Paragon Banking Group PLC

Paragon Banking Group PLC (LSE: PAG), a constituent of the FTSE 250 index, is a UK-based specialist banking group. The company provides a variety of savings products and delivers tailored financing solutions for buy-to-let landlords, small and medium-sized enterprises (SMEs), and residential property developers across the UK. This Report covers the Investment Highlights, Conclusion, and Recommendation on the stock. 

Key Investment Rationale – Buy at GBX 844.50

• Loan and pipeline growth: The net loan book increased to £16.2bn, reflecting 4.8% growth from Q3 2024 and 1.1% quarter-on-quarter expansion. Mortgage advances reached £1.1bn for the nine months, and the buy-to-let pipeline rose 27.6% to £0.8bn, driven by completions late in the period.

• Deposit inflows strengthened: Retail savings balances climbed 1.5% to £16.0bn, supported by inflows through the newly launched Spring App in April 2025. The app achieved rapid public adoption and favourable customer feedback, placing it near the top of UK deposit-taker rankings.

• Stable Credit quality: Buy-to-let arrears stood at 54 bps (H1 2025: 51 bps), and the annualised redemption rate was 7.0%, largely unchanged from the half-year. Development-finance loan workouts from 2022 continue under active management, and no new default cases were recorded in the June quarter.

• Capital, profitability, and shareholder distributions remain stable: Capital ratios at quarter end were CET1 13.6% and TCR 15.4%, including the assumed half-year dividend and the £100mn share buyback for FY 2025. Guidance remains unchanged for RoTE 15–20%, NIM above 300 bps, and operating expenses below £185mn, reflecting continued capital strength and cost discipline while maintaining planned shareholder distributions.

PAG Daily Chart & Valuation

For conducting the valuation, the following peers have been considered: TP ICAP Group PLC (LSE: TCAP), Standard Chartered PLC (LSE: STAN), etc.

As per the above-mentioned price action and technical indicators analysis, a ‘Buy’ rating has been given on Paragon Banking Group PLC (LSE: PAG) at the Current Market Price of GBX 844.50, as of 24 October 2025, 08:45 AM, GMT+1.

Markets are trading in a highly volatile zone currently due to certain Macro & Micro-economic data and prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing.

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is 24 October 2025. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: Target Price refers to a price level which the stock is expected to reach as per the relative valuation method and/or technical analysis taking into consideration both short-term and long-term scenario.

Note 5: ‘Kalkine reports are prepared based on the stock prices captured either from the London Stock Exchange (LSE) and or REFINITIV. Typically, both sources (LSE and or REFINITIV) may reflect stock prices with a delay which could be a lag of 15-20 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.’

Note 6: Dividend Yield may vary as per the stock price movement.