Strengthening buy-to-let market boosts Paragon as H1 profits rise
SOLIHULL-based home credit and mortgages group Paragon has seen interim profit growth on a strengthening buy-to-let market.
The group said it had made significant progress in the six months to March 31, 2013. Buy-to-let lending activity has increased considerably and it said strong growth in lending volumes was expected in the second half of the year.
Its subsidiary Idem Capital has increased its portfolio through further investments in the period, which it said were expected to contribute to second half profits. It is also actively engaged in reviewing potential acquisitions.
Paragon said its new retail bond programme and the increased warehouse capacity were providing access to funding to support future growth in Idem Capital and Paragon Mortgages. With new business activities also in development, the board said it was confident that the group was well positioned for future growth.
The period saw a strong growth in profits and significant progress in laying the foundations for further, sustainable growth. The group’s portfolio of loans, including acquired assets, is said to be continuing to perform well and the key performance metrics remain similar to recent periods. Organic cash generation remains strong; redemptions remain low; and, across the portfolio, credit performance is strong and in line with group expectations.
Idem Capital portfolio acquisitions added £57.6m of new investments, while in Paragon Mortgages, £102.3m of buy-to-let loans were completed. The Moorgate loans servicing business saw the completion of agreements to manage two new portfolios.
Group pre-tax profit increased by 9.6% to £49.1m (2012 H1: £44.8m), while group operating income increased by 5.5% to £86.8m (2012 H1: £82.3m).
Earnings per share increased by 10.5% to 12.6p (2012 H1: 11.4p), with the interim dividend rising to 2.4p per share (2012 H1: 1.5p per share) in line with dividend policy.
Commenting on the results, Nigel Terrington, Chief Executive of Paragon, said: “The group has made significant progress in the six months. Buy-to-let lending activity has increased considerably and strong growth in lending volumes is expected in the second half of the year. Idem Capital has increased its portfolio through further investments in the period, which are expected to contribute to second half profits, and is actively engaged in reviewing potential acquisitions.
“The new retail bond programme and the increased warehouse capacity provide access to funding to support future growth in Idem Capital and Paragon Mortgages. With a return to consumer finance lending in development, the board is confident that the group is well positioned for future growth.”
