Paragon lifts profit, see further growth in lending - UPDATE

21st May 2013 07:32

The Paragon Group of Companies, a specialist buy-to-let and consumer finance group, increased its half year profit after a sharp rise in buy-to-let lending activity, and said it is well positioned for future growth.Pre-tax profit increased by 9.6% to £49.1m in the six months ended March 31st 2013. Underlying pre-tax profit climbed 10% to £48.2m. Earnings per share increased by 10.5% to 12.6p.Buy-to-let loans advanced to £102.3m during the period from £89.2m the same time a year earlier with a pipeline at the end of March of £241.2m. Paragon, which acquires unsecured consumer loans through its Idem Capital Securities subsidiary, said it expects a significant increase in lending expected in second half.Chief Executive Nigel Terrington said: "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."The interim dividend has been increased to 2.4p per share from 1.5p per share last year, in line with the group's dividend policy.Jefferies International recommended a 'buy' rating and target price of 350p, saying it sees the company earning 10% on average equity in fiscal year 2013 as surplus cash in invested."We have made no material changes to forecasts and keep Paragon a 'buy'," the broker said.Paragon's share price fell 1.50% to 341p at 08:45. CJ