Newcastle United sponsor Wonga announces big losses

WONGA ... the payday lender has revealed huge losses after its revenues fell by almost �100m.
WONGA ... the payday lender has revealed huge losses after its revenues fell by almost �100m.
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NEWCASTLE United’s shirt sponsor, payday lender Wonga, today announced huge losses after its revenues slumped by almost £100m last year.

The controversial business posted a loss of £37.3m following a significant reduction in UK consumer lending while it attempts to clean up its tarnished image.

Revenues declined to £217.2m in the period.

It is unclear whether the results will affect Wonga’s sponsorship of the football club, which is nearing the end of the second year of a four-year deal.

Executive chairman Andy Haste said: “We know it will take time to repair our reputation and gain an accepted place in the financial services industry, but we’re determined to deliver on our plans and serve our customers in the right way.”

In line with its forecast in July that it would be smaller and less profitable over the near term, Wonga reported that lending volumes fell by 36 per cent, to £732m last year, from £1.1bn in 2013.

It made 2.5 million loans in the UK last year against 3.7 million in 2013, and the number of customers fell from around one million to 575,000 in the UK.

However, its default rate improved from 6.9 per cent to 6.6 per cent.

Last June, Wonga was ordered to pay compensation of £2.6m 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 £220m of debt belonging to 330,000 customers after admitting making loans to people who could not afford to repay them.

The business, which earlier this year announced plans to cut 325 jobs, has carried out a review of its business to ensure it is lending only to customers who can reasonably afford to repay their loans.

It believes there are 13 million people across the UK who are cash and credit constrained and under-served by mainstream financial services.