Lender Amigo saw profits grow almost 70 per cent to £111m in its latest financial year, amid the threat of a regulatory crackdown on the guarantor loan market.
Profit before tax soared 68 per cent to £111m year on year in the 12 months to the end of March, the lender revealed, as customer numbers rose 23 per cent to 224,000.
Meanwhile revenue on its loans, which are offered at 49 per cent APR, climbed 28 per cent to £270.7m.
Earnings per share jumped 52.7 per cent to 19.4p, up from 12.7p a year before, and the company said it will pay a final dividend of 9.32p per share.
Why it’s interesting
Amigo set out strong growth figures in its maiden results since its initial public offering (IPO) in June 2018, which valued the business at £1.3bn.
The firm has previously warned that Brexit uncertainty could dent its loan book growth, and it said today it will “continue to monitor the potential effects” of the UK’s departure from the EU.
Chairman Stephan Wilcke said the company’s float last summer has “fuelled some urban myths about us and our customers” in the guarantor loans space, which is facing a regulatory crackdown.
“In future we will work harder to dispel those myths and take the time to ensure our evolving stakeholder universe fully understands the service we offer,” Wilcke added.
Guarantor loans firms like the FTSE 250 business are under pressure amid eye-watering interest rates and arguments that guarantors do not fully understand the risks of such lending agreements.
The Financial Conduct Authority has raised repeated warnings recently, saying guarantors end up paying back part of the loans customers owe.
The results come as chief executive Glen Crawford steps down for medical reasons, with former Brighthouse boss Hamish Paton taking over.
“Amigo retains its beautiful simplicity through a transparent product and business model,” Crawford said. “It has a clear focus on serving the needs of people excluded from mainstream finance who deserved a second chance.”
What Amigo said
Incoming chief executive Hamish Paton said: “It’s vital to remember the really important role Amigo plays in the lives of our customers. And what Amigo does, it does exceptionally well. We provide credit to those that can afford it but can’t currently get a loan from their bank for reasons that are often through no fault of their own. My Amigo journey has only just begun, and I can already feel a passion here that is both rare and inspiring.”