TIDMPAG
RNS Number : 0624M
Paragon Group Of Companies PLC
26 July 2017
THE PARAGON GROUP OF COMPANIES PLC
Trading Update
Good progress across all business lines, additional buy-back
announced
The Paragon Group of Companies PLC ("the Group" or "Paragon"),
the specialist lender and banking group, today publishes its
trading update based upon the business performance from 1 October
2016 to date.
Operating activity
New business levels continue to be strong, with growth in each
of our main lending products year to date. A further GBP575.7
million of new lending completed in the third quarter, taking
aggregate advances to GBP1,439.7 million for the nine months.
GBP million Q3 '17 Q3 '16 YTD Q3 '17 YTD
--------------- ------- ----------- -----------
Buy-to-let 458.0 989.6 1,014.2
--------------- ------- ----------- -----------
Asset finance 58.8 99.3 165.5
--------------- ------- ----------- -----------
Specialist
lending 58.9 99.8 164.6
--------------- ------- ----------- -----------
Total new
lending 575.7 1,188.7 1,344.3
--------------- ------- ----------- -----------
Idem Capital 0.0 208.8 95.4
--------------- ------- ----------- -----------
Total new
lending and
investment 575.7 1,397.5 1,439.7
--------------- ------- ----------- -----------
Buy-to-let
Paragon's application flows remain strong reflecting market
share gains in an otherwise subdued UK buy-to-let market. The
Group's growth reflects increasing demand from more complex and
professional customers. The proportion of these customers in the
pipeline has risen to 70.0% during the quarter, up from 61.8% at
the start of the year. The pipeline (58.5% of which is for
remortgage) continues to be healthy at GBP699.8 million at the end
of the quarter. Paragon launched its updated complex lending
proposition on 17 July 2017, well in advance of the PRA's 1 October
2017 deadline.
96% of lending in the quarter took place through Paragon Bank,
reflecting its increasingly important role in financing the Group's
new lending flows.
Redemption levels rose on the new BTL portfolio as it continues
to mature, taking the annualised redemption rate for 2017 to 20.6%
for the new book and 10.9% for the total portfolio.
Asset finance
The asset finance division continues to make good progress, with
new business levels increasing to GBP58.8 million in the quarter as
target markets, systems and operations continue to develop in line
with the Group's strategy.
Specialist lending
Combined completion volumes for the Group's other specialist
business streams (car finance, development finance, second mortgage
lending and residential mortgages) totalled GBP58.9 million for the
quarter, reflecting the measured expansion planned for these
product lines. The Group's residential mortgage initiative
continues as a pilot lending project while system and distribution
testing takes place.
Idem Capital
Idem made no new investments in the quarter but maintains a
strong pipeline of opportunities, both where it invests alone and
where it partners with Paragon Bank.
Funding update
Paragon Bank's savings deposit balances rose to GBP2.9 billion
as at 30 June and currently exceed GBP3.0 billion, with over
100,000 customers.
Further drawings of GBP175.0 million were also made under the
TFS scheme during the quarter. Total drawings stood at GBP450.0
million at the quarter end.
During May one of the Group's buy-to-let securitisations,
Paragon Mortgages (no.19) PLC was called, with GBP119.0 million
buy-to-let loans being acquired by Paragon Bank. More recently a
call notice has been given on one of the Group's legacy
securitisations, Paragon Mortgages (no.7) PLC, where the loans will
be refinanced by Paragon Bank during August. In July, the Group's
non-bank origination company was sold to Paragon Bank, meaning all
subsequent origination activity will take place in Paragon Bank or
one of its subsidiaries.
The Group's GBP110 million subordinated bond issue was repaid in
April as planned and Idem Capital extended its bi-lateral facility
with Citi by GBP70 million.
Group free cash stood at GBP255.6 million at the end of
June.
Credit quality
The credit quality of the portfolio remains exemplary, with just
9 basis points of three month plus arrears on the buy-to-let
portfolio at the quarter end. All portfolios continue to exhibit
strong behavioural scores suggesting no emerging signs of
stress.
Capital management
Paragon's capital position remains strong, with an unaudited
CET1 ratio of 16.1% at 30 June 2017. The Group concluded its GBP50
million share buy-back during July and, given its strong cash and
capital position, will be extending this 2017 buy-back by up to an
additional GBP15 million. The Group's capital management plans
will, as normal, be reviewed at the year end and will be
communicated to investors with the Group's preliminary announcement
on 23 November, 2017.
Outlook
The Group continues to see good progress in each of its business
lines and continues to trade in line with expectations and
re-iterates its guidance for the year.
Nigel Terrington, Paragon's Chief Executive said:
"I am pleased with the Group's performance for the year to date.
Our strong capital and funding resources provide the foundations
for further growth alongside returning additional sums to
shareholders via the enhanced buy-back programme. Our new business
streams continue to develop well and the increasingly complex focus
in buy-to-let demand is also supporting absolute growth and market
share gains for Paragon. The Group is well-placed for the next
phase of PRA underwriting rule changes, which will provide Paragon
with a further competitive advantage".
For further information, please contact:
The Paragon Group of Companies Headland
PLC
Nigel Terrington, Chief Lucy Legh and Del Jones
Executive
Richard Woodman, Group paragon@headlandconsultancy.com
Finance Director
Tel: 020 7786 8455 Tel: 020 3805 4822
Paragon will be releasing its preliminary results for the year
to 30 September 2017 on 23 November 2017.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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