Amigo Loans says repayments remain strong despite rising delinquencies as it awaits watchdog approval to start lending again
- “Robust” overall collections despite growing number of people in arrears
- He warns that the cost of living crisis should have an impact on his clientele
- Revenue fell 48% to £89.5m in the year to end March as he stopped lending
Amigo Loans said repayments remain “robust”, despite “an upward trend in delinquencies”, as the struggling business awaits approval to start lending again.
In its results for the year to the end of March, the company said overall debt collection, including prepayments, was still strong despite an increase in the number of people in arrears.
But he added that the financial strain caused by rising inflation is likely to impact his clients in the months to come.
Amigo Loans, which has seen its income plummet, is awaiting approval from the Financial Conduct Authority to start lending again
“While unemployment trends are favourable, the cost of living crisis is expected to impact our customer base,” said Chief Financial Officer Danny Malone.
“Significant uncertainty remains regarding future customer behavior and collections as the cost of living increases and the loan portfolio shrinks.”
Revenue fell 48% to £89.5m, following the halt in loans in November 2020 after a deluge of complaints from people accusing the company of selling them loans they couldn’t to reimburse.
The guarantor loan provider rose to a pre-tax profit of £167.9m from a loss of £283.6m.
But he pointed out this was because he took a £156.6million complaints reserve release following the approval of his latest scheme to settle claims from underselling customers.
“The profit we are reporting today of £170m should not be taken as an indication of business performance or shareholder benefits,” chief executive Gary Jennison said.
“This is the result of the recent court ruling in favor of our plan of arrangement to pay compensation to customers who were mis-sold.”
Under the scheme, creditors are in line to receive at least £116million between them, which is around 41p for every £1 owed to them.
It depends on Amigo lending resuming within nine months of approval and a successful capital raise by May next year.
“We continue to engage with the Financial Conduct Authority on the terms of Amigo’s return to lending, and are grateful to them for working closely with us for such a long time,” Jennison added.
Last month, Amigo announced that it planned to offer two new products – a personal loan and a guarantor loan – under a new brand called RewardRate.
Shares of Amigo Loans fell 8.5% to 4.44p in early trading.