Profits improve for Paragon as lending picks up

MORTGAGE group Paragon has seen half-year profits increase by almost 35% as lending picked up in the six months to March 31, 2011.

The Solihull based firm has also said it expects lending levels to be strong during the second half.

H1 pre-tax profits came in at £39.5m, up 34.8% on the same period last year (£29.3m), while earnings per share increased by 36.6% to 9.7p on H1 2010. The interim dividend increased by 12.5% to 1.35p per share, compared to 1.20p last year.

Shareholders’ funds stand at £715.2m, up from £664.6m in H1 last year, or £2.43 per share. The business generated cash of £179.7m, up from £128.1m last year.

The company said it had benefited from a successful lending relaunch plus it said strong growth in completions was expected in the second half of the year.

Further portfolio investment has been made with approximately 50,000 additional third party loans to be serviced. Further opportunities for growth are now under discussion.

It said its portfolio had performed well with buy-to-let arrears continuing to fall and remaining significantly below industry average.

Commenting on the results, Nigel Terrington, chief executive of Paragon, said: “The group’s performance continues to be strong, with excellent profit growth, credit performance and cash generation during the first half of the financial year.

“New lending has progressed well, with a strong application flow building to a meaningful pipeline of business. Strong growth in lending is expected in the second half of the year.”

He said further progress had been achieved in servicing and investing in loan portfolios, and additional opportunities were under review which sought to take advantage of the group’s expertise in these areas.

“We look forward to building on the success of the group’s return to new lending as the foundation for future growth and to returning to the securitisation market,” he added.

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