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5 years ago
UK mortgage specialist Paragon makes record profit
November 20, 2012 / 9:41 AM / 5 years ago

UK mortgage specialist Paragon makes record profit

2 Min Read

* Year profit 94.2 mln stg, at upper end of forecasts

* Group benefits from big lenders shedding assets

LONDON, Nov 20 (Reuters) - British buy-to-let mortgage specialist Paragon has reported the highest profits in its history, benefiting from larger lenders selling off assets as they shrink their balance sheets.

Paragon said on Tuesday its pretax profit before exceptional items rose by 16 percent to 94.2 million pounds ($149.9 million), at the upper end of expectations. Analysts forecasts had ranged between 88 million and 95 million pounds, according to Thomson Reuters I/B/E/S data.

The company has performed strongly during the economic downturn, pursuing a strategy of expanding through acquisitions as banks sell off loans.

Earlier this month, Paragon bolstered its funding by increasing its credit line with Australia's Macquarie Bank to 250 million pounds, from 200 million previously.

Chief Executive Nigel Terrington said the group was "in a good position to continue to benefit from future portfolio acquisitions and servicing opportunities arising out of bank de-leveraging".

Paragon took an impairment charge on bad debts of 24.1 million pounds, 1.2 percent less that the charge for the previous year. The group said it benefited from low interest rates increasing affordability for customers.

Paragon said it would pay a final dividend of 4.5 pence per share, making a total payout for the year of 6 pence per share, up 50 percent on the previous year.

Shares in Paragon, which have gained in value by 65 percent since May, were down 1.9 percent to 245.2 pence at 0925 GMT.

Numis analyst James Hamilton has a "sell" recommendation on the stock. He said impairment charges could increase significantly when interest rates eventually start rising.

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