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Paragon's underlying op. profit in line

27 January 2017 07:24

Paragon Group of Companies said that for the quarter Oct. 1-Dec. 31, 2016, its underlying operating profits were £33.1m and in line with management's expectations.

These profits were supported by good underlying trends in volumes, margins, cost control and bad debts, the company said.

As previously guided, the carry cost of the group's subordinated bonds would dampen reported profits in the early part of the year prior to the repayment of the £110m bond maturing in April 2017.

OUTLOOK

Paragon said it continued to see progress in each of its operating divisions and remained confident in achieving its expectations for the year.

CEO Nigel Terrington said the company had made a strong start to a year that would see the group continue its transition to a lending and operational model that is orientated around Paragon Bank.

"The lending growth we have seen in asset finance is encouraging and reflects the increasing diversification of the Group," he added in a statement.

"Lending across all divisions and the strong growth in the buy-to-let pipeline bodes well for the year as a whole."

FUNDING

The group's funding focus continued to be based upon its retail deposit taking activities through Paragon Bank, where deposit levels grew further during the quarter to £2.03bn (December 2015: £1.05bn).

"Immediately after the period end, Paragon Bank made its first drawing under the Bank of England's new Term Funding Scheme, to support further lending growth and we expect additional drawings over the rest of the year.

"This focus of retail deposit funding has resulted in the Group not renewing one of its warehouse lines, resulting in aggregate re-draw facilities reducing by £300 million from its position at the Group's 2016 year-end."

Story provided by StockMarketWire.com

Related Company: PAG

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