CONTROVERSIAL payday lender Wonga has slumped into the red after revenues fell by almost £100m last year.

The business, which name appears on Newcastle United shirts, posted a loss of £37.3m, following a significant reduction in UK consumer lending while it attempts to clean up its tarnished image.

Revenues declined to £217.2m in the period.

It is a further slide in earnings for the lender after profits for 2013 halved to £39.7m as it racked up costs relating to a scandal over fake legal letters.

Andy Haste, executive chairman, said: "We know it will take time to repair our reputation and gain an accepted place in the financial services industry, but we're determined to deliver on our plans and serve our customers in the right way."

In line with its forecast in July it would be smaller and less profitable over the near term, Wonga reported that lending volumes fell by 36 per cent to £732m last year, from £1.1bn in 2013.

It made 2.5 million loans in the UK last year against 3.7 million in 2013, and the number of customers fell from around one million to 575,000 in the UK.

However, its default rate improved from 6.9 per cent to 6.6 per cent.

Wonga is shrinking its business as it tries to clean up its tarnished reputation in an industry whose practices have drawn criticism from politicians as well as the Archbishop of Canterbury.

Last June, Wonga, which sponsors Newcastle, and has a deal with Blackpool FC that finishes this season, was ordered to pay compensation of £2.6m by the Financial Conduct Authority after sending threatening legal letters from fake law firms to 45,000 customers.

In October it said it had written off a total of £220m of debt belonging to 330,000 customers after admitting making loans to people who could not afford to repay them.

Like its competitors, Wonga also faces the prospect of a new levy if Labour wins the General Election, with the move featuring in the Party's manifesto.

Mr Haste, appointed last summer, has promised to clean up the company and admitted it had made "serious mistakes".

He said the business, which has been strongly criticised by MPs over interest rates of more than 5,000 per cent, must review rates, fees and charges and no longer be seen as targeting the young and the vulnerable.

Earlier this year, Wonga announced plans to cut 325 jobs under a new strategy which will see it become smaller and less profitable, under changes to ensure that it lends fairly and responsibly.

Mr Haste said at the time of the announcement in February: "Wonga can no longer sustain its high cost base which must be significantly reduced to reflect our evolving business and market."

This week's figures are not expected to include the cost of the job cuts.

The impact of a cap on payday loan charges in force since the start of this year is also not expected to be a factor in the 2014 figures.

In October 2012, Newcastle United agreed a four-year deal with Wonga to become the club's lead commercial sponsor.

In addition to sponsoring the team shirt from the start of the 2013/14 season, Wonga agreed to invest at least £1.5m to support the club's academy and Foundation Enterprise Scheme which helps 15 to 16 year-olds find work.

After penning the deal Derek Llambias, then managing director of Newcastle United, said: "We are building a club that can regularly compete for top honours at the highest level.

"As everyone knows, a strong commercial programme is vital to this goal and I am delighted to welcome Wonga into the fold as our lead commercial partner, alongside Puma and Sports Direct."

Last November, Wonga announced it would be removing its name from children’s replica kit sold by Newcastle United but not until the 2016/17 season.