Wonga Confirms Annual Losses Of £37.3m

Wonga has confirmed that a string of regulatory scandals and restructuring costs have pushed it to an annual loss of £37.3m.

Britain's biggest payday lender announced the pre-tax loss following a story by Sky News last weekend that revealed it would confirm an end to a long run of profitability in the wake of regulatory action against the company and wider short-term loans industry.

Revenues slumped by 31% or almost £100m to £217.2m in 2014, with lending volumes down 36% to £732m.

Customer numbers fell to 575,000 from around one million in 2013 and their default rate eased to 6.6% from 6.9%.

There was a PR disaster for Wonga last June when it was ordered to pay £2.6m in compensation for sending threatening legal letters from fake law firms to 45,000 customers.

It later said it had written off £220m of debt belonging to 330,000 people after giving loans to people who could not afford to repay them.

Executive chairman Andy Haste 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."

Earlier this year Wonga said a review of its business would result in hundreds of job losses .

The 2014 results underline the scale of the challenge confronting Wonga as it attempts to secure approval from the City regulator for a new licence as part of the broader overhaul of the industry.

The Financial Conduct Authority (FCA) has estimated that the vast majority of the roughly 400 payday lenders operating in Britain will go out of business following the introduction in January of a price cap on loan and repayment charges.

Mr Haste was asked today if it was still possible to run a profitable payday loan business under the new industry regime.

He said: ""Yes. Our issues are legacy issues... Could you start a payday business today within the cap and be profitable? Yes."

Wonga said that as part of its plans to build a "sustainable and successful business", it plans to launch new products to reach out to a broader number of customers, details of which would be revealed in due course.