Wonga expected to report losses of £35m

PAYDAY lender Wonga is expected to slump into the red when it publishes full-year results this week.
Wonga: set to announce loss of 35 million pounds. Picture: PAWonga: set to announce loss of 35 million pounds. Picture: PA
Wonga: set to announce loss of 35 million pounds. Picture: PA

The controversial business will reportedly announce losses of around £35 million, with revenues down by a third to about £210 million.

It is a further slide in earnings for the lender after profits for 2013 halved to £39.7 million as it racked up costs relating to a scandal over fake legal letters.

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Wonga is shrinking its business as it tries to clean up its tarnished reputation in an industry whose practices have drawn criticism from politicians as well as the Archbishop of Canterbury.

Last June, Wonga was ordered to pay compensation of £2.6 million by the Financial Conduct Authority after sending threatening legal letters from fake law firms to 45,000 customers.

In October it said it had written off a total of £220 million of debt belonging to 330,000 customers after admitting making loans to people who could not afford to repay them.

Chairman Andy Haste, appointed last summer, has promised to clean up the company and admitted it had made “serious mistakes”.

He said the business, which has been strongly criticised by MPs over interest rates of more than 5,000%, must review rates, fees and charges and no longer be seen as targeting “the young and the vulnerable”.

Earlier this year, Wonga announced plans to cut 325 jobs under a new strategy which will see it become smaller and less profitable, under changes to ensure that it lends “fairly and responsibly”.

Mr Haste said at the time of the announcement in February: “Wonga can no longer sustain its high cost base which must be significantly reduced to reflect our evolving business and market.”

This week’s figures are not expected to include the cost of the job cuts.

The impact of a cap on payday loan charges in force since the start of this year is also not expected to be a factor in the 2014 figures.