Wonga results could get even worse this year, chief admits

The firm’s revenues slumped by a third to £217 million in 2014

The firm’s revenues slumped by a third to £217 million in a disastrous 2014 (Dan Kitwood/Getty Images)

Struggling payday lending Wonga has been forced to admit its financial woes will worsen this year.

Confirming a £37million loss last year, compared to a £37million profit in 2013 and more than double that the year before, chief financial officer Paul Miles this morning admitted: “Our 2015 results will reflect what will be another tough year.”

It announced earlier this year that it is sacking 325 staff - a third of its workforce - in the wake of a tough new regulatory crackdown that came into effect in January.

The firm’s revenues slumped by a third to £217 million in a disastrous 2014 which saw it forced to write off £220m-worth of debt after the City watchdog accused it of irresponsible lending.

It parachuted City big-hitter Andy Haste – former boss of the insurer RSA – in as chairman in July in an attempt to rebuild the controversial business.

Andy Haste wants Wonga to be more ‘customer focused’ (Andy Paradise)

He said today: “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. The new management team is tackling deep-rooted issues.”

His rebuilding has included scrapping the controversial puppet ads, which had been branded “irrresponsible” by consumer groups. The move was described by the company today as an attempt “to reduce the risk of inadvertently attracting the very young or vulnerable”.

Linked to that decision the company has ended its sponsorship of Blackpool and agreed with Newcastle United to remove the Wonga logo from all children's replica shirts from next season.

Mr Haste has also overseen a tightening of lending criteria in an attempt to create “a sustainable business that lends responsibly and transparently to customers who can afford to borrow from us”. That was reflected in its default rate sliding from 6.9% to 6.6%.

Carl Packman, author of Payday Lending: Global Growth of the High Cost Credit Market, said: “While few tears will be shed for the company, the context must be made absolutely clear: these reported losses by Wonga have come after years of scandal such as sending struggling debtors fake legal letters to customers.

“What other company could expect to consistently break the rules and not see their profits fall? Wonga has brought this crash on themselves. Consumers who take out credit deserve more, and today Wonga has been punished for not doing so.”