British lender Paragon Group of Companies has reported a nine per cent increase in full-year pre-tax profit and raised its share buyback programme by up to £50 million after extending it into next year.
The company, which owns Paragon Bank, said its buy-to-let lending doubled to £1.33 billion in the year ended September 30, while its pipeline at year-end was up 72 per cent at £713.7m.
Buy-to-let is a form of investment in which people buy a property, typically with a mortgage, to rent out.
Increasing house prices, brought about by restricted supply and an uptick in demand, have made such investments more attractive.
Paragon said its banking unit, which reported a loss of £8.6m in 2015, is expected to make a profit in 2016.
Paragon launched the retail-funded lending bank last year to enable it to diversify beyond the mortgage market.
Chief executive Nigel Terrington said the bank would not earn enough in 2016 to come under a proposed banking tax - an eight per cent surcharge on banks' profits above £25m.
"In one sense, it will be good news to pay the extra eight per cent tax because that means it (Paragon Bank) will be profitable," Mr Terrington said.
Paragon said last month it had bought SME lending-focused Five Arrows Leasing from Rothschild & Co.
The asset finance business would contribute about £10m to the group's profit this year, with about £3m expected to go towards transaction costs.
Paragon also raised its dividend by 22 per cent to 11 pence per share.
The lender said Idem Capital, its loan portfolio acquisition unit, made net investments of £104.4m, down from £175.7m a year earlier.
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