Paragon posts £13m interim pre-tax profit

28 January 2010 | By Natalie Holt

An interim management statement from Paragon published today shows that the group made an operating profit of £13.2m.

Paragon, parent company of Paragon Mortgages, stopped accepting new business in February but in November said that it was considering a return to new lending.

The group says it continues to finance buy-to-let and secured loan further advances through securitisations.

Paragon says that securitisation spreads have tightened over the last month and notes new securitisation issues planned by Lloyds Banking Group.

Nigel Terrington, chief executive of Paragon Group, says: “We continue to monitor developments in the securitisation markets and the potential for new issuance by the group on terms which meet our requirements to support new lending.”

He says the group is also pursuing “a number of new opportunities” in relation to its third party servicing and private rented sector activities.

The company says that these areas, together with the portfolio it acquired last August, continue to operate profitably.

Redemptions across the loan books remains low, at levels similar to the second half of the year ending September 30 2009.

Arrears on the buy-to-let are reported to have improved with the percentage of accounts three months or more in arrears falling to 150bp as at December 31 from 154bp as at September 30.

Terrington adds: “The group remains financially strong, managing its portfolio carefully in the weakened economic environment.  

“UK interest rates are expected to remain at low levels during 2010, which will continue to have a positive impact on borrower payment performance, and we expect mortgage redemption rates to remain low.

“We will aim to recommence lending when funding market conditions are appropriate and in the meantime we shall continue to seek new business opportunities to supplement growth.”