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Wonga defies critics to post record profits


Payday lender Wonga, a company which has come under stark criticism about how it operates, has posted record profits, and has become one of the most popular lenders in the UK.

Within the last 12 months, Wonga has been repeatedly criticised about the service it provides to customers, particularly the hugely inflated interest rates that are charged on loans when customers are late making a repayment.

At times borrowers have been stung with rates that exceeded 5,000%, leading the Church of England to condemn the company as unethical and immoral.

However, despite this, Wonga enjoyed great success over the past year, approving as many loans as Nationwide did personal loans, and increasing profit margins by a third. A total of one million customers borrowed money through four million loans, totalling £1.2bn. This led to total profits of £62.5m for the lender.

Wonga has now opened a business lending arm, and started a global expansion process at the start of the year, targeting customers in Canada, South Africa, Poland and Spain.

Wonga primarily serves customers who are unable to get a loan from a high street bank, offering money quickly and hassle-free. While interest rates are typically 1% per day, if a customer defaults on a repayment, these rates can suddenly rise by thousands of percent.

However, Errol Demelin, founder and chief executive of Wonga, backed the company. He said: “This is not about people on breadlines being desperate. This is about us serving customers who want to take out a loan and know they can pay it back in three days”.

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