Paragon pushes ahead

That ability to return to making loans followed success in negotiating a £200m warehouse facility and management has been busy re-establishing a network of authorised mortgage intermediaries. Since the year-end, Paragon has succeeded in completing the first securitisation of buy-to-let assets since the financial crisis. The deal was priced at 275 points over Libor and will enable the group to reload its warehouse facility to continue making new loans.

Loan quality looks good, too, and - of the £127m of loans advanced to new customers - none is in arrears, while the average loan-to-value ratio remains low at 69.2 per cent. Low interest rates have also helped to improve the quality of the existing loan book, and overall impairment charges fell 37.8 per cent to £24.4m which equates to just 0.28 per cent of the loan book.

The group's hands-on approach to addressing situations where landlords encounter financial difficulties has also paid-off. While the number of properties where a receiver has been appointed rose marginally from 1,398 to 1,483, 93.9 per cent of those properties available were let, with rental income comfortably exceeding the mortgage payments.

Following efforts to diversify its revenue stream when the wholesale funding market effectively curtailed the buy-to-let mortgage side, Paragon has been building a series of loan portfolios through acquisition, as well as offering a servicing facility for third-party loans. Progress here has been impressive, with operating profits up 55.1 per cent at £7.6m.

Peel Hunt has upgraded its forecasts and now expects full-year pre-tax profit of £86m and EPS of 20.7p (2011: £78m/18.7p).