Amigo posts 80% profit fall, as payment breaks reach 47,000

The guarantor lender’s results show that profit after tax fell from £20.4m in Q1 to £3.9m in Q2. The results also revealed a revenue reduction of 31.7% to £48.8m, which it attributes primarily to payment holidays and the temporary pause in all new lending except to key workers. Amigo granted approximately 47,000 payment holidays.

In Q2, Amigo’s complaints provision remained at £116.4m. The results also reported a voluntary agreement which had been reached with the FCA to resolve a complaints backlog by October 30 2020, and that the lender is reportedly on track to meet this deadline.

Amigo’s CFO, Nayan Kisnadwala, said: “The whole team at Amigo is focused on addressing our legacy issues and building a sustainable business for the long term. Operationally, we have turned a corner in our handling of complaints. We are updating our lending processes and policies to enable Amigo to restart lending in a prudent manner by the end of 2020.”

Just before the results were published, the Amigo founder James Benamor, who is also a majority shareholder in the lender through his company Richmond Group, issued another blog, criticising how former executives had run the company and what changes the company needs to undertake.

Benamor called for “cutting back layers of unnecessary suits brought in by the previous board; paying down debt and buying back under-priced bonds to repair the damage done to the balance sheet”.

In his blog, Benamor asked the board of Amigo to agree to certain changes, including the below:

• The replacement of CFO Nayan Kisnadwala within the next 30 days;
• Removal of interim chairman Roger Lovering immediately and appointment of one of the remaining non-exec directors as non exec chair;
• Retention of Glen Crawford as CEO of Amigo Loans Ltd.
• The appointment of himself as CEO of Amigo Holdings PLC.

Benamor claimed that private investors, some with a few hundred shares, others who have most of their life savings in Amigo, had been left in the dark by the previous board. Benamor said: “Their important questions have been ignored by the management of the company, as if they were annoying children interrupting the grown-ups.”

In response to the blog post, the board said: “Whilst the board feels no compulsion to respond to Mr Benamor within his requested timescale, it is concerned to avoid any further unnecessary market uncertainty and therefore wishes to make its position clear without delay.

“The board agrees with Mr Benamor that Amigo continues to face significant challenges on its ongoing operations. It also agrees that the reappointment of Glen Crawford as CEO of Amigo is a critical step for thee business in navigating through the issues we face and returning Amigo to full health as quickly as possible.”

The response later added: “Mr Crawford has made it clear to the board that he is not prepared to work with Amigo in any circumstances where Mr Benamor returns to Amigo’s governance structure in a position of influence.”