17/09/2012 11:53 BST | Updated 17/09/2012 17:38 BST

Wonga, Controversial Payday Loan Provider, Sees Profits Rise 225% In 2011 To £184.7m

Payday lender Wonga has seen profits surge after approving nearly 2.5 million short-term loans in its last financial year.

The company has faced accusations that it targets the financially vulnerable with an annual percentage rate as high as 4,000% but argues it is helping meet demand for short-term loans from people shunned by high street banks.

The number of loans provided jumped by 296% in 2011, helping revenues rise 225% to £184.7m and net income lift 269% to £45.8m.

Commenting on the increase in Wonga's profits, Labour MP Stella Creasy, who has campaigned against payday loans, told the Huffington Post UK: “It comes to no surprise to any of us who are dealing with working families struggling to make ends meet that legal loan sharks are making such so much money out of the British public.

"That Wonga has increased its profits by 270% this year alone – that’s £45m of cash for them when so many individuals and businesses are suffering to get by -shows who is benefiting from the government's current economic policies.

"Those caught in the spiral of toxic debt legal loan sharks create will be asking what more has to happen before the government changes its mind and puts their needs first- for their sake we will keep up the pressure for caps on the costs of credit and a real time register to give British consumers the protect they so desperately need from these legal loan sharks. ”

Wonga credits its performance on technology enabling it to make real-time lending decisions and says it still rejects the majority of first-time loan applicants. Its average loan is about £160, with interest of about 1% a day.

The latest results come amid scrutiny of the industry by the Office of Fair Trading (OFT) amid claims that some firms target people unsuitable for credit and roll over loans so that the charges escalate and they become unaffordable.

payday loans

Wonga say 1,000 people a day are downloading the firm's iPhone app

Co-founder and chief executive Errol Damelin said Wonga's success was based on record level of customer satisfaction and a 10-fold increase in the volume of loans taken out by mobile phone.

A new iPhone app is being downloaded by nearly a thousand people a day.

Mr Damelin said: "We delivered another year of growth in 2011 by continuing to use our technology to meet people's cash flow needs in increasingly tailored ways.

"Enabling people to borrow on their terms, with no hidden catches, has also seen us continue to record super-high customer satisfaction ratings with word-of-mouth still helping to drive our growth."

He said Wonga has now offered its short-term loans to more than one million people since its launch in 2007, with six million loans in total.

Wonga was recently criticised by the OFT for letters and emails that without appropriate justification suggested that some customers may have committed fraud although Wonga said it planned to launch an appeal against the ruling.

Earlier this year, the group branched out by offering loans for businesses of between £3,000 and £10,000 within 15 minutes.

There have also been reports that the London-based company is considering a US stock market flotation that could value the business at more than £1 billion.