Buy-to-let boom drives Paragon renaissance

24th May 2011 17:47

Talk of a strong revival in the buy-to-let market gained credence when mortgage lender Paragon announced interim profits increased by more than a third. Profit before tax in the six months to the end of March rose 34.8% to £39.5m from £29.3m at the half-way stage the year before.Underlying profit before tax, which strips out gains on losses on hedging instruments, grew 29.3% to £34.8m from £29.7m a year earlier.The charge for impairments more or less halved, to £13.3m, from £26.7m the year before, reflecting the lower level of arrears within the portfolio.As a percentage of loans to customers the charge has reduced from 0.3% for the first half of 2010 to 0.2% and has remained stable compared to the second half of 2010."The group's performance continues to be strong, with excellent profit growth, credit performance and cash generation during the first half of the financial year," said Nigel Terrington, chief executive of Paragon. "New lending has progressed well, with a strong application flow building to a meaningful pipeline of business. Strong growth in lending is expected in the second half of the year," Terrington added. The group only resumed lending to new clients in September 2010 after battening down the hatches during the credit crunch.Earnings per share grew 36.6% to 9.7p from 7.1p last year, and the interim dividend has been upped to 1.35p fro 1.20p.---jh