Amigo goes from loss to profit

It saw its profits after tax hit £169.6m in the year that ended on 31 March 2022, an increase of more than 158% when compared to the £289.1m loss it saw in the year to 31 March 2021. In addition to this, it’s gone from having £118.6m worth of debt to £83.9m worth of net cash - an increase of 170.7%. 

Driven in part by the fact that the business suspended lending in March - subsequently agreeing with the Financial Conduct Authority (FCA) not to lend again without regulatory approval - the number of customers on its books declined by 46.3%, going from 136 million to 73 million, with its net loan book and revenues also going down by 59.5% and 47.6% respectively. 

It comes as Amigo announced it would be returning to the market with two new loan products - a personal loan and guarantor loan. 

The personal loan starts at 49.9% APR while the guarantor product begins at 39.9% APR, with both products offering the borrower the opportunity to reduce the interest rate charged over time to the equivalent 34.9% APR by making payments on time. 

These products will be marketed under the RewardRate brand - with no new lending taking place under the Amigo brand. The name Amigo will continue as part of a regulated lending entity, Amigo Loans Ltd, as well as the listed holding company Amigo Holdings PLC. 

However, no pre-March 2020 loan products will be sold again, with the legacy book continuing to run off. 

Despite seeing its profits after tax increase, Amigo’s chief executive Gary Jennison said it should “not be taken as an indication of company performance or shareholder benefit” but is a result of the recent court ruling in favour of its scheme of arrangement to pay compensation to customers who were mis-sold loans. 

He explained: “Prior to the ruling, Amigo was insolvent and the only change is that the complaints provision has been replaced with a scheme provision of just under £170m.” 

He also said the success of the scheme and the ability of Amigo to lend in the future remains “dependent” on a successful capital raise by May 2023 and FCA approval. He added: “We are continuing to engage with the FCA 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. 

“As a company, we have learnt the lessons of the past. Our executive team has changed the culture of the company and we have developed new lending products built to serve the needs of a clearly defined set of customers, for whom having access to credit can lead to better long-term financial outcomes. 

“There are not enough providers left in the non-standard lending sector, and we believe it’s vital that a fair and responsible offering exists to help the millions of adults in the UK who can’t get a loan from a mainstream lender.”