The Paragon Group of Companies reported Thursday a 16.7 per cent increase in operating profits for the last three months of 2012.
The FTSE 250 provider of mortgages and personal loans said its financial performance was in line with management's expectations with operating profits of £23.7m, compared with £20.3m for the same period the previous year.
Pre-tax profits, after a charge of £0.2m for fair value hedging items, were £23.5 million for the period.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
A strong portfolio pushed profits higher during the quarter with credit performance of consumer loans in line with management forecasts.
The group also made £45.6m of new buy-to-let loans and £0.5m of further advances.
By the end of the period the pipeline of new business amounted to £102.7m.
"The credit quality of the new lending business written in the period has remained excellent.," the company said.
"Following the increase in funding capacity the group has enlarged and extended its lending activities and we anticipate increased business volumes during the second quarter."
Cash generation from the group's portfolios remained strong. Free cash balances came to £154.4m at December 31st, compared with £127.7m at September 30th.
In October the company completed, through its subsidiary Paragon Mortgages, a £200m securitisation transaction consisting exclusively of buy-to-let assets.
A month later the group announced the renewal of its mortgage warehouse facility with Macquarie Bank's London branch, increasing the facility to £250m from £200m.
The facility, rated by Fitch Ratings, will be available until December 2016. The extension and increase in the loan facility brings total warehouse capacity within the group to £450m and will be used to support growth plans in the buy-to-let market.
The company was considering the acquisition of Hampshire Trust, a wholly-owned bank subsidiary of National Counties Building Society. Discussions have since terminated but Paragon said it will be exploring other avenues including the establishment of a banking subsidiary in the group.
"During the period, the group has made excellent progress, successfully managing the portfolio of originated and acquired assets, seeking further opportunities to expand by acquisition, developing the new lending business, increasing the funding available for buy-to-let mortgage originations and completing a further securitisation," Paragon stated.
"The group will continue to pursue this strategy."
Shares fell 2.71% to 276.70p at 9:27 Thursday.
RD
-
Going part-time could leave a £58,000 hole in your pension: how to plug the gapThere are many reasons for switching to part-time work, but some savers don’t consider the impact on their pension until it is too late
-
Three bargain investment trusts to add to your portfolioThese three investment trusts are bargains compared to their net asset value (NAV), but one fund analyst thinks the deep discounts are unwarranted.
