Best ever half year profits for Paragon Group

SOLIHULL-based home credit and mortgages group, Paragon has announced record half year profits following considerable growth in the buy-to-let lending sector.

In its half yearly results for the six months ended March 31, 2015, the group saw underlying profit increase by 10.4% to £63.9m (2014 H1: £57.9m).  Statutory pre-tax profit increased by 7.6% to £62.6m (2014 H1: £58.2m).

Return on equity improved to 10.8% (2014 H1: 10.5%) and the group has announced a 20% dividend increase to 3.6p per share.

The group said it had benefited from a 65.7% increase in new buy-to-let lending, while its pipeline in the sector was up 101.5% to £701.4m (2014 H1: £348.1m).

The group’s new banking arm also enjoyed a solid period with flows building across its product offering. Deposit balances increased to £165m, while its mortgage warehouse facilities increased to £750m.

Its credit arm, Idem Capital, also enjoyed a strong performance, with new investments and commitments of £28.9m.

Commenting on the performance, Nigel Terrington, chief executive of Paragon, said: “These results demonstrate how far Paragon has progressed in recent years as one of the UK’s leading specialist lenders.

“Considerable growth in buy-to-let lending volumes and strong momentum into the second half of the year, complemented by the launch of a number of additional products which contribute to the on-going diversification of its income streams, have significantly enhanced the group’s franchise.

“Notwithstanding the start-up costs of Paragon Bank and new business strain associated with higher volume levels, the group delivered record interim profits, up 10.4% from the same period in 2014.”

He said the substantial increase in capacity and access to new and deeper funding markets, particularly through Paragon Bank, had provided the platform to support further sustainable growth and diversification going forward.

“The bank has made excellent progress since its launch just over a year ago and is on track to break even during the 2016 financial year,” he added.