Payday loan company Wonga experienced a slump in lending last year, resulting in the company recording a considerable loss of £37 million.
This represented a sharp turnaround compared to the previous year, when the company reported a profit of almost £40m. Its revenue has fallen considerably, from £315m to £217m, with the number of customers they had also decreasing significantly, from approximately one million to 600,000, over the last two years.
“We said Wonga would be smaller and less profitable in the near term as we focus on creating a sustainable business that lends responsibly and transparently to customers who can afford to borrow from us,” said Andy Haste, who joined as chairman last summer. The controversial company announced that it expects another loss in 2015.
He stated that there is still a position in the market for short-term loan providers, “but only if they put their customers first and lend responsibly. Regrettably, that has not always been the case at Wonga.”
Wonga is one of the leading companies in the payday loan market, but has suffered a fairly substantial hit to its reputation in recent times. It emerged earlier this year that letters were sent to customers who were in debt, under the names of fake legal firms, threatening them to repay the money.
It has also been heavily criticised for its very high interest rates, before the new laws were introduced by the Financial Conduct Authority (FCA), which restricted interest rates to 0.8 per cent a day among other changes.