Expectations met as Paragon posts £18m pre-tax profit

SOLIHULL-based mortgage company the Paragon Group posted a pre-tax profit of £18.7m, the company announced today.

In an interim management statement for the period October 1, 2010, to date, the firm said performance remained “in line with management’s expectations”, generating operating profits of £18.1m.

Redemptions across the loan books remain low, Paragon reports, while customer payment performance in buy-to-let and secured consumer loan businesses “continues to be superior to industry data”.

The statement added: “At December 31, 2010, arrears over three months on the buy-to-let portfolio, including the portfolio acquired in September 2010, were 83bp – 76bp excluding the acquired portfolio – continuing the downward trend in the percentage of the portfolio experiencing payment difficulty.

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“In accordance with the Group’s normal practice, the buy-to-let loan portfolio acquired on September 30 is now fully integrated and managed entirely by Paragon employees.

“Together with the other portfolios acquired previously, it is performing well, in line with our expectations.”
 
Cash generated from the group’s special purpose vehicles remained strong over the period, it said, with free cash balances increasing during the quarter to December 31 to £164.6m from £147.8m at the end of September.

The statement added: “In September 2010, the group announced a return to new buy-to-let mortgage lending following the signing of a £200 million warehouse facility.

“Our target market remains the experienced landlord, although those with smaller, high quality, portfolios are also considered.

“We are encouraged by the steady growth in the level of applications in the four months since our return to new lending was announced and the current pipeline of applications stands at approximately £75m.”