Trading Update

RNS ANNOUNCEMENT

27 January 2026

PARAGON BANKING GROUP PLC

Trading update

POSITIVE START TO FY26: FULL YEAR GUIDANCE REITERATED Paragon Banking Group PLC ("the Group" or "Paragon") today publishes its trading update based on the business performance from 1 October to 31 December 2025. The Group's trading performance has been in line with the Board's expectations for the first quarter of its 2025/26 financial year and all elements of full year guidance are reiterated.

Nigel Terrington, Chief Executive, said:

"We delivered a strong operating performance for Q1. Our digitalisation activities continue apace and we have seen further progress with Spring, our new savings app, with balances now in excess of £800 million. Lending volumes and pipelines across our businesses are robust and we are well placed to continue building on our long-term track record of delivery as we reiterate our 2026 full-year guidance."   Operational highlights

·    Total lending up 6.9% to £724.0 million (2025 Q1: £677.4 million)

·    Buy-to-let lending up 0.4% to £425.0 million (2025 Q1: £423.2 million)

·    Commercial Lending advances up 17.6% to £299.0 million (2025 Q1: £254.2 million)

·    The Group's buy-to-let pipeline ended the quarter at £722.2 million, 4.4% above its position a year earlier (December 2024: £691.9 million)

·    The Group's combined Development Finance pipeline and undrawn commitment balance was 4.4% lower than the 2025 Q1 position at £700.8 million

·    Buy-to-let redemptions ran at an annualised redemption rate of 8.2% (2025 Q1: 7.7%), reflecting continued strong retention levels at product maturity and the seasoning of the legacy portfolio

·    Buy-to-let arrears were little changed from the 2025 year-end and the credit performance in Commercial Lending continues to normalise as expected

·    The Group's net loan balances grew 3.9% to £16.5 billion at the quarter end (December 2024: £15.9 billion) maintaining the growth rate seen during FY25

Capital and funding

Deposit flows through the Group's Spring savings app continued to grow during the quarter, rising to £0.7 billion at the quarter end and now exceed £0.8 billion. Elsewhere, the broader retail deposit book contracted during the period, leaving overall deposits 3.3% lower year-on-year at £15.9 billion as we continue to diversify the funding structure for the business including accessing wholesale markets.

Q1 saw the commencement of the 2026 share buy-back programme, with £11.8 million of the total £50.0 million executed during December. After allowing for half of an interim dividend in line with policy and the full 2026 share buy-back, the Group's unverified CET1 and total capital ratios remain strong at 13.3% and 15.0% respectively.

Guidance and outlook

Our FY26 guidance for net interest margin, new business volumes, operating costs and RoTE remain unchanged.

FY26 guidance summary

Volumes                    

     -   Buy-to-let                                  £1.5-£1.7 billion

     -   Commercial Lending               £1.2-£1.4 billion

NIM                                                     2.9% to 3.0%

Opex                                                    Below £190 million

UL RoTE                                             Mid 15-20%

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Paragon is expected to release its half-year results for the six months to 31 March 2026 on Tuesday 2 June 2026.