Paragon Group Share News (PAG)

The horrors of the credit crunch are becoming a faint memory for specialist mortgage lender Paragon with performance in the third quarter of its financial year continuing to be strong.Pre-tax profits, inclusive of an exceptional profit of £5.7m on the purchase of group securitised bonds and a charge of £0.5m for fair value hedging items, were £52.7m for the April to June quarter.Performance since the end of June has been on a similar level to that seen in the April-June quarter.Arrears within the buy-to-let portfolio improved further during the third quarter, with the proportion of the portfolio three months or more in arrears reducing to 0.97% at 30 June 2010 from 1.17% at 31 March 2010. In addition, the number of accounts in arrears within the secured consumer finance book remained stable. The company said these improvements in arrears trends contributed to a lower impairment charge in both segments of the business from the previous two quarters. The level of redemptions remains low, thanks not only to the company's customer redemption scheme but also the scarcity of competing loan offerings from other companies in Paragon's sector of the market. That scarcity is caused, in part, by the unavailability of funding from the money markets, a situation that has prompted Paragon to cease offering new loans for the time being. Discussions between Paragon and potential warehouse providers continue and the group continues to make operational preparations for the recommencement of lending. The group continues to finance buy-to-let and secured consumer finance further advances through its current securitisation arrangements."In the absence of a significant increase in competition within the buy-to-let finance market in the foreseeable future, we expect redemption levels to remain low," the company said.