Credit losses at Klarna surged to $542 million (SEK 4.6 billion) last year.

The Buy Now, Pay Later (BNPL) company attributed the losses to continued growth in its consumer base and expansion into new markets.

The business, which now serves 100 million active customers around the world, said that improved underwriting on mature market volume growth added $100 million to losses, while an increase in volume of new customers in growth markets added $300 million of losses.

“With our focus on creating products which consumers love powered by effective underwriting, our credit loss rates have reduced by over 30 per cent since 2019,” said Sebastian Siemiatkowski, chief executive and co-founder, Klarna. “The detailed reader will however notice that in absolute terms our credit losses are growing, not shrinking.

“This is entirely explained by Klarna’s growth, expansion to new markets and massive inflow of new customers. It is more challenging to underwrite a new customer compared to an existing returning one.”

According to Klarna, 99 per cent of its lending is repaid and its losses are below the card industry standard.

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