Customer numbers increased 18% to 222,800 in the half-year to 30 September compared to the previous period last year, thanks to a new advertising campaign and increased marketing efficiency.
Amigo, which is the UK's largest provider of 'guarantor loans' where a family member or friend agrees to be liable to repay a debt if the borrower cannot, said its net loan book expanded 9% to £730mln of outstanding loans, pushing revenue up 12% to £145mln.
Top line growth, however, was offset by the combination of increasing impairment charges, £10mln customer complaints provisions and investment in people and operations.
As a result, profit before tax was 13% lower at £42mln.
Overall net debt stretched 6% to £496mln, although the ratio between net debt and adjusted tangible equity fell to 2.0x from 2.3x, as the company repays expensive borrowings replacing them with cheaper ones.
A day after the company had put out a statement saying that a review by the City watchdog “has not raised concerns” over guarantor loans as a product, Amigo was forced to add in a separate announcement that the review was only meant to be focused on what information is made available to those people who are acting as guarantors.
“The review was not intended to examine the guarantor loan product itself nor the underlying business model at Amigo,” it stressed.
The Financial Conduct Authority identified areas for improvement, such as increasing the explanation of key information provided to potential guarantors and disclosure on the likelihood that guarantors could be called to make payments.
Chief executive Hamish Paton said it will take “some time” to see the full benefits of the new initiatives outlined in August, such as prioritising loans to new customers over re-lending to existing ones and tightening the credit policy.
“Amigo holds a leading position in the guarantor loans market and our product makes a real difference to the lives of our borrowers, many of whom cannot access credit from mainstream providers. We are determined to use that position to be a role model in a growing sector,” he added.
The shares, which are now trading around a quarter of the value set at the initial public offering in June last year, were 16% higher at 69.68p by noon on Thursday.