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Paragon’s total advances down 50% from H1 2007

Paragon’s total advances for H2 2007 are expected to be 50 per cent less than in the first half of 2007, it has revealed in its pre-close trading statement.

The lender also confirmed its headcount is expected to be around 30 per cent lower than at the beginning of the financial year, following last year’s announcement of the move of Mortgage Trust’s new business processing function from Epsom to Solihull and redundancies in Solihull to reflect the reduction in new business.

The buy-to-let specialist lender says that significant exceptional costs of up to £10m relating mostly to its recent rights issue standby facility and to staff redundancies are expected to reduce pre-tax profits.

It says that operating profits, before exceptional costs and fair value movements, are expected to be marginally lower than the comparable period last year.

Paragon says total income is expected to be similar to H1 2007, with underlying costs marginally lower and impairments marginally higher in the Consumer Finance Division.

It says that on February 29, its warehouse facility, from which new lending is funded, was closed to new advances and converted to a £1.7bn term loan repayable by 2050.

Whilst the group continues to finance secured consumer finance originations and BTL further advances through its current securitisation arrangements, in order to be able to write more normal levels of business in the future, it will continue to pursue all prudent funding options open to it, including forward flow agreements.

A full report on the progress of the group will be issued at its interim results on May 20.

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