Wonga full-year loss widens amid stricter regulation

Wonga reported a widening of full-year losses as the payday lender overhauls its business to comply with stricter regulation in the industry.

For the year to the end of December, the company posted a pre-tax loss of £80.2m compared to a £38.1m loss in 2014.

This came as revenues fell to £77.3m from £217.2m due to a reduction in UK consumer lending volumes following the implementation of stricter lending criteria at the end of 2014 and the introduction of the regulatory price cap.

Operating costs in the year dropped to £125.5m from £151.4m, in line with the group’s major restructuring programme to reduce costs.

Last year, the Financial Conduct Authority put a cap on daily interest and fees, forcing payday lenders such as Wonga to apply for authorisation in order to continue operating.

Chief financial officer Paul Miles said: “We said last year that our 2015 results would reflect what would be another tough year in Wonga’s transformation and the numbers are in line with our plans.

“2015 was a year of transition for Wonga. In 2016 we expect revenues to increase significantly, driven by continued growth in Poland and Germany and a return to growth in the UK and South Africa. While this year as a whole will again be loss-making, it will be considerably less so than in 2015.”

The group said it has overhauled its approach to credit risk and strengthened the risk decision and lending criteria to ensure all lending is responsible and affordable.

Chairman Andy Haste said: “We continued to focus on changing our culture to ensure customers are at the heart of our business, while strengthening our financial position. We have embedded good governance and brought in a new, experienced leadership team, overhauled our approach to credit risk, continued to improve our relationships with key stakeholders and launched new products to meet customer demand.”