Paragon Group's annual profits rise on pick up in lending market

26th Nov 2013 07:07

- Pre-tax profit and income rise on demand for mortgages- Improved housing sector and economy boosts results- Final dividend raised to 4.8p per share from 4.5p- Growth expected in year ahead Paragon Group's annual pre-tax profit rose 10.4 per cent to 105.4m pounds, driven by growth in buy-to-let lending volumes. The company, which provides mortgages and personal loans, achieved a 90.5% increase in buy-to-let loans of £359.8m in the year ended September 30th 2013. A pick up in the housing market, boosted by government schemes including Help to Buy, helped to bolster demand for loans. Paragon said higher levels of consumer confidence and an improving economy also supported its results. Total income jumped 4.5% to £177.9m while earnings per share climbed 17.4% to 28.4p.During the period the firm invested £92.8m in consumer loan portfolios and a further £13.5m shortly after the year-end. The group's investment division Idem Capital added £92.8m to the portfolio and an additional £13.5m after the year-end. "Buy-to-let lending volumes have grown by over 90% as landlords feel increasingly optimistic about the housing market and the prospects for the private rental sector," Chief Executive Nigel Terrington explained."At the same time, the group has continued to build on its highly regarded expertise in the debt purchase market, making further significant investments through Idem Capital."The group has applied to the Prudential Regulatory Authority and the Financial Conduct Authority for permission to establish a banking subsidiary.The proposed bank will take deposits and make, initially, car and second mortgage loans, with other product lines to be established in due course. Paragon expects to launch the bank in the first quarter of 2014, subject to approvals. "With our banking licence application making good progress and our plans for a return to consumer finance lending now well advanced, the group is well positioned for further growth in the year ahead," Terrington added. The final dividend was raised to 4.8p per share from 4.5p last year. Total dividend for the year increased by 20% to 7.2p per share from 6p.RD