Trading Update

PARAGON BANKING GROUP PLC

Trading update

Paragon Banking Group PLC ("the Group" or "Paragon") today publishes a trading update ahead of its 30 September 2018 year end.

The business continues to operate in line with the Board's expectations.  Paragon reiterates the guidance given at the half year in respect of volumes, margins and costs and has made further progress on growing its retail deposit base, which now exceeds £5 billion. 

Idem Capital, Paragon's portfolio purchase division has disposed of a portfolio of wholesale funded assets for a premium, capitalising on strong market conditions.  The bulk of the remaining Idem assets will be transferred to Paragon Bank, which will be funded by retail deposits and which will improve the returns from these assets going forward.

Underlying profits for 2018 remain in line with the Board's expectations.  The Idem disposal will, however, have a favourable one-off impact of circa 7 pence per share on reported earnings for 2018, subject to final closing mechanics.

The Group's buy-to-let pipeline at 30 September 2018 is expected to be over 25% above the level reported at 30 September 2017, supporting lending volumes into the next financial year.  The buy-to-let operation has maintained its focus on professional landlord business, which now represents approximately 90% of application flows.

The integration of the Titlestone business acquired in July 2018 is progressing well and has added further scale to Paragon's Commercial Lending division, where the existing business streams have also maintained their progress during the period.

Nigel Terrington, Chief Executive said:

"The Idem Capital transaction and Titlestone acquisition in the final quarter of 2018 demonstrate the Group's ability to refocus capital to support its growth businesses and enhance value for shareholders.  In spite of the prevailing macro uncertainties we are well placed to benefit from scale economies in the Commercial Lending division, and the Group continues to cement its position as a leading lender to professional landlords in the UK, underpinned by its 22 year history in this market.  We look to the future with confidence."

Paragon will be releasing its full-year results for the twelve months to 30 September 2018 on Wednesday 21 November 2018.

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