July 23, 2019 / 6:44 AM / a month ago

Paragon Banking braces for Brexit as loans rise 20%

(Reuters) - Paragon Banking (PARA.L) on Tuesday reported a 20% jump in new lending in the first nine months of 2019 and stuck by its financial guidance for the whole year, while saying it was keeping a tight rein on risk due to political uncertainties.

A Brexit-induced slowdown in the UK housing market has taken a toll on the country’s mortgage lenders, which are also facing stiff competition and navigating through regulatory and tax policy changes.

The specialist lender reported new lending of 1.90 billion pounds year-to-date, compared to 1.58 billion pounds in the same period a year ago, but the growth came chiefly from commercial lending with mortgage loans only slightly higher.

The company, which in May said it was maintaining “cautious” liquidity levels in the face of Brexit-related risks, also said it was making precautionary preparations for Britain’s departure from the European Union, without giving further details.

Paragon said it expects net interest margin - a measure of underlying profitability - for the year to be above 2.24% compared with 2.19% in 2018.

Reporting by Yadarisa Shabong in Bengaluru; editing by Patrick Graham

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