Wonga set for return to profitability after cutting ties with Newcastle United

Payday lender Wonga today said it will return to profitability this year, boosted by walking away from a controversial sponsorship deal with Newcastle United.

The privately-owned firm said it was coming out of a painful three-year turnaround and today revealed revenue growth of 18 per cent during 2016 and pre-tax losses had fallen to £64.9m.

“We expect to move back into profit in 2017,” Wonga chief executive Tara Kneafsey told City A.M..

Wonga said a decision not to renew its sponsorship of Newcastle United Football Club – understood to have cost £24m over four years – and a decision to move its London headquarters, meant costs in 2017 would be further reduced and facilitate a return to profitability.

Read more: Wonga to get a new UK boss

Hard yards

“We feel that the hard yards of what has been a three-year transformation process are now behind us,” said Kneafsey.

We believe that there are about 13m in the UK that are cash and credit constrained and they find it difficult to access credit when they need it.

Wonga said a focus on customer service led to satisfaction scores jumping during 2016.

Unlike some of its rivals, Kneafsey said it would not stand to benefit from problems experienced by Britain’s largest sub-prime lender Provident Financial.

“It’s a very different business model,” Kneafsey said.

“The areas they are having their challenges are on their home credit business. We’re an online digital lender and that’s very much a face-to-face agent network… We don’t see it as something that affects us.”

Read more: Losses at Wonga double as firm grapples with turnaround