Paragon Banking Group delivered £1.1bn in mortgage advances for the nine months to 30 June, up on the same period in 2024.
In its trading update covering its Q3 period, Paragon said new business completions reflected stamp duty “disruption” on the opening pipeline. It saw a stronger buy-to-let (BTL) pipeline over the period and ended 27.6% higher than its March level at £800m.
Paragon said this growth mainly took place at the end of the period, so its full-year volumes would be at the lower end of its original guidance.
The group previously said lending for the year would be around £1.6bn-1.8bn, but has revised this down to £1.6bn.
It said the pipeline activity should support a “more favourable start” to the new financial year.
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Commercial lending as expected
Paragon’s commercial lending volumes were in line with expectations, with motor, asset finance and development finances over the nine-month period up 6.6% on the year before.
However, it said net repayments on structured lending revolving credit facilities took commercial lending advances to £900m, a 1.5% decline on the previous year.
Paragon said the structured lending pipeline was “strong” and its development finance pipeline at the end of Q3 was in line with expectations.
The group expects its commercial lending advances to reach around £1.2bn-1.4bn for 2025.
Further, Paragon said customer retention rates were good, with the annualised BTL redemption rate at 7% by the end of Q3, similar to the 7.1% reported in the first half of its financial year.
It reported a 1.1% rise in its net loan book to £16.2bn from Q2 to Q3, and a 4.8% improvement on the same period in 2024.
Arrears of three months or more accounted for 0.54% of its BTL book, while its development finance portfolio saw no new default cases in June. However, it said development finance loans from 2022 were impacted by the rise in interest rates and inflation, and continued to generate impairment requirements.
A strong trading period for Paragon
Nigel Terrington, chief executive of Paragon Banking Group, said: “The nine months to June 2025 have seen another strong trading period for the group, with loan balances up 4.8% from Q3 2024 and deposit growth supported by the take-up of our new Spring App, which was launched to the public during the quarter. Spring’s market entry exceeded expectations, with deposit balances growing well and strong customer service feedback placing it close to the top of UK bank deposit-taker rankings.
“We welcome the changes to the MREL regime, which, along with a proposed broader set of reforms, support a more competitive and dynamic financial services sector. The momentum in our business and the resilience of our business model mean we are well-positioned to continue supporting our customers and delivering strong returns for our shareholders.”
