Amigo profit rises but troubles persist
Amigo Holdings' profit increased in the first quarter but the embattled subprime lender warned its balance sheet was insolvent after a court turned down its rescue plan.
Pretax profit for the three months to the end of June rose to £16m from £3m a year earlier as revenue fell by a third to £32.5m after the company ceased new loans during the Covid-19 crisis. Operating costs fell to £6.5m from £11.2m and impairments dropped to £7.6m from £18.5m.
Amigo sells loans at high interest rates to people with poor credit histories backed by friends or relatives. The company has been deluged with complaints about mis-sold loans, leaving it on the brink of collapse. There was no extra complaints provision in the quarter and the charge was stable at £338m.
The High Court rejected a rescue plan in May that would have capped compensation payments to customers mis-sold loans. Amigo said the first-quarter results were better than expected but repeated that its liabilities exceeded its assets.
Amigo published the first-quarter figures soon after its annual results, which it reported on Tuesday. Those showed a pretax loss of £283.6m as it set aside £344.6m to settle compensation claims.
Chief Executive Mike Corcoran said: "The extremely challenging situation facing Amigo, resulting from the significant liability for compensation payments for historical lending, provides the context for our first quarter results. Within this context, the performance of the business in the first quarter has been better than anticipated.
"The overall net liability position reflects the remaining complaints provision on the balance sheet. A material uncertainty over the group's ability to continue as a going concern remains."
Amigo shares rose 2.1% to 8.06p at 08:36 BST.