Amigo Loans Reports 40% Rise in Profits
Guarantor loan market leader, Amigo Loans, posted a 40% increase in profits this year, despite a 1.15% fall in share price at 262p. The Bournemouth based lender floated on the stock exchange earlier this year with a £1.3 billion valuation which pocketed £327 million for the founders of the company.
The firm has since raised £150 million in the form of securitisation, taking their loan book into a secure asset for investors.
City AM reported that revenue grew 40 per cent to £130.1m in the six months ended 30 September when compared to the same period in 2017
Its net loan book grew 24 per cent to £671.7m and its number of customers increased 34 per cent to 207,000.
Amigo was one of the first movers in the guarantor loan industry, starting in 2005. It currently owns 88% of the market share in the industry, followed by our other favourite lenders such as Buddy, Trust Two, UK Credit and George Banco.
The average APR charged on their guarantor loans is 49.9% representative APR. This means that at least 51% of successfully funded customers will receive this rate, and others will vary depending on circumstances such as credit ratings, loans terms and affordability.
Amigo guarantor loans are commonly used by customers for consolidating debts, holidays, starting new business and a huge part of their business is for car finance. Amigo also have a section on their site for existing customer to purchase household and retail items and receive cash back – a mini QuidCo meets Amazon.
The FCA has raised concerns about the fast-growing industry and making sure that guarantors know what their responsibilities are. Essentially, if a customer cannot repay their loan, a guarantor must step in and repay on their behalf. This could be the monthly repayment amount or the entire loan sum and interest.
The FCA recently said that it will be reviewing the high cost consumer credit industry, specifically unauthorised overdrafts, rent-to-buy and car finance. Guarantor loans and payday loans are likely to be reviewed but not in the same depth. Amigo told City AM that it would welcome any comments and reviews to the industry.