Wonga

Payday lender Wonga has reported a year of surging profits as its number of cash-strapped customers swelled to more than one million.

The controversial company, which offers short-term loans to households and businesses, said profits after tax rose 36% to £62.5 million during 2012 - the equivalent to more than £1 million a week.

Revenues surged 67% to £309.3 million and it lent £1.2 billion in the year, a rise of 68%.

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

Founder and chief executive Errol Damelin said the online lender operates in an "upfront and transparent" way, adding it makes 5p of profit on every £1 it lends.

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.

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

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

The entire payday lending industry, worth £2 billion, was referred in June for a full-blown investigation by the Competition Commission after the trading watchdog un covered ''deep-rooted'' problems.

The Office of Fair Trading made the referral because it continues to suspect that features of the market ''prevent, restrict or distort competition''.

Stella Creasy, the Labour MP who has criticised Wonga in the past, said: "We have got to remember that Wonga's mega-profits come at a time when the entire payday lending industry has been referred to the Competition Commission by the Office for Fair Trading because of concerns about exploitative practices within that industry.

"So the fact that Wonga is able to make more than £1 million a week in an industry which has widespread malpractices should be of great concern to all of us in Britain.

"What that says about families who are struggling financially, what it says about the kind of regulation we currently have in the UK and the things we need to do to make sure people in Britain can borrow affordably, Wonga might be celebrating today, I'm very, very concerned about what this might mean for people in my community and across the country who are paying the price for their profits."

Wonga typically lends sums of about £200 to £400 to consumers, repaid over a few weeks.

Interest often works out at thousands of percent a year, although the company says it never comes to this as loans are repaid much sooner.

The Most Reverend Justin Welby said recently that he hoped the Church of England's support for credit unions would drive Wonga out of business. It later transpired that the Church had invested indirectly In Wonga, triggering an investigation by the Church.

Mr Damelin said: "Credit unions in the UK have so far not been successful at getting to scale.

"It's difficult to imagine a sub-scale organisation bring able to deliver these services."

The company laid out plans to tackle banks' stranglehold on lending to small businesses, which it said is "broken".

It is lending sums of up to £30,000 to companies, repayable over a year.

Mr Damelin said: "Job growth needs to come from small businesses. They are critical for the UK economy."

© 2013 Press Association