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Paragon’s new mortgage lending comes to £649.3m in H1 2024

  • 05/06/2024
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Paragon’s new mortgage lending comes to £649.3m in H1 2024
Buy-to-let (BTL) specialist Paragon reported £649.3m in new BTL mortgage lending in the first half of the year, a fall from £1.02bn in the same period last year.

According to Paragon’s latest financial report, this reflected a “much-reduced” September 2023 pipeline.

Paragon’s financial reporting period runs from the six months that ended on 31 March 2024.

Within that lending figure, £643.4m was for specialist BTL and £2.9m was from non-specialist BTL. This compared to around £1bn and £12.9bn in the same period last year.

The report found that its BTL pipeline came to £874m, adding that it had been growing since the September 2023 figure of £594.6m at the end of March last year.

Paragon said that recent application flows have “maintained their positive trajectory”, with its upgraded mortgage lending advances guidance now pegged at £1.4bn-1.6bn. This is an increase from £1.3bn-1.6bn in its original guidance.

The company added that BTL redemptions came to 6%, which is the lowest rate since the first half of 2015 and a fall from 10.7% last year.

On the arrears side, the report stated that BTL accounts in more than three months in arrears, including receiver of rent clauses, rose from 0.25% last year to 0.68% in the first half of this year. The report stated that this was below the UK Finance figure of 0.84%.

Paragon said that its net loan book grew 4% year-on-year (YOY) to £13.1bn as of 31 March.

The firm reported an underlying profit of £146.3m in the first half of this year, which is a 13% rise on the same period last year.

The company’s net interest margin (NIM) came to 4.19%, an increase from 2.95% last year.

It also reported an impairment charge of £2.8m, which it said reflected the “impacts of the higher-interest-rate environment on the legacy variable rate portfolio”.


New commercial lending rises nearly 3% YOY

Commercial lending volumes stood at £598.8m, up from £574.4m in the same period last year, with the lender saying there has been growth in SME and structure lending.

The firm noted that this was slightly offset by lower flow in motor finance and development finance.

Development finance lending came to £243.8m during the period, down from £273.1m last year, while SME lending stood at £230.2m, a rise from £220m in the same period last year.

Structured lending came to £44.2m, which compared to a loss of £4.9m last year, and motor finance was estimated at £71.6m, a decrease from £86.2m in the first half of last year.

The overall commercial lending book grew 9.8% YOY to £2.2bn, adding that there were increased balances across all business lines and an improved pipeline and outlook, leading to upgraded guidance.

Commercial lending advances guidance has been increased to £1.1bn-1.2bn, a rise from £1bn-1.2bn previously.


Paragon delivers ‘strong operational and financial performance’

Nigel Terrington (pictured), chief executive of Paragon, said: “The group has delivered another strong operational and financial performance, with underlying profits up 13.5%, driven by good loan growth, improved margins and tight cost control.

“There has been a strong recovery in customer demand, with new business pipelines materially above the levels seen at the year end, improving the outlook for lending volumes for the rest of this year. The deposit book saw continued strong growth to £14.8bn, up 24.4%, outperforming the market.

“The transformation of the group’s capabilities continues with the cloud-based technology re-platforming programme, which is enhancing our customer experience and improving efficiencies.

“The group’s strong capital generation is a core strength, supporting our growth ambitions and enabling us to announce an increase in our share buy-back programme of up to £100m.

“Including today’s announcement, we have returned in excess of £1bn to our shareholders since 2015 through dividends and share buy-backs.

“The strength of our business model, long-term track record, and improving customer sentiment means the group is well-placed to continue supporting our customers’ ambitions whilst delivering strong returns for our shareholders and capitalising on the opportunities in our chosen specialist markets.”

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