Restructuring progress continues for challenger bank as new lending reaches £990m

Challenger bank Paragon has said it has made strong progress in its mission to move from a monoline centralised lender to an increasingly diversified banking group as it announced a rise in new lending from £768m to £990m in the first half of 2018.

Updating the markets on its performance for the six months to the end of March, the Solihull-based group reported a 4.7% increase in underlying profit before tax to £73.4m, up from £70.1m the prior year period.

Mortgage lending was up 22.7% to £721m from £587m while the group’s buy-to-let lending pipeline up 6.1% to £787m.

Paragon’s commercial lending volumes also rose, up 49% to £269.3m.

The group, which acquired Iceberg professions finance business for £18.6 m in December 2017, is in the middle of a major restructuring and transitioning of its business model from a wholesale funded buy-to-let lender to a more broadly-based bank.

Paragon Bank, which effectively subsumed the group from the beginning of this financial year, “has laid the foundations for its future growth and diversification plans”, Paragon said.

“This is already evident in the progress seen in the first six months of the year. New lending has increased by 29% with all originating divisions making strong progress. Furthermore, the various pipelines across the group suggest that lending for the year as a whole will continue to remain strong.”

Nigel Terrington, chief executive of Paragon, said: “The success of our changing business model has enabled the group to support an increasing number of customers, whether they be landlords, small businesses or consumers. We are helping to support individual investment and retirement plans, create jobs in the real economy and even build homes across the country. Our deposit products are providing market leading rates to customers starved of income in a low interest environment. We are building a leading specialist retail bank to deliver outstanding products and services to our customers with strong and sustainable returns to our shareholders. The group has delivered much in recent years on this journey but considerable opportunities exist to build on this progress for the future.”