Half year profits rise 13% at Paragon Group

MORTGAGE and finance business The Paragon Group has announced a 13.4% growth in half-year pre-tax profit to £44.8m (2011 H1: £39.5m) which it said underlined its strong start to the year.

The Solihull-based lender, servicer and acquirer of loan portfolios said total operating income increased by 10.5% during the period to £82.3m (2011 H1: £74.5m), with earnings per share increasing 17.5% to 11.4p (2011 H1: 9.7p).

The interim dividend increased by 11.1% to 1.50p per share (2011 H1: 1.35p).

Shareholders’ funds grew to £766m (2011 H1: £715.2m) or £2.57 per share (2011 H1: £2.43) and cash generation was strong, up to £104.9m (2011 H1: £179.7m) after investments.

The period also saw the first securitisation of new buy-to-let loan assets since 2007 and the business saw its first period of growth in its loan book since 2008.

There were £87.2m of new buy-to-let loans advanced; with a pipeline at March 31, 2012 of £103.1m. Almost £100m was invested in consumer loan portfolios in the period.

The group’s Idem Capital was established as one of the leading consumer debt buyers in the UK through a series of deals with RBS.

Commenting on the results, Nigel Terrington, Paragon’s chief executive, said: “We have delivered a further period of top-line revenue growth, driven by the success of our loan portfolio acquisition business, Idem Capital, together with continued low bad debts and costs.

“The group is well capitalised, has a term-funded balance sheet, has strong operational cash flow and is highly regarded for its track record as an originator and servicer of mortgages and consumer loans.

“This strong combination of attributes leaves us well placed to continue to develop our lending activities and to make further earnings-enhancing portfolio investments, and continue the improving trend in return on equity.”