Shareholders of Amigo Holdings PLC (LON: AMGO) have seen their shares spike on Thursday morning following a rise in their interim payout.
Amigo Holdings is a guarantor loans lender, which provide fast, flexible and straightforward loans. The firm prides itself on no hidden costs, bad credit and CCJ’s accepted.
Also, Amigo provides loans to consumers in which payments are guaranteed by a friend or family members
Earlier this year, Amigo changed their annual expectations which caused shares to plunge. However, it seems that the firm has now won back the appetite of shareholders.
Shares of Amigo spiked 16.6% to 69p on Thursday morning. 28/11/19 10:44BST.
Competitors in the insurance and finance industry have seen slumps in trading in tough conditions.
Big names such as HSBC (LON: HSBA) and Lloyds (LON: LLOY) have seen their third quarter profits slip amid modest updates.
Additionally competitors in the insurance sector including Aviva (LON: AV) and AXA (EPA: CS) have seen their shares fall after slumps in trading.
In the six months to September 30, Amigo recorded pretax profit of £42.3 million, down 13% on the £48.4 million reported the year before.
n the six months to September 30, Amigo recorded pretax profit of £42.3 million, down 13% on the £48.4 million reported the year before.
Amigo saw a 75% increase in total operating expenses, which grew to £40.7 millions from £23.3 million a year ago, which bruised profits.
Revenue was up 12% year on year, from £130.1 million to £145.4 million.
“While the wider environment remains challenging with ongoing economic and political uncertainty, we continue to focus on addressing collections capacity issues. We are investing in both people and technology that will increase agent effectiveness,” the lender explained.
The lender saw its total customers also rise 18% from 188,900 to 222,800 which is an impressive figure considering the state of market conditions.
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.”
Looking ahead, the firm said: “Over the second quarter we have worked hard to address capacity constraints within the business with action plans initiated to drive further improvements. It will take time to see the full benefits of our actions, but we have made a good start in the first half.
“As a result, we have a strong and flexible balance sheet. Our guidance for the full year is unchanged for key operating metrics (net loan book growth, operating cost to income and impairments to revenue), dividend and gearing.”
On Wednesday, Amigo said the review of guarantor loan products by the Financial Conduct Authority had not raised concerns, but did offer areas where “our customer journey could be enhanced”.
Amigo believes the proposed changes will “not fundamentally alter the attractiveness of the guarantor loan product relative to higher cost alternatives for our borrowers”.
On Thursday, the lender clarified the review was “not intended to examine the guarantor loan product itself nor the underlying business model at Amigo”.
