29th Aug 2019 09:10
(Alliance News) - Amigo Holdings PLC shares fell on Thursday after the lender said it expects flat loan book growth through the current financial year.
Shares in the guaranteed lender were down 32% in early trade in London at 99.20 pence each.
Amigo said it is being "proactive and pragmatic" in an "evolving regulatory and economic environment", and, as a result, will prioritise new customer lending over existing customers.
In a statement, the company said: "We will continue to work alongside our regulators and consider it our responsibility as sector leader to not only respond to the evolving regulatory environment but to drive change proactively to improve customer outcomes. We aim to do the best for all our stakeholders and, as a result, have further enhanced our credit and conduct policies."
This is expected to hit Amigo's repeat lending growth, due to its "enhanced" credit policy.
All of which is expected to see Amigo's net loan book growth "broadly flat" in financial 2020. The company's net loan book at March 31, the end of Amigo's financial year, stood at GBP707.6 million.
"Amigo is both a responsible and profitable lender. We are focused on our future returns and building a sustainable business for the long term. We are accelerating investment in our operations to enable continued delivery of best in class customer service and further enhancing credit and conduct policies," said Chief Executive Hamish Paton.
The company added: "The change in economic outlook, and the potential for regulatory change, means we are taking a more cautious approach to lending and have increased provisioning. We have enhanced our credit policy around relending through adopting a more conservative view on frequency and timing and are now prioritising lending to new customers."
In Amigo's first quarter, the three months to June 30, the company's loan book grew 14% to GBP728.4 million compared to GBP638.2 the year before.
Pretax profit in the first quarter increased 33% to GBP22.6 million GBP17.0 million, with revenue rising 14% to GBP71.5 from GBP62.9 million.
The lender's number of customers increased 17% to 210,300.
Amigo said it saw a rise in customer complaints in the first quarter, driving impairments higher.
Amigo's impairment-to-revenue ratio worsened to 30.5% from 25.4% the year before with cost-to-income ratio worsening to 23.4% from 17.5%.
For the full year, Amigo is guiding for an impairment ratio in the low to mid 30s and a cost ratio in the low 20s.
Related Shares:
Amigo