Amigo reports £58.1m loss after tax
Amigo has reported an adjusted loss after tax of £58.1m in the six months to September 2020 after profit of £35.8m a year earlier.
The guarantor lender revealed it had seen a revenue reduction of 36.5% to £92.3m, compared to £145.4m in the same period a year earlier.
It said this was primarily due to the temporary pause in all new lending except to key workers and due to Covid-19 related payment holidays.
The sub-prime lender revealed it granted Covid-19 related payment holidays to around 56,000 customers as at 30 September 2020.
By the end of October, this had risen to 57,000 with 22,000 plans still active.
It also stated one of the biggest challenges it faced in the six-month period was the level of complaints received.
These related to affordability and mis-selling concerns with complaints increasing since 2018.
It entered an agreement with the financial watchdog to clear a backlog of 9,000 complaints in June 2020, but earlier this month Amigo revealed it had received a total of 25,571 complaints. It was required to deal with these by an October deadline.
As part of today’s half-year report, Amigo said the provision for complaints increased to £159.1m (up from £7.5m in the previous year).
The cost of complaints for the half year is £93.7m which led to a reported loss before tax of £62.6m and loss after tax of £67.9m. Adjusting for exceptional items, adjusted loss after tax was £58.1m.
It added that complaints from claims management companies (CMCs) “continues to present a risk to the business” and said it has seen evidence of “very poor behaviour” by some CMCs such as issuing complaints from people who have never been customers of Amigo or submitting complaints multiple times from one customer.
Cash holdings stand at £160m as of 25 November 2020.
Gary Jennison, CEO of Amigo, said: “It’s undoubtedly been a difficult period for Amigo but as a team we have made significant progress towards quantifying and addressing the challenges we face.
“We are much better placed operationally to manage complaints and we now understand our position better. We have appointed professional advisors to help us look at all the available options; this work is at a very early stage. Where we’ve seen evidence of very poor behaviour by some CMCs, we have reported them to their regulator, the FCA. Our focus is on ensuring that Amigo retains its position as a viable unsecured lending platform for the 10-12m adults who are excluded from mainstream bank lending. We want to meet the varied needs of these potential customers, be that through offering guarantor loans or other unsecured loan products.”