TIDMPAG
RNS Number : 0066H
Paragon Banking Group PLC
25 July 2023
RNS ANNOUNCEMENT
25 July 2023
PARAGON BANKING GROUP PLC
Trading update
STRONG FINANCIAL AND OPERATIONAL PERFORMANCE FOR THE
QUARTER,
FULL YEAR GUIDANCE RECONFIRMED
Paragon Banking Group PLC ("the Group" or "Paragon") today
publishes its Q3 trading update based on the business performance
from 1 October 2022 to 30 June 2023.
Nigel Terrington, Chief Executive, 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."
Financial and operational highlights
The Group continues to deliver strong performance, with volumes,
margins and costs in line with our expectations, and we re-confirm
our guidance for the full year.
YTD 2023 YTD 2022 Change %
Total advances GBP2.3bn GBP2.2bn +0.9%
----------- ----------- ---------
* Mortgage Lending advances GBP1.4bn GBP1.3bn +7.8%
----------- ----------- ---------
* Commercial Lending advances GBP0.9bn GBP0.9bn -8.7%
----------- ----------- ---------
Net loans GBP14.7bn GBP14.0bn +4.8%
----------- ----------- ---------
New business levels in the two divisions remain in line with our
expectations, albeit interest rate and swap volatility led to
market disruption and reduced application flow in the quarter,
slowing the rate of pipeline increases. Despite this, we remain
comfortable with our guidance for the full year new advances
out-turn in both divisions.
Although application flows have been disrupted, retention levels
continue to improve as expected. Buy-to-let redemption levels fell
further in Q3, taking the annualised rate of 10.7% reported at the
interim to the current annualised rate of 9.4%.
The combination of new advances and strong retentions has
resulted in the net loan book increasing by 4.8% since June 2022,
to GBP14.7 billion.
Income recognition using the Effective Interest Rate ("EIR")
methodology has received heightened attention recently. At Paragon,
EIR movements arising from customer behaviour and pricing changes
are fully incorporated in our margin reporting, both historically
and within any future guidance. The circa 300 basis point net
interest margin expectation for FY2023 included at the interim and
reconfirmed today fully reflects our latest views on all margin
constituents, including the EIR element.
The Group's digitalisation initiatives continue at pace, with
the launch of a portal for our existing buy-to-let customers
delivering increased self-help options, better information access
and enhancing customer relationship management. The next quarter
sees more of a focus on internal infrastructure enhancements, with
further progress in our cloud-first strategy and the delivery of
even stronger operational resilience, before we move on with
further customer and intermediary-facing enhancements during
FY2024.
Credit performance
Mortgage LTVs remain low at 62.1%. As noted at the half-year
results, we had seen some limited increases in 3 month+ arrears on
the old, variable rate mortgage book. The 3 month+ measure stands
at 28 basis points overall at the quarter end, remaining materially
lower than the buy-to-let industry and the wider mortgage market as
a whole. All other Group loan portfolios continue to demonstrate a
strong credit performance.
Capital and funding
The Group's retail savings balances continued to grow in the
quarter, standing at over GBP12.3 billion at the quarter end, up
21.6% year-on-year. The predominantly fixed term, FSCS protected,
deposit book provides a stable and reliable basis of funding for
the business.
By the end of June, the Group had completed GBP63.1 million of
the GBP100 million 2023 share buy-back.
Our unverified capital ratios were 15.6% for CET1 and 17.5% for
TCR at the quarter end (which reflects half of the assumed final
dividend and the full GBP100 million buy-back for FY2023). These
figures compare to 15.9% and 18.0% at Q3:2022 respectively.
Final preparations for the Group's updated Phase 2 IRB
submissions are underway following extensive feedback from the PRA
and the Group's associated enhancement and remediation work.
Guidance and outlook
The Group re-confirms the guidance given at the half-year
results for the FY2023:
Mortgage Lending advances GBP1.75-1.90 billion
Commercial Lending advances GBP1.1-1.3 billion
---------------------
Operating costs Circa GBP170 million
---------------------
NIM Circa 300 basis
points
---------------------
For further information, please contact:
Paragon Banking Group PLC Headland
Nigel Terrington, Chief Executive Lucy Legh / Charlie Twigg
Richard Woodman, Chief Financial paragon@headlandconsultancy.com
Officer
Tel: 0121 712 3161 Tel: 020 3805 4822
Paragon will be releasing its full year results for the twelve
months to 30 September 2023 on Wednesday 6 December 2023.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
TSTSEIFILEDSEFW
(END) Dow Jones Newswires
July 25, 2023 02:00 ET (06:00 GMT)
Paragon Banking (LSE:PAG)
Historical Stock Chart
From Jun 2024 to Jul 2024
Paragon Banking (LSE:PAG)
Historical Stock Chart
From Jul 2023 to Jul 2024