Wonga Confirms Weekly Profit Of More Than £1m

One of the biggest names in the controversial payday loans industry has confirmed it is making more than £1m in profits every week.

As first reported by Sky's City Editor Mark Kleinman, a surge in customer numbers helped Wonga earn profits, after tax, of £62.5m during 2012 - a 36% increase on the previous 12 months.

The company, which offers short-term loans to households and businesses, said revenues rose by 67% in the period to £309.3m and it lent £1.2bn - 68% more than in 2011 - in total to more than one million people.

The number of borrowers defaulting on their loans rose in 2012, to 7.4% from 6.4% the year before.

The payday industry is currently facing a Competition Commission inquiry amid concerns over how it operates.

Dozens of firms have left the payday market amid regulatory scrutiny

Today, Wonga's founder and chief executive Errol Damelin insisted the online lender was "upfront and transparent", adding it makes 5p of profit on every £1 it lends - typically £15 on every loan.

He said: "This is not about people on breadlines being desperate and us being a lender of last resort. We reject two-thirds of applications."

Instead, he said, the industry has been tarred by behaviour of other high-interest lenders.

"There's a lot wrong in how other parts of the industry operates," he said.

The industry denies imposing extortionate penalties for missed payments

And Mr Damelin insisted the company's profit margins were "not outrageous in any way to us".

He added: "Our customers are telling us that we provide very good value for money."

Wonga, which was involved in controversy recently when the Archbishop of Canterbury said he wanted the Church of England to "compete" it out of existence, also cast doubt over whether the Church can be a realistic competitor.

Mr Damelin told Sky News: "Two out of three applicants for Wonga loans are rejected. The market the church will get will be those rejected by Wonga.

"It's a market that needs to be serviced, and we are happy to see that market serviced. It's an important initiative."

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