Controversial payday lender Wonga has reported a slump in profits as it counts the cost of a drive to clean up the image of the business.
UK based Wonga said the 53pc slide in profits to £39.7m (€51m) in 2013 was in part due to a one-off charge in relation to a recent scandal over fake legal letters, which were used in order to chase struggling customers into paying up.
The company said it expects that it will be "smaller and less profitable" in the near term while it builds a more sustainable business for the future.
Wonga issued 4.6 million loans in 2013, a rise of 15pc, and lent a total of £1.3bn, compared with £1.19bn the previous year.
Revenues were 2pc higher at £314.7m but operating costs jumped 56pc to £133.7m. The default rate on loans fell to 7pc from 7.4pc in 2012.
The company recently appointed Andy Haste, the former chief executive of the RSA insurance group, as its new chairman in a bid to clean up its battered reputation.
At the time of his appointment in July Mr Haste said: "This is a sector and Wonga is a company that needs to go through significant change if it is to have a sustainable future.
"Some serious mistakes have been made. The company admitted those mistakes and it has apologised for those mistakes."
In June Wonga was fined £2.6m for sending threatening legal letters from fake law firms to 45,000 customers by the Financial Conduct Authority (FCA).
The FCA said Wonga had been guilty of "unfair and misleading debt collection practices" by creating fake companies to pressure struggling customers into paying their bills.
Wonga said remediation costs relating to historic debt collection and system issues amounted to £18.8 million in today's accounts.
The regulator is bearing down on all providers of short-term credit, proposing in the summer a cap on payday lending meaning that from next January, interest and fees must not exceed 0.8% per day of the amount borrowed.
It also wants to impose a cap on the overall cost of a payday loan so that it cannot exceed 100% of the original sum borrowed.
Payday lenders have been attacked by MPs as a form of "legal loan sharking".