Wonga is the biggest payday lender in the United Kingdom, but today this definition does not exactly match the situation in which it is situated the lender. Wonga is also a sponsor of the Newcastle football team, but due to the financial problems, the lender was forced to cancel the sponsorship of Newcastle United in its 2016 annual report.Will Wonga and the other payday lenders survive? Click To Tweet
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How big the company’s losses are?
Wonga made a loss of nearly £65m last year but has insisted that it is on track to return to profitability in 2017, in part due to its Newcastle United sponsorship ending.
The UK’s biggest payday lender was forced to tear up its business model in 2014 after running into regulatory problems and because of the cap on loan rates introduced by the Financial Conduct Authority in 2015.
Sun on the horizon for the payday lender company with the new management team!
A new management team took over in late 2014 and said in the lender’s annual report that is expected to report a significantly improved performance for the current financial year”.
Among the reasons listed for this was the end of its football sponsorship, which is reported to have cost £24m over four years, and Wonga’s efforts to cut costs, including moving its head office across London.
Wong has losses more than double. Who’s the blame?
In 2014 Wonga was ordered to pay £2.6m in compensation to about 45,000 customers after sending threatening letters from non-existent law firms, and was then forced to write off £220m of debts of 375,000 borrowers who it admitted should never have been given loans.
The annual report shows revenue was £76.7m, up from £65.2m but still well below the £300m Wonga was generating in 2012. The loss of £64.9m is lower than the £80m incurred in 2015, however. About 60% of the lender’s revenue is generated in the UK, with the rest made in Poland, South Africa, and Spain.
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