Amigo beats on loan arrears

Increased regulatory scrutiny is understandable given the size of the addressable market, between 8m and 10m people are unable to access mainstream credit. Newly listed Amigo – which charges an annual percentage rate (APR) of 49.9 per cent on customer loans – benefited from rising demand during the first half, with customer numbers rising more than a third to 207,000. That pushed the net loan book up almost a quarter to £672m. Economies of scale also meant operating expenses fell to 17.9 per cent of revenue, from 23.5 per cent in the prior year.

Collections were up by almost half to £261m and at a higher level than new loans written, which meant net debt declined to 2.3 times net tangible equity from a multiple of 2.8. Around 4.4 per cent of the gross loan book was more than 30 days in arrears – lower than expected – up from 2.4 per cent in the prior year. Management is seeking to diversify funding sources, completing a £150m securitisation, at an all-in rate of around 5 percentage points less than its bond funding. The latter comprises a £400m secured bond at a rate of 7.625 per cent and is in addition to a £160m senior facility. Management hopes to repay more of its higher-cost bonds this time next year by carrying out another securitisation exercise.   

Analysts at Shore Capital expect adjusted net tangible assets of 50.9p a share at the March 2019 year-end.