Paragon Banking Group PLC (LON:PAG) posted a 40.6% jump in new lending for the first quarter, driven by demand from professional landlords.
New lending amounted to £660.5mln in the three months to December 31, up from £469.8mln a year ago. The company said lending to complex landlords continued to drive new business flows.
READ: Paragon Banking Group "offers attractive yield and increasing profitability"
The value of outstanding deposits rose to £5.6bn at the end of the quarter from £5.3bn at the end of September.
The common equity tier 1 ratio, a key measure of balance sheet strength, edged up to 13.9% at December 31 from the 13.8% reported in November.
Paragon said the debt purchase market remained highly competitive in the quarter. Idem Capital, a unit through which the company invests in and manages loan portfolios, made no new investments in the period.
“We remain confident in the outlook, but will maintain our capital, liquidity and broader risk disciplines in case the external operating environment should deteriorate,” chief executive Nigel Terrington said.
The bank maintained its guidance for 2019.
Peel Hunt repeated a 'buy' rating on the stock, saying it thinks the share price is "overly pessimistic" with regards to the sustainability of returns.
"We continue to see upside, supported by the long-term improvement in returns from the diversification of the business, with the current valuation indicating a degree of pessimism relating to the sustainability of returns," the broker said.
In morning trading, shares rose 1.5% to 416.6p.