Paragon records a 21% increase in development finance new business pipeline as developer confidence improves

By Bridging Loan Directory 5th June 2024

Paragon Banking Group’s development finance business has recorded a 21% jump in its new business pipeline as developer confidence recovers.

Announcing its Half Year results for the six months to 31 March 2024, Paragon reported its development finance new business pipeline stood at £186.4 million, compared to £154.3 million at the end of September last year.

The Group also reported that undrawn balances on development projects in progress increased by 19.2% since the Group’s Year End to £481.5 million.

A significant amount of these balances, particularly those related to projects already started, would be expected to be drawn in the second half of the financial year, providing a strong base for lending.

New lending during the six months stood at £243.8 million and the division recorded a broader geographical spread than at the same period last year.

The proportion of the portfolio located in London and the South East reduced to 49%, down from 54% as at March 2023.

Other highlights during the Half Year included the extension of the Green Homes Initiative from £200 million to £300 million.

The scheme incentivises developers to build the most energy efficient homes through financial discounts and, as at 31 March 2024, £204.8 million had been agreed under the scheme.

The period also marked the development finance business’s expansion into the Build to Rent market, building on its mature offering in the Purpose Built Student Accommodation sector.

Overall, Paragon Banking Group delivered a 13.5% increase in underlying profits to £146.3 million for the period.

Development finance is one of the businesses that comprises Paragon’s Commercial Lending division.

Overall Commercial Lending volumes were slightly higher than their 2023 level at £589.8 million and Commercial Lending now accounts for 48% of new lending across the Group.

Neal Moy, Paragon Bank’s Development Finance Managing Director, said:

“Coming out of a challenging 2023 for the market, we are seeing an increase in quality proposals from developers, leading to an expansion of our new business pipeline.

Developer confidence is improving as economic volatility dissipates and some of the supply chain and labour issues that marked the post-pandemic world ease.”