Paragon in £40m buyback as interim profits soar
By Frank Prenesti
Date: Tuesday 08 Jun 2021
(Sharecast News) - Buy-to-let specialist lender Paragon Bank on Tuesday reported higher interim profits and a £40m share buyback as the housing market recovered from the Covid pandemic.
The company posted a 68.8% rise in profits to £96.4m and declared a 7.2p-a-share dividend for the six months to March 31. Net interest margin, the difference between savings and lending rates, rose 3 points to 2.32%.
Impairment charges fell to £6m compared to £30m in the same period in 2020 although the group maintained a cautious outlook as "uncertainties remain" about prospects for small businesses and retail customers once government Covid support schemes are unwound.
Buy-to-let advances fell 5% to £714.9m, although were 57.8% higher on the second half of 2020, with the period-end pipeline up 17.3% from its March 2020 level to £926.7m.
New mortgage loans were up 45% to £1.13bn, while buy-to-let advances rose 58% to £715m with the portfolio worth £10.9bn.
Paragon said it still had around £40m of customer balances subject to payment holidays compared to £2.5bn at the peak of the pandemic last year as the government introduced measures to stop people sliding into debt.
"The loan-to-value position of the buy-to-let portfolio continues to improve, reflecting strong house price appreciation since September 2020," the bank said.
"The markets in which we operate have seen healthy quarter-on-quarter improvements in activity and our business has been building momentum, whilst maintaining our traditional prudent risk appetite. The group has a strong capital base, high levels of liquidity and is well-positioned to capitalise on any opportunities that may emerge in the future."
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