Paragon Banking Group (LSE: PAG) on Friday reported a 29% drop in new lending to £610.7 million in the first quarter of its financial year ending September 30, although it noted “improved customer sentiment” driving rising enquiry levels, which should translate into improving volumes over the year.
The FTSE 250 mortgage and loan provider said buy-to-let lending totalled £336.3 million, down 43% from £591.1 million a year before. Commercial Lending advances were £274.4 million, up 1.4% from £270.6 million. However, Paragon pointed to a buy-to-let pipeline now “comfortably above” 2023 year-end levels.
Deposit balances grew 7.0% in the quarter, bringing year-on-year growth to 26.5%.
“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,” said Chief Executive Nigel Terrington.
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Shares were unchanged as Paragon maintained full-year guidance for margins, new business flows, operating costs and return on tangible equity. The company noted its margins are currently “slightly ahead of expectations”.
The stock is up 22% over the past 12 months after recently delivering a 25% jump in annual profits. Paragon also announced another £50 million share buyback following stronger-than-expected full-year performance.
