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Paragon’s development finance business builds on acquisition to increase lending

Building on the acquisition of property finance firm Titlestone, Paragon’s development finance business has led the way for new lending within the specialist lender’s Commercial Lending division.

Paragon’s half year results announced show Commercial Lending has seen strong business growth as it focuses on helping British SMEs gain access to funding.

Across Commercial lending, which includes development finance, asset finance, motor finance and structured lending, lending increased by 69 per cent to GBP455 million and there was a three-fold increase in underlying profits to GBP20 million.

Within the division, development finance showed the strongest performance with new lending increasing four-fold by GBP126 million to GBP161 million, compared to the same period last year.
Paragon has significantly expanded its development finance portfolio following the acquisition of Titlestone Property Finance in July last year.

With an enhanced and broader product range, the experienced team focuses on small and medium sized UK property developers. Business so far has concentrated on the South-East of England and typical projects funded have an average size of around GBP4.5 million.

Nigel Terrington, Chief Executive of Paragon, says: “We have delivered a strong first half, with increased profits benefiting from good growth in lending and improved margins. This reflects our strategic transformation to become a more broadly-based banking group focussed on supporting British SMEs and consumers in specialist lending markets.

“The successful integration of the Titlestone development finance business, together with strong growth in the wider Commercial Lending division means that we now offer a stronger and broader proposition to our SME customers.

“The half year performance provides further evidence of the success of Paragon’s five-year transformation into a specialist banking group. Our diversification will enable us to continue to grow our customer base and deliver improving returns to shareholders.”

Richard Doe, Managing Director of Commercial lending at Paragon, says: “Development finance has significantly expanded since the acquisition of Titlestone and is supporting our aim to help SMEs and independent property developers achieve their financial ambitions.

“While a majority of the business has been in the South-East of England, our objective is to lend more widely across the UK.”

Profits included the impact of the Titlestone acquisition, with the acquired loan portfolio contributing approximately 83 basis points of the 106 basis point improvement in the Net Interest Margin (NIM), which records the difference between what Paragon pays for funds and what it earns from lending.

Overall, Commercial Lending’s loan book now stands at nearly GBP1.3 billion following an 89 per cent year-on-year increase.

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