Mortgage lender Paragon upbeat on 2011 as profits rise 32pc

Published 25th Nov 2010

UK mortgage lender Paragon Group issued an upbeat outlook for the next 12 months after reporting a 32pc increase in pre-tax profits for the year to the end of September.


Paragon, which reopened for new business again for the first time in three years in September, reported a pre-tax profit for its latest financial year of £71.8m, up from £54.3m in 2009.

The increase in profits was driven by a continuing fall in impairments on the back of lower arrears as well as gains on the repurchase of the company's own debt.

Nigel Terrington, chief executive, said the lender had made "excellent progress" and hailed the company securing £200m of funding that allowed it to begin making new mortgages.

"We fully expect that our new lending programme will expand over time and will be complemented by increasing opportunities to acquire loan portfolios and take on new servicing contracts," said Mr Terrington.

Paragon has yet to make a new loan since reopening to new business, but Mr Terrington said the company had received a lot of interest from mortgage brokers and would soon complete on its first lending since late 2007.

Mr Terrington expects Paragon to sell its first new securitisation deal since the financial crisis next year and said he thought it would be possible to issue a bond worth about £250m around the middle of 2011.

"I want to get back into the securitisation market and I think it would be better to issue something rather than to keep on talking about the possibility of doing something," he said.

Paragon's financial results beat analyst expectations and broker Arden Partners increased its target share price for the company and maintained its "buy" recommendation on the shares.

Source: ' Telegraph '

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