Paragon's (PAG) banking business has become the engine for growth, as the specialist finance group continues to diversify its funding and lending streams. Retail deposits at Paragon Bank grew 164 per cent to £1.87bn during the 12 months to September. This helped propel the bank's loan book up to £1.69bn, from just £0.41bn the previous year. The group has been channelling more of its buy-to-let business - as well as other sources of finance - through Paragon Bank, taking advantage of the lower cost of funding via retail deposits.
While buy-to-let lending by the banking business grew by almost half, overall lending to this market declined 12 per cent, to £1.16bn. The pipeline at the year-end almost halved due to market disruptions, including an increase in stamp duty for these landlords. However, chief executive Nigel Terrington believes that the chronic shortage of housing will continue to propel demand for loans in the long term.
Consumer debt purchaser Idem Capital Management sharply increased the amount of second charge mortgages sourced on behalf of the personal finance business. The group is also extending into property development finance, lending to small builders an average loan size of £5m.
Analysts at Shore Capital expect tangible net assets of 359p per share at September 2017, up from 312p the previous year.
PARAGON GROUP OF COMPANIES (PAG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 371.7p | MARKET VALUE: | £1.04bn | |
| TOUCH: | 371.7-372p | 12-MONTH HIGH: | 420p | LOW: 225p |
| DIVIDEND YIELD: | 3.6% | PE RATIO: | 9 | |
| NET ASSET VALUE: | 346p | LEVERAGE RATIO: | 15.5 | |
| Year to 30 Sep | Total operating income (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 170 | 96 | 24.2 | 6 |
| 2013 | 178 | 105 | 28.2 | 7.2 |
| 2014 | 198 | 123 | 31.9 | 9 |
| 2015 | 212 | 134 | 35.5 | 11 |
| 2016 | 244 | 143 | 40.5 | 13.5 |
| % change | +15 | +7 | +14 | +23 |
Ex-div: 5 Jan Payment: 13 Feb | ||||
