Paragon Banking Group backs full-year guidance as lending grows

Paragon Banking Group has reported higher lending and deposit growth across all of its businesses and backed its full-year guidance.

However, the lender also warned that it will maintain its capital liquidity buffer in order to hedge against a further deterioration in the “external operation environment”.

Chief executive Nigel Terrington said: “The group has started the year well, delivering strong lending growth across all our core business areas. Our retail deposit base continues to grow, creating further efficiencies in our funding structure.

“We remain confident in the outlook, but will maintain our capital, liquidity and broader risk disciplines in case the external operating environment should deteriorate.”

The FTSE 250-listed firm said new business flows increased 41% to £660 million in the first quarter ended December 31.

New business inflows for mortgages in the period grew 22% to £448.6 million, dominated by lending to professional landlords.

The buy-to-let pipeline stood at £729.1 million at the end of December, about 18% higher than the previous year.

Commercial lending was strong during the quarter, particularly to finance companies, as business inflows more than doubled to £211.9 million.

Paragon said deposit-raising continues to be the foundation of its funding programme and the value of outstanding deposits rose to £5.6 billion by the end of December from £5.3 billion at the end of September.

However, “market developments have resulted in some modest price inflation within this area”, with the average deposit cost increasing by 0.3%.

The company said its capital position is strong, with its unaudited Common Equity Tier 1 (CET1) ratio, a key measure of a bank’s financial performance, increasing to 13.9% at the end of December.

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