Paragon Group's first half profits jump on buy-to-let demand

Paragon Group on Tuesday reported a 12.5% increase in underlying profits to £71.9m in the first half as the provider of mortgages and personal loans received strong demand for buy-to-let house purchases.

Pre-tax profit grew 11% to £69.5m in the six months to 31 March 2016 as buy-to-let lending jumped 84.6% to £823.6m.

The surge in buy-to-let lending came ahead of the introduction of higher stamp duty on such purchases from 1 April.

Paragon’s return on tangible equity improved to 12.7% compared to 11% the same period year earlier. Earnings per share rose 17.2% to 19.1p.

The company raised its dividend by 19.4% to 4.3p.

"This has been another outstanding performance from Paragon, with strong profit growth complemented by significant progress in our lending activity and further development in our diversification strategy," said chief executive Nigel Terrington.

However the company's shares fell as the outlook for the buy-to-let market remains uncertain. Shares were down 3.79% to 311.8p at 1033 BST.