Wonga lent more than the entire equity release sector in 2012

Payday lender Wonga lent £1.2bn to customers in 2012 – more than the entire equity release industry lent in total.

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The firm’s 2012 accounts, published today, show its lending was up 68 per cent on 2011, when it lent around £707m.

Figures from trade body the Equity Release Council show the total value of the equity release market in 2012 was £925.7m.

Moreover, Wonga also lent around 80 per cent of what the entire bridging industry lent, which is estimated to have been around £1.5bn.

Wonga is also among the top 20 biggest lenders in the UK. Although it does not do mortgage lending, £1.2bn of lending puts it at joint fourteenth with Principality Building Society in the top 20 lenders list compiled by the Council of Mortgage Lenders last week.

It provided around 3.8 million loans to borrowers, up 54 per cent on roughly 2.4 million loans the year before. More than 1 million customers were served in 2012, up 61 per cent on the previous year.

Pre-tax profit increased 35 per cent from £62.4m in 2011 to £84.5m in 2012. The firm says it makes around 5 pence profit on every £1 it lends.

Revenue was up 67 per cent to £309.3m in 2012, from £184.7m the year before.

Wonga founder and chief executive Errol Damelin says: “Our mission is to build an international digital finance group, solving customer needs in a transparent, controllable and responsible way. Last year was another step towards that goal. Group revenue was up 67 per cent at £309.3m with net profit after tax of £62.5m, an increase of 36 per cent.

“This is because our business provides something that a great many consumers and small businesses want – unsecured loans for short periods of time, available online, within minutes and at a completely clear price.”

The payday lending sector will be regulated by the Financial Conduct Authority from April 2014.

Damelin welcomed the regulation of payday lenders in order to “eradicate unscrupulous practices” in the sector.

He says: “We’ve always been a strong advocate of better regulation and measures that seek to protect consumers and eradicate unscrupulous practices used by some operators. It’s on this basis that we look forward to working with the FCA as our new regulator in the UK from next year.”