Amigo Loans says repayments remain high despite rising arrears as it awaits watchdog approval to resume lending

  • Overall, fees are “reliable” despite more people falling behind on repayments
  • He warns that the cost of living crisis could affect the customer base
  • Revenue fell 48% to £89.5m in the year to the end of March as it stopped lending

Amigo Credits said total debt payments remained “robust” despite “an upward trend in delinquencies” as the troubled firm awaited approval to start lending again.

In its results for the year to the end of March, the company said total debt collections remained high, despite an increase in the number of people falling behind on their repayments.

But he added that financial pressures caused by rising inflation were likely to affect his customers in the coming months.

Amigo Loans, which has seen its revenue fall, is awaiting approval from the Financial Conduct Authority to start lending again

“While unemployment trends are favorable, the cost of living crisis is expected to impact our customer base,” said CFO Danny Malone.

“There remains considerable uncertainty about future customer behavior and collections as the cost of living increases and the loan book shrinks.”

Revenue fell 48 per cent to £89.5m as a result of the lending freeze in November 2020 following a flood of complaints from people who accused the firm of selling them loans they could not repay.

The guarantor loan provider made a pre-tax profit of £167.9m from a loss of £283.6m.

But he stressed that this was because it had released £156.6m after approving the latest settlement scheme for claims from customers who were mis-sold.

“The £170m profit we are reporting today should not be taken as an indication of the company’s performance or the benefit to shareholders,” said chief executive Gary Jennison.

“This follows a recent court decision in favor of our settlement agreement scheme to compensate customers who have been mis-sold loans.”

Under the scheme, creditors should receive at least £116m between them, which is around 41p for every £1 they are owed.

This is dependent on Amigo Lending restarting within nine months of approval and completing a successful capital raising by May next year.

“We continue to work with the Financial Conduct Authority on the terms of Amigo’s return to lending and we are grateful to them for working closely with us over such a long period of time,” added Jennison.

Amigo said last month that it plans to offer two new products – a personal loan and a guarantor loan – under a new brand called RewardRate.

Amigo Loans shares fell 8.5 percent to 4.44 pence in early trade.

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