Troubled payday lender Wonga has revealed a 53 per cent slump in pre-tax profits to £39.7m. However the number of high-cost loans it made in 2013 soared 15 per cent to 4.6million.
The short-term lender saw operating costs rise by more than half -56 per cent - from £85.8million to £133.7m. It said the decline in profits was driven by "remediation costs related to historic debt collection and systems issues".
That's believed to refer to a multiple-million pound bill to cover the costly legal and regulatory repair job after the "fake lawyers" scandal which blew up this summer.
But Tim Weller, Wonga’s interim chief executive, said today: “Investment in people, processes and our international businesses were key factors in the decline in Wonga’s 2013 profits.”
The company is reshaping its operations on the back of tougher consumer credit laws that came into force in April, which have hit all short-term credit providers.
In July the lender appointed the City big-hitter Andy Haste – former boss of the insurer RSA – as chairman in an attempt to restore its reputation.
He admitted that profits would fall as it refocused its business and his first act was the scrap the much-criticised puppets that helped flog the company's loans.
But Carl Packman, author of a new book published this week looking at the global growth of the payday lending industry, had a differing view of the lender's performance last year: “2013 was the year that Wonga received the kind of scrutiny that was desperately needed. "
He added: "It offered a £400 loan to a 13-year-old boy at 5,853 per cent interest, and raided the bank accounts of fraudulent loan victims, resulting in a flood of complaints. The Archbishop of Canterbury promised he would outcompete the loan firm out of business, and the regulator stepped up attention of the entire payday sector."