The Paragon Group of Companies has issued a trading statement, based upon the business performance from 1 October 2015 to date.
Underlying operating profits of £35.2 million were 13.9% higher than the £30.9 million reported for the corresponding period in the previous year. This figure excludes costs of £2.2 million incurred in connection with the group’s acquisition of the Five Arrows Leasing Group, completed on 3 November 2015. Net of these expenses, operating profits were £33.0 million for the period. Pre-tax profit, after a credit of £0.9 million for fair value hedging items, was £33.9 million for the period, an increase of 12.3% including the absorption of the costs associated with the acquisition.
Buy-to-let originations were 80.6% higher than the same period in 2015, at £400.9 million. The period end buy-to-let pipeline stood at £595.7 million, 43% higher than at the same point in 2014. The group says it remains on track to deliver further growth in new lending this year.
Paragon said that the fiscal and regulatory changes and proposals, introduced over the last six months, may soften the rate of growth for buy-to-lending as time progresses towards their full implementation in 2021. However, demand for rental properties will remain strong for the foreseeable future. The changes are likely to result in an increasing trend towards investment by professional landlords.
Nigel Terrington, the group’s chief executive, said: “I am delighted with yet another strong financial performance by the group which has been achieved alongside further significant progress in our diversification strategy. Paragon Bank has passed through the milestones of £1 billion of deposit balances and on a monthly basis is in profit, less than two years after launch. The acquisition of Five Arrows Leasing is an exciting prospect and we believe it will provide a platform for further growth into the future.
“Our buy-to-let lending continues to display an exemplary credit performance and whilst the recent and proposed changes may soften the rate of growth in the sector, the drivers supporting the long term structural changes in the housing market remain as valid today as they have over the last three decades.”