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Amigo profits decline on increased impairment and investment charges

By Iain Gilbert

Date: Thursday 28 Nov 2019

LONDON (ShareCast) - (Sharecast News) - Guarantor loans provider Amigo saw profits fall in the six months ended 30 September despite witnessing growth in both customer numbers and revenues.
Adjusted profits after tax fell 24.2% to £35.8m during the half as a result of an expected increase in impairment and investment and a provision for complaints.

The London-listed firm reported an 8.8% increase of its net loan book to £730.7m and an 11.8% improvement in revenues to £145.5m. Cost of funds improved to 4.3% from 5.2%.

Amigo, which kept its full-year guidance for key operating metrics unchanged, also proposed an interim dividend of 3.1p.

On the operational front, Amigo said its strengthened credit policy resulted in lower re-lending and noted that its focus on new customers had led to the high-levels of customer growth seen during the period - especially in its Irish business.

Chief executive Hamish Paton said: "The first half of the financial year has demonstrated continued demand for our guarantor loan product with solid growth in customer numbers.

"We are making encouraging progress as we roll out the operational and strategic initiatives outlined in August. While it will take some time to see the full benefits, we are pleased with the positive start we have made."

Elsewhere, Amigo was ordered to more carefully explain the risks associated with agreeing to guarantee a loan for a family member or friend.

The Financial Conduct Authority identified areas where there was room for improvement, but Amigo insisted that the regulator had not raised any concern about its main product or the group's business model itself.

As of 0840 GMT, Amigo shares had climbed ahead 7.50% to 64.50p.

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