Paragon sees strong Q3 trading

MIDLAND mortgage group Paragon said today its third quarter trading was strong, contributing to operating profits before exceptional items for the nine months to June 30 of £47.6m.

In an interim management statement covering the period from April 1 to date, the Solihull firm said pre-tax profits, inclusive of an exceptional profit of £5.7m on the purchase of group securitised bonds and a charge of £0.5m for fair value hedging items, had reached £52.7m.
 
Arrears within the buy-to-let portfolio improved further during Q3, with the proportion of lenders more than three months in arrears reducing to 0.97% by June 30, which compares to 1.17% by March 31.

Paragon said the number of accounts in arrears within the secured consumer finance book remained stable, contributing to a lower impairment charge in both segments of the business from the previous two quarters.  

It said the continuing funding shortage and lack of competing back products had served to keep the level of redemptions low.
 
Cash generation from the group’s special purpose vehicles remained strong over the period, resulting in an increase in cash balances to £145.4m.
 
The firm bought back £12.5m of securitisation bonds for £7.3m during the quarter, capitalising on the weakness of the bond markets.

It said it was also considering re-starting its lending programme, providing market conditions supported the move.

In a statement, it said: “Discussions with potential warehouse providers continue and, whilst we cannot provide any guidance regarding timing or outcome, the group continues to make operational preparations for the recommencement of lending.  

“This may include, from time to time, the testing of products and distribution in the market. The group continues to finance buy-to-let and secured consumer finance further advances through its current securitisation arrangements.”
 
The group said its financial position continued to strengthen and provided interest rates remained low, it expected a better payment performance.

However, it added that in the absence of a significant increase in competition within the buy-to-let finance market, it expected redemption levels to remain low.

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