Paragon Banking Group on Friday reiterated its full-year guidance after ‘an encouraging start’ to financial 2025, particularly in buy-to-let lending.

The Solihull, England-based bank said trading volumes were in line with expectations during the three months to December 31, the first quarter of its financial year, with the net interest margin above expectations.

The company did not specify its current NIM, but set full-year guidance in the region of 3%. In financial 2024, it had widened by 7 basis points to 3.16%

Total new lending for the recent quarter is estimated at £677.4 million, up roughly 9.9% from £610.7 million a year before.

Paragon’s buy-to-let loans were the star performer. The bank estimated that BTL lending jumped 21% to £423.2 million from £336.3 million the year prior. Full-year BTL guidance is between £1.6 billion and £1.8 billion.

Paragon valued its buy-to-let pipeline at around £691.9 million at the quarter-end, up from £559.6 million in 2023. The estimated redemption rate on BTL loans was 7.7% on an annual basis, up from 6.4% year-on-year.

Commercial lending, however, is estimated to have fallen to £254.2 million in the first quarter from £274.4 million a year before. Paragon attributed the 12% drop to ‘timing differences’ between its lending business. Full-year commercial lending guidance is between £1.2 billion and £1.4 billion.

Overall, Paragon says its maintained the annual growth of financial 2024, with estimated net loan balances of £15.9 billion at the end of December, up 1.0% from the September 30 and up 5.5% on a year before.

The bank said it refinanced most of its term funding scheme during financial 2024, with common equity tier-1 and total capital ratios staying ‘strong’ at 14% and 16% respectively.

Full-year guidance of £185 million in operating expenses remains unchanged.

Paragon’s half-year results are scheduled for March 31.

Its shares were up 1.3% at 772.50.00 pence on Friday morning in London.

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