Amigo, a struggling UK risk lender, has set aside the equivalent of 23% of its loan portfolio in Ireland for write-downs here.
t had a gross loan portfolio of 4.7million pounds sterling (5.4million euros) in Ireland at the end of December, according to third quarter results released yesterday by the company. There are no previously published depreciation figures for Amigo’s business in Ireland.
Amigo started offering loans in Ireland in early 2019.
As of March of last year, it had more than 4,000 clients here, with a total loan portfolio of around 8.2 million euros. It now has fewer than 3,000 customers in Ireland.
The company has suspended new loans in the UK and Ireland as it faces intense regulatory scrutiny.
In its third quarter results, the lender said it has set aside £ 1.1million as an impairment allowance for its Irish loan portfolio.
Amigo, who appointed a new CEO and CFO last year, reported a 37% drop in revenue in the nine months leading up to the end of 2020, and warned he faced “significant uncertainties “pending approval of its claims management plan for the huge backlog of customer complaints.
The company, which saw revenue drop to £ 137.5million (€ 159.1million) over the period, also said its net loan portfolio was cut by more than 40%, while 62,000 of his clients were on repayment leave. It has suspended all new loans until the regulator approves its planned approach to restart it.
The lender has had to provide millions of pounds to manage indemnity payments caused by a large number of customer complaints and has been the subject of an investigation by the UK financial regulator into how it assesses the creditworthiness of clients.
This hampered Amigo’s ability to function and he warned that unless his proposed plan to process compensation payments is approved, he may not survive.
Amigo’s total net lending stood at £ 412.2million at the end of December, down nearly 43% year-on-year.
CEO Gary Jennison insisted that Amigo had made “tremendous progress” in its third quarter with a new board that he said allows for a “new and different approach.”
“When I started as CEO over five months ago, I knew we had to do something important to deal with the complaints we received,” he said.
“We are working to do the right thing for all of our clients, including the 700,000 former borrowers and guarantors who no longer have loans with us,” added the CEO.
Mr. Jennison said Amigo had a “valuable role to play” in the “non-standard” lending industry.
“We have a real goal of helping deliver financial inclusion to millions of adults,” he said.
Amigo requires borrowers to secure their loans with a friend or family member who remains in charge of the money if the borrower cannot make payments.
It charges an interest rate of almost 50%, compared to rates below 10% that would typically be charged for similar loans by traditional lenders.
Additional reports: Reuters.