Paragon 9 month underlying profits up

Paragon Group said underlying operating profits before fair value items and acquisition related costs rose 12.1% to £109.9 million for the nine months to June 30.

The company said normal trading had been disrupted by stamp duty changes on buy-to-let property purchases and uncertainty ahead of the referendum on Britain's membership of the European Union.

“There is the potential for further disruption following the referendum vote, although it is too early for the scale of this to be determined,” the company said.

“However, our view continues to be that a number of regulatory and fiscal changes, whilst dampening the rate of growth of the buy-to-let market, will create opportunities for market share gains for specialist lenders.”

It added that pre-tax profits were up 9% to £106.3m after a £2.8m charge incurred in connection with the group's acquisition of the Five Arrows Leasing Group and a fair value charge of £0.8m

Paragon said the group's loan portfolios have maintained their strong performance in credit, profit and in cash flow.

Buy-to-let lending for the nine months to 30 June 2016 rose 21.2% was £989.6m. Paragon Bank funded 45.7% of buy-to-let, compared to 22.8% at 30 June 2015.

“As expected, new lending levels slowed during the third quarter to £166m following the disruptions to the market caused by the combination of stamp duty changes and uncertainty in the run up to the referendum,” Paragon said.

“The group continues to maintain a disciplined approach to pricing and credit, including having taken an early decision to raise minimum affordability tests in January 2016 to reflect future landlord tax relief changes. The pipeline at 30 June 2016 stood at £339m compared to £350.6m at the start of the quarter.”