Daily Mail

Lender Klarna back in profit

- By Calum Muirhead

KLARNA has posted its first quarterly profit in four years amid a boom in demand from shoppers ahead of the Christmas period.

The Swedish buy-now-pay-later (BnPl) giant, once Europe’s most valuable start-up, reported a profit of £9.6m for the third quarter of 2023 having made a loss of £156m a year earlier.

revenue jumped 30pc to £445m as the 150m shoppers that use its services around the world increasing­ly looked to spread paying for their online purchases as the rising cost of living squeezes incomes.

The company also flagged that credit losses, money set aside to cover customers not paying their debts, fell 46pc yearon-year to around £59m.

‘Our growth has accelerate­d and we will build on this momentum with further investment­s to drive value to our consumers and merchants alike,’ said Klarna boss Sebastian Siemiatkow­ski.

The firm had several years of profitable trading following its founding in 2005 but ran into difficulti­es in 2018 as consumer spending slowed.

last year, the group’s valuation was slashed to £5.4bn from £37bn and it was forced to cut jobs and office space to bring down costs.

But the return to profit provides a valuable boost for Klarna amid reports it has set up a UK holding company in preparatio­n for a stock market listing in london or new York – which could value the group at as much as £12bn.

It followed comments from Siemiatkow­ski, 42, in august when he said that the company’s three conditions for going public have been met. These

were to become establishe­d in the US, have a sustainabl­e business model and significan­t potential for growth.

Klarna’s business model offers customers a way to spread purchases out over several payments with leading retailers including clothing firm Boden, takeaway firm Deliveroo and fashion retailer H&M.

But BnPl services have come under intense criticism from

campaigner­s and MPs who are raising concerns that it is loading up consumers, particular­ly younger people, with unsustaina­ble amounts of debt.

last week, a report from the Financial Conduct authority (FCa) revealed that more than a quarter of regular BnPl users have missed a bill or debt repayment in three of the last six months, totalling 529,200 people.

and 48pc – 940,800 – also had a high-cost credit product such as a payday loan. More than half had increased their credit card debt in the last year, accounting for some 1m consumers.

Despite growing pressure to crack down on BnPl, it was reported in July that the Treasury had shelved plans to bring companies such as Klarna under the overview of the FCa.

 ?? ?? Building momentum: Sebastian Siemiatkow­ski, pictured with wife Nina
Building momentum: Sebastian Siemiatkow­ski, pictured with wife Nina
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