Amigo Loans says repayments remain strong despite rise in delinquencies

Amigo Loans has said that repayments remain ‘robust’, despite ‘an increasing trend in delinquency’, as the troubled firm awaits approval to begin lending again. 

In its results for the year to the end of March, the company said that overall debt collections, including early repayments, were still strong despite an increase in the number of people who were falling behind with repayments.

But it added that the financial squeeze caused by rising inflation will likely impact its customers in the coming months.

‘Whilst unemployment trends are favourable, the cost-of-living crisis is expected to have an impact on our customer base,’ said chief financial officer Danny Malone.

‘Significant uncertainty remains in respect of future customer behaviour and collections as the cost of living increases and the loan book diminishes.’

Revenues fell by 48 per cent to £89.5million, as a result of a halt to lending in November 2020 after a deluge of complaints from people who accused the firm of selling them loans that they could not repay.

The guarantor loans provider swung to a pre-tax profit of £167.9million, from a loss of £283.6million. 

But it stressed that this was due to it taking a £156.6million complaints provision release following the approval of its latest scheme to settle mis-sold customer claims.

‘The profit we are reporting today of £170million should not be taken as an indication of company performance or shareholder benefit,’ chief executive Gary Jennison said.

‘It is a result of the recent Court ruling in favour of our Scheme of Arrangement to pay out compensation to customers who were mis-sold loans.’

Under the scheme, creditors are in line to receive at least £116million between them, which represents around 41p for every £1 they are owed.

This is dependent on Amigo’s restarting lending within nine months of approval and completing a successful equity raise by May next year.

‘We are continuing to engage with the Financial Conduct Authority on the terms of Amigo’s return to lending, and we are thankful to them for working closely with us over such a long period of time,’ Jennison added.

Last month, Amigo said it was planning to offer two new products – a personal loan and a guarantor loan – under a new brand called RewardRate.

Amigo Loans shares were down 8.5 per cent to 4.44p in early trade.