Paragon Banking Group confirmed all guidance provided at its interim results in a trading statement for the third quarter, while flagging that near-term net interest margin (NIM) performance could be stronger than previously expected.
Loan growth for the quarter ending June 2026 was modest, with year-on-year expansion of 3.0% - a rate that equates to roughly 0.5% growth over the quarter. Activity slowed in April and May amid rising interest rates and a drop in confidence following the onset of hostilities in the Middle East, but the bank reported signs of a pick-up in June.
To broaden its lending franchise, Paragon has hired two teams focused on agricultural lending and on building out bridging loan capability. Management estimates these hires could lift loan growth by about one percentage point over the coming two years.
Deposit balances fell by approximately \u00a3200 million, or around 1%, in the third quarter - a slower pace of outflow compared with the \u00a3600 million to \u00a3700 million reported in the second quarter.
Throughout the period the bank said it preserved a disciplined approach to retail pricing and continued to unwind its reliance on Bank of England repo facilities.
On margins, Paragon indicated that second-half NIM may be better than the levels implied at the time of the interim results. The existing full-year guide of approximately 300 basis points had implied a fall from 308 basis points in the first half of 2026 to as low as 292 basis points in the second half.
Asset quality metrics showed modest improvement. Arrears on the buy-to-let portfolio eased by 10 basis points to 40 basis points during the quarter. Impairment in development finance also continued to trend lower.
Capitalisation on a pro-forma basis was reported at 13.6% to 13.7% for the CET1 ratio at quarter-end, a figure that includes an uplift of about 50 basis points stemming from the SFS disposal completed in July 2026.
Context for financial stakeholders
The update preserves the bank 's near-term targets while offering signs that underlying margin dynamics and capital metrics are moving in a constructive direction.