(Adds details, shares, CEO comments)
By Noor Zainab Hussain
May 23 British buy-to-let mortgage lender
Paragon Group of Companies Plc reported a marginal fall
in first-half profit, but said its buy-to-let pipeline had more
than doubled as full-year lending volumes topped its
Paragon, which has been diversifying its business from its
core buy-to-let mortgage market, made a pretax profit of 69.4
million pounds ($90.1 million) in the six months ended March,
down from 69.5 million pounds a year earlier.
The company raised its interim dividend by 9.3 percent to
4.7 pence per share. Its return on tangible equity, a key
measure of profitability, improved to 13.5 percent from 12.7
percent a year ago.
New buy-to-let lending fell to 556.2 million pounds in the
six-month period from 823.6 million pounds a year earlier.
Origination flows over the last year in the group's core
buy-to-let mortgage market have been heavily disrupted by
Britain's stamp duty changes, which saw landlords scrambling to
Buy-to-let is a form of residential investment in which you
buy a property, typically with a mortgage, with the view of
renting it out.
In the final months of 2016 the buy-to-let market also saw
lenders tightening criteria ahead of the Prudential Regulation
Authority's (PRA) underwriting changes.
Paragon's buy-to-let lending pipeline, however, more than
doubled to 742.3 million pounds, allowing it to raise its
lending volumes expectation to 1.25 billion pounds for the year,
from 1.1 billion pounds.
"The biggest area of growth for us has been in the more
complex, professional end of the market... landlords might have
multiple properties or they might have properties with a
particular focus such as the student market," Chief Executive
Nigel Terrington told Reuters.
"Regulatory changes like the mortgage interest relief and
changes in the PRA underwriting rules will push more business
towards these more complex professional landlords," he said.
Paragon said asset finance lending rose to 106.6 million
pounds from 57.7 million pounds a year earlier.
"Asset finance generally is a fairly good barometer of the
economy... What we've clearly seen is the UK economy had a
pretty positive period even allowing for Brexit," Terrington
Paragon's retail-funded lending bank, which was launched the
in 2014 to enable the company to diversify beyond the mortgage
market, saw deposit levels rise 64.6 percent to 2.35 billion
Shares in Solihull, West Midlands-based Paragon were up
nearly 1 percent at 476.6 pence at 0821 GMT on the London Stock
Exchange, in line with Europe's banking sector.
($1 = 0.7702 pounds)
(Reporting by Noor Zainab Hussain in Bengaluru; Editing by
Sunil Nair and Amrutha Gayathri)