Trading Update

RNS ANNOUNCEMENT

Tuesday 29 July 2025

PARAGON BANKING GROUP PLC

Trading update

Continued strong performance

Paragon Banking Group PLC ("the Group" or "Paragon") today publishes its Q3 trading update based on the business performance from 1 October 2024 to 30 June 2025.

Nigel Terrington, Chief Executive, said:

"The nine months to June 2025 have seen another strong trading period for the Group, with loan balances up 4.8% from Q3 2024 and deposit growth supported by the take-up of our new Spring App, which was launched to the public during the quarter. Spring's market entry exceeded expectations, with deposit balances growing well and strong customer service feedback placing it close to the top of UK bank deposit-taker rankings.

We welcome the changes to the MREL regime which, along with a proposed broader set of reforms, support a more competitive and dynamic financial services sector. The momentum in our business and the resilience of our business model means we are well-positioned to continue supporting our customers and delivering strong returns for our shareholders."

Financial and operational highlights

The Group has maintained its strong performance, with volumes, margins, costs and capital in line with our expectations.

Mortgage advances for the nine months totalled £1.1 billion, up marginally on the previous year's levels, with new business completions for the quarter reflecting the stamp duty disruption on the opening pipeline. A stronger buy-to-let pipeline built across the period, ended 27.6% above its March 2025 level at £0.8 billion. The growth in the pipeline mainly occurred towards the end of the period and consequently our full year volumes are expected to be around the lower end of original guidance but should support a more favourable start to the new financial year.

Commercial Lending volumes remain in line with expectations, with combined motor, asset finance and development finance advances for the nine months to June up 6.6% year-on-year. However net repayments on structured lending revolving credit facilities took overall commercial lending advances to £0.9 billion, a reduction of 1.5% from the prior year's level. However, the structured lending pipeline is strong and the development finance pipeline at the quarter end was broadly in line with its March 2025 position.

Customer retention rates have remained strong, with the annualised buy-to-let redemption rate at the end of Q3 at 7.0%, little changed from the position reported at the half-year (H1 2025: 7.1%).

At £16.2 billion, the net loan book was up 1.1% during the quarter and 4.8% from its Q3 2024 level.

Credit performance

Credit dynamics remain in line with the position reported at the 2025 half-year results. The three-month plus arrears levels on the buy-to-let portfolio stood at 54 basis points (H1 2025: 51bp), and the work out of the cohort of development finance loans from early 2022, impacted by the step-up in interest rates and inflation, continues to generate impairment requirements. There were no new development finance default cases in the June quarter.

Funding

Retail savings balances rose by 1.5% during the quarter to £16.0 billion, supported in part by flows through the new Spring app following its public launch in April.

Capital

Our unverified capital ratios were in line with expectations at 13.6% for CET1 and 15.4% for TCR at the quarter end (these reflect half of the assumed final dividend and the full £100.0 million buy-back for FY 2025). These figures compare to 14.2% and 16.0% at H1 2025 respectively.

Guidance and outlook

The following guidance applies for our FY 2025 performance:

For further information, please contact:

Paragon will be releasing its full year results for the twelve months to 30 September 2025 on Wednesday 3 December 2025.