Paragon lifts business loans by 58pc in move to mainstream
CHALLENGER bank Paragon enjoyed strong growth in commercial lending in the last nine months, as City analysts hailed the bank’s “gathering momentum” towards becoming a more mainstream bank.
In a third-quarter trading update, FTSE 250 bank Paragon said lending to businesses over the nine months to June was up 58pc to £449m, from £285m the prior year.
Paragon has been moving into new markets, away from its core buy-to-let business in recent years. Ian Gordon, analyst at Investec, said the jump in commercial lending showed the push was “gathering momentum”.
The bank also snapped up development finance specialist Titlestone Property Finance for £48m last month as part of the strategy.
Paragon confirmed yesterday that it was suspending the remaining £25m of its share buyback programme for the year as a result of the takeover. It said the tie-up would boost after-tax profits by high single-digit percentage growth from 2019. Meanwhile the bank’s mortgage lending was up solidly by 7pc to £1.13bn over the nine-month period. City analysts said the bank was on track to hit its full-year targets of £1.6bn in mortgage advances and £600m of commercial lending.
Analysts at UBS said: “Overall, we think this is a good set of updates.” Investec’s Mr Gordon said the numbers were “very solid”, adding he was impressed by a “quite stunning” increase in the firm’s buy-to-let pipeline. The buy-to-let division pushed up its lending pipeline by 8pc to £858.8m, despite a recent regulatory clampdown on the market.
Nigel Terrington, chief executive of Paragon, has previously said the bank’s focus on professional buy-to-let landlords is enabling it to pick up market share as the reforms hit amateur landlords the hardest.
He said: “The business is well-placed to make further strong progress in 2019.” Paragon’s portfolio business, Idem, also completed its first deal last month, buying a range of car and asset finance loans.