No recommendation
No news or research item is a personal recommendation to deal. Hargreaves Lansdown may not share ShareCast's (powered by Digital Look) views.
(Sharecast News) - Buy-to-let mortgages provider Paragon Banking said on Wednesday that it had delivered another period of strong trading, with volumes, margins, costs and capital all tracking expectations, and its fullyear guidance reaffirmed across all key metrics.
New advances for the nine months ended 30 June rose 4.3% yearonyear to 2.06bn, with Paragon's net loan book up 3% over the past 12 months, or 6.1% excluding the runoff of legacy assets.
Mortgage lending increased 1.2% to 1.12bn, with buytolet demand soft in April and May before normalising in June, leaving the group's pipeline at 620m. Retention remained strong, with annualised redemptions at 8.1%. Commercial lending grew more quickly, rising 8.2% to 940m, supported by a sharp rebound in development finance activity late in the quarter and a 610m pipeline.
Paragon said credit performance remained robust, with buytolet arrears falling to 40 basis points and impairment trends improving in development finance. Retail savings balances, on the other hand, eased to 15.1bn as the group made greater use of Bank of England repo facilities, while a second covered bond was completed postperiod end at tighter pricing, underscoring strong wholesale funding demand.
The FTSE 250-listed group also completed the sale of its SFS subsidiary, generating a 27m gain and removing 12m of goodwill.
Looking ahead, Paragon reiterated its FY26 guidance, including mortgage advances at the lower end of its 1.5bn to 1.7bn expectations, commercial lending of 1.2bn to 1.4bn, net intrerest margins of around 300bps, operating expenses near 185m, return on tangible equity in the mid15% to 20% range, and up to 100m of share buybacks.
As of 1000 BST, Paragon shares were up 2.13% at 840.50p.
Reporting by Iain Gilbert at Sharecast.com
See latest RNS at Investegate