Its commercial lending advances were flat at £900m, while its total advances saw a nominal 0.9 per cent uplift to £2.3bn in the period up to June.
Paragon said new business levels in its two divisions were in line with its expectations. It noted that volatility in swap and interest rates reduced its application flow and slowed the rate of pipeline increases.
However, the group said: “Despite this, we remain comfortable with our guidance for the full year new advances out-turn in both divisions.”
Paragon’s retention levels also continued to improve, it added.
The group said the level of new advances and strong retentions led to a 4.8 per cent rise in its net loan book year-on-year to £14.7bn.
Paragon’s buy-to-let redemption levels continued to fall in Q3, resulting in the 10.7 per cent annualised rate stated in its interim report falling to 9.4 per cent.
Mortgage profiles
Paragon said the average loan to value (LTV) of its mortgage book remained low at 62.1 per cent.
It noted it had seen “limited increases” in arrears of three months or more across its variable rate mortgage book. This accounted for 0.28 per cent of its book in Q3, which it said was “materially lower” than the buy-to-let sector and wider mortgage market.
Paragon said it was progressing with its digitalisation process, adding that the launch of its portal for existing buy-to-let borrowers was leading to a rise in self-help options, better access to information and an improved relationship. In Q4, the group will develop its internal infrastructure and then move on to further customer and intermediary enhancements in 2024.
Paragon said its deposit book provided a “stable and reliable” basis of funding, and this stood at £12.3bn in Q3 which was 21.6 per cent up on last year.
Expectations for the year
Looking ahead, Paragon expects its mortgage lending advances to reach between £1.75bn and £1.9bn this year and its commercial lending advances to total between £1.1bn and £1.3bn.
It predicted that its operating costs would be around £170m and its net interest margin would sit at 300 basis points.
Nigel Terrington, chief executive of Paragon Banking Group, said: “The group has delivered another strong trading performance with robust new business flows, strong customer retention and good margins. We expect to deliver results for the year in line with expectations. This has been achieved despite continuing volatility in the financial markets and higher interest rates.
“We have a strong balance sheet with a high quality customer base, reflected in the resilient nature of our loan portfolios’ credit performance.”
“We are well positioned and stand ready to support our customers in these challenging times and to continue to deliver strong returns for our shareholders,” he added.
