Paragon makes £20m Q4 profit

The Paragon Group has reported operating profits (before fair value items) of £20.3 million for the last three months of 2011, compared with £18.1 million for the corresponding period in the previous year.

This came as it publishes its interim management statement based on the performance of the business from 1 October 2011 to date, including a commentary on the unaudited financial information for the period from 1 October to 31 December 2011.

It put the the increase primarily down to income generated from the group’s new business developments. Pre-tax profits, inclusive of a credit of £0.5 million for fair value hedging items, were £20.8 million for the period.

At 31 December 2011 arrears over three months on the buy-to-let portfolio, including acquired loans and receivership cases, were 64bp, comparing favourably with 83bp of arrears at 31 December 2010 and at a similar level, despite the seasonal payment disruptions of the Christmas period, to the 63bp of arrears at 30 September 2011.

After investing £98.9 million on portfolio acquisitions over the period and £37.5 million in the recent securitisation by Paragon Mortgages (No. 16) PLC, free cash balances stood at £83.6 million at 31 December 2011 compared with £195.0 million at 30 September 2011. Cash generation from the group’s SPVs and, increasingly, from the acquired portfolios, remained strong over the period, Paragon said.

During the quarter, £37.4 million of new buy-to-let loans were advanced and a further £1.2 million was advanced by way of further advances to existing borrowers. At 31 December 2011 the pipeline of new business amounted to £95.1 million.