Wonga to post loss amid clampdown on payday lenders
Published 21/04/2015 | 02:30
Wonga, the controversial payday lender, will announce it has fallen into the red, while an industry-wide crackdown on short-term lenders threatens its recovery.
Wonga, which said it will pull out of Ireland next year, has tumbled into the red, it is expected to announce, ending a sustained period of profitability for the controversial lender now bidding to overhaul its image amid a clampdown on short-term creditors.
The payday loan company is set to report in the first half of this week a loss of around £35m for 2014 after revenues fell by almost a third to £215m, according to Sky News.
This follows a 53pc drop in profits to £39.7m in 2013 following a near-£19m bill for "remediation relating to historic debt collection and system issues".
At the time last September, the company said it expected to "be smaller and less profitable in the near term". The following month, Wonga said it would take a £35m hit from writing off debts worth £220m from more than 300,000 customers in an attempt to improve its relationship with borrowers and regulators, which will be reflected in this year's results.
Wonga is also reeling from an order to pay £2.6m in compensation after sending fake legal letters between 2008 and 2010 to 45,000 customers whose payments were overdue.
Since the high-interest lender stopped advertising on television last summer - one of the first moves by new chairman Andy Haste over fears that its ads featuring puppets would result in inadvertently "appealing to the young and vulnerable" - it has suffered a significant drop in customers.
In February, the Camden-based company announced it would cut 325 jobs, amounting to more than a third of its workforce and resulting in the closure of its offices in Dublin and Tel Aviv.