Paragon records 41% jump in development finance lending
Paragon Bank’s development finance division recorded a 41% increase in advances during the first half of its financial year, reflecting strong demand from SME developers and housebuilders.
The division lent £323.7 million during the six months to the end of March, compared to £229.5 million during the same period in 2021.
Short-term prospects for future lending in the development finance business remain strong.
Undrawn balances on current facilities increased to £596.4 million from £402 million last year, a significant amount of which would be expected to be drawn in the second half of the financial year.
The new business pipeline stood at £266.7 million.
Total lending across the Paragon Banking Group’s divisions increased by 32.2% compared to the same period last year to £1.49 billion. Pre-tax profits at the company increased 49% to £143.6 million.
The division’s loan book ended the period at £672.9 million, compared to £552.3 million the year before.
Paragon launched its Development Finance Green Homes initiative during the first half, with £23.5 million of new lending facilities agreed under the initiative.
Under the Green Homes Initiative, projects developing energy-efficient properties, those with an EPC A grade, can receive discounted pricing.
The regional spread of the Group’s lending has broadened, with the proportion of the portfolio located in London and the South-East of England falling to 58.2% from 63.6% at 30 September 2021.
Activity increased particularly in the East and West Midlands, with funding provided for a number of flagship projects.
Robert Orr, Paragon’s Development Finance Managing Director, said:
“These are a pleasing set of results and reflect the efforts of our team during the period.
We have expanded our relationship director team and built a strong support function over the past three years, and we are now seeing the benefit of this through lending growth.
I was particularly pleased to see how we have broadened our lending geographically, especially around the East and West Midlands, as well as the South West.
We aim to develop our business regionally even further in the coming years.”