased by 35.7% to
£708.0 million from £521.8 million in Q1 2020/21.

 

The volume of new buy-to-let mortgage advances increased by 36.8% to £408.5
million when compared to the £298.7 million reported for Q1 2020/21, with a
continued focus on lending to specialist landlords.

 

The Group's Commercial Lending volumes also increased significantly. At
£298.8 million, new advances were 37.3% above the £217.7 million reported in
the first quarter last year. Each of the four business lines within Commercial
Lending saw at least double-digit percentage improvements from the comparable
quarter.

 

Net balance sheet loans grew by 7.7% to £13.7 billion in the twelve months to
31 December 2021 and NIM has progressed in line with the guidance given at the
full year results.

 

The buy-to-let pipeline totals £1,027.1 million, 6.2% above 2021's Q1 level
and redemptions for the period totalled £193.8 million, representing an
annualised redemption rate of 6.8% which remains well below historical
averages.

 

The Group will update the economic scenarios, weightings and overlay
considerations that feed into its impairment assessments with its half year
results. Portfolio performance, behavioural scores and arrears levels remain
stable at the end of the first quarter.

 

Good progress has been made with our digitalisation programme, with costs
continuing to be in line with the previous guidance provided.

 

 

Capital and funding

 

Deposit balances increased further to £9.6 billion in the period. The
portfolio average deposit rate at the end of December 2021 was 0.90% compared
to the 1.22% reported at the end of December 2020.

 

After accruing for dividends, but excluding the current buyback of up to £50
million, the Group's unverified CET1 and total capital ratios remained strong
at 15.6% and 17.7% respectively (15.3% and 17.5% on a fully loaded basis) at
31 December 2021.

 

The Group continues to engage with the PRA on Paragon's IRB application, with
Phase 2 of the process underway for buy-to-let and preparations on the
application for the development finance assets at an advanced stage.

 

Guidance and outlook

 

Whilst there continue to be macro-economic uncertainties stemming from the
ongoing impacts of Covid-19, the Group's operational and financial performance
during the first quarter has been strong and the Board's FY22 guidance remains
unchanged.

 

For further information, please contact:

 

 Paragon Banking Group PLC                  Headland
 Nigel Terrington, Chief Executive          Del Jones

Richard Woodman, Chief Financial Officer

                                            Lucy Legh
                                            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 2022 on Tuesday 14 June 2022.

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