REG - Paragon Banking Grp - Trading Update

Paragon BankingAnnouncement

26/01/2024 07:00

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RNS Number : 9645A  Paragon Banking Group PLC  26 January 2024

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          Lucy Legh/Charlie Twigg

Richard Woodman, Chief Financial Officer
                                            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.

 

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