Loans company Amigo has seen profits drop sharply as it set aside more money for handling complaints.
The Bournemouth-based sub-prime lender recently launched a strategic review which meant formally putting itself up for sale.
Amigo Holdings saw pre-tax profits fall by 32.2 per cent to £53.5million, despite attracting more borrowers. Amigo lends money at 49.9 per cent annual percentage rate to borrowers who have a poor credit history but who can find a friend or relative to act as guarantor.
As of the end of 2019, the company had set aside £26.6m for the costs of redressing customer complaints and had used £7.9m of that money.
Revenue at Amigo rose 8.5 per cent to £218m in the period in question, while the net value of its loan book was up 3.8 per cent to £722.3m.
“The strategic review has led to a change in our risk appetite on new lending, which we are currently trialling, as we steer Amigo towards sustainable, long term growth. While these lending adjustments will result in lower volumes, we expect that they will have a positive impact on impairment levels, yield per account and future complaints costs.”