Jim Armitage: Don’t fall for the spin from the humbled Wonga

Outlook Don’t mourn too much about Wonga’s financial woes. Figures for 2013 showed its profits halved to £39.7m due to the bill from the phoney lawyers’ letters scandal and compensating customers whose balances it had got wrong. But look closer and the long-term picture is brighter than the spin suggests.

Last year, despite already tightening up its criteria of who it would lend to, Wonga still made 15 per cent more loans to its customers. Meanwhile, the puny fine from the regulators, plus the cost of compensating customers who’d been overcharged all mounted up to £18.8m (it backdated those charges into 2013’s accounts). But those costs will not be repeated in future years – bar another scandal, of course.

The once-combative Wonga plays humble these days, with sources there suggesting 2014’s profits will be down, too.

Such humility is clever. Especially when politicians, regulators and the media hold you in their gaze. But it will only be short term pain.

Wages won’t catch up with inflation for a long time; banks will remain wary of high-risk lending. Wonga, with its big share of the market and slick tech, will be raking it in soon enough.