Shares of Amigo Holdings PLC (LON: AMGO) rallied higher after releasing its earnings results for the first quarter of its financial year ended 30 June 2021.
The guarantor lender made a net profit of £16.0 million despite not actively lending to its customers as the impact of the coronavirus pandemic on repayments was less than expected.
Amigo noted that its net loan book shrunk 48% to £288.7 million compared to the £553.1 million reported in a similar period last year.
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The lender’s revenues also fell 33.4% to £32.5 million versus the £48.8 million recorded in fiscal Q1 2020. However, amigo still managed to turn a profit despite the significant hit to its overall revenues.
Still, investors barely reacted to today’s positive results. After the High Court nullified its previous scheme, Amigo is still struggling to develop a fair compensation plan for its afflicted customers.
Mike Corcoran, Amigo Holdings’ CFO, said: “The extremely challenging situation facing Amigo, resulting from the significant liability for compensation payments for historical lending, provides the context for our first-quarter results. Within this context, the performance of the business in the first quarter has been better than anticipated. As Amigo is not currently lending, the business is cash generative, and our cost reduction programme has been effective.”
Corcoran further added that Amigo’s collections remained quite solid despite the impact of the coronavirus pandemic after all COVID-19 related payment holidays ending. In addition, the company did not include any potential liability for customer claims related to its past lending practices, which contributed significantly to its profitability.
Amigo Loans share price.
Amigo shares edged 3.98% higher despite today’s upbeat Q1 earnings results.