Things aren't looking good for much-maligned payday lender Wonga. Figures posted today showed it slipped into a pre-tax loss in 2014, to the tune of £37.3m, down from a profit of £39.7m this time last year, as various regulatory crackdowns took their toll on its figures. That pushed it to a net loss of £42.8m.
Revenues, meanwhile, dropped almost a third to £217.2m, while operating costs rose 12 per cent to £150.2m.
Why it's interesting
The payday lender's troubles during 2014 have been well documented. Not only did it go through more chief executives in just over a year than most companies go through in a decade (following Errol Damelin's departure in November 2014, replacement Niall Wass quit in May and Tim Weller stepped down in November), but earlier this year it was also ditched by its ad agency.
But its real problems came from regulators, who were determined to prevent what they saw as punishing interest rates. That culminated in a crackdown on lending rates by the Competition and Markets Authority (CMA), which said lenders "must make the details and costs of potential loans clear to consumers in a comparable way", while in October the Financial Conduct Authority forced it to write off debts for 330,000 customers. Then there was "fake law firm-gate"...
But with a new chairman in the form of former RSA boss Andy Haste - who made it his first priority to get rid of those creepy puppets - Wonga is as well-placed as it can be to recover. Whether it's too late to turn around the supertanker, though, is another question.
What Wonga said
On joining Wonga last July, I set out six priorities to deliver essential change and this period has been focused on delivering against those priorities.
We said Wonga would be smaller and less profitable in the near term as we focus on creating a sustainable business that lends responsibly and transparently to customers who can afford to borrow from us. Today’s results are clear evidence of the changes we have made and are continuing to make. 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
Wonga was always going to have to hit rock bottom before it recovered - but it may be too late for the company's tattered reputation.