Diversification continued to be the name of the game for Paragon (PAG) during the six months to March 2017. The challenger bank increased the proportion of income from non-buy-to-let lending to 36 per cent of the group total, from 29 per cent in the previous year. Retail banking deposits via Paragon Bank are now the largest source of funding for new lending, and the bank was also able to access £275m via the lower-cost Bank of England term funding scheme, which management plans to utilise to a greater degree during the second half of the year.
The banking business grew its loan book by almost three-quarters to £2.5bn. New asset finance business increased by almost half to £107m, and there was a small uptick in car finance loans. Its immature development finance products, which are aimed at small-scale property developers, made £23m in new loans, compared with just £1m in the previous year.
Buy-to-let mortgage lending was up almost a third at the bank to £455m. However, the actual volume of these mortgages written by Paragon Mortgages declined and pulled down overall new business for the group. This was set against a surge in business last year from landlords eager to secure mortgages ahead of the implementation of the stamp duty increase. Encouragingly, however, the pipeline of buy-to-let business more than doubled to £742m by the end of March.
Analysts at Shore Capital expect tangible net assets of 354p a share at September 2017, up from 312p in the previous year.
PARAGON GROUP OF COMPANIES (PAG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 475.6p | MARKET VALUE: | £1.3bn | |
| TOUCH: | 475.6-476.1p | 12-MONTH HIGH: | 491p | LOW: 225p |
| DIVIDEND YIELD: | 2.9% | PE RATIO: | 11 | |
| NET ASSET VALUE: | 365p | LEVERAGE: | 14.9 | |
| Half-year to 31 Mar | Total operating income (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2016 | 122 | 69.5 | 19.1 | 4.3 |
| 2017 | 124 | 69.4 | 21 | 4.7 |
| % change | +2 | - | +7 | +9 |
Ex-div: 6 Jul Payment: 28 Jul | ||||
