Morses Club hails encouraging first half
By Michele Maatouk
Date: Thursday 31 Aug 2017
(ShareCast News) - Doorstep lender Morses Club reported a rise in its customer numbers and loan book in the 26-week period to 26 August, in an update that came hot on the heels of a profit warning from rival Provident Financial last week.
Customer numbers rose to around 233,000, while the gross loan book was also up 12%, with the average customer balance unchanged. The company said trading for the period has continued to be "strong", with total credit issued up 25% to £82.2m compared to the same period last year, reflecting "a significant increase in territory builds".
Morses said the territory builds in progress to date are performing ahead of management's expectations set at the beginning of the year, and it is anticipated that this increased level of investment will not have an adverse impact on earnings expectations in FY18.
Notwithstanding the up-front costs of the investment in territory builds and infrastructure during the first half of the year, overall, business performance is in line with expectations.
In addition, the company said it expects that the new loan facility announced on 18 August will lead to over 400 new agent territory builds in the current financial year.
Chief executive officer Paul Smith said: "We are delighted with all aspects of the progress of the business, reflecting the fact that we have capitalised on market conditions, whilst developing our strategy of product diversification. As the second largest lender in this market, we believe that our growth is based on a solid foundation of listening to our customers and adapting to their needs. Our depth of operational experience is central to our customer service model which consistently delivers customer satisfaction levels of 95% or more."
Last week, shares in Provident Financial tanked 66% after it said it issued its second profit warning in two months, withdrew its dividend, announced the departure of its CEO and revealed an FCA investigation into Vanquis Bank, as it transitioned to a fully-employed agent model.
Whitman Howard analyst Phil Pickard said: "The really interesting point in this statement is the comment that the new loan facility will lead to over 400 new territory builds in the current year. I have very little doubt this is boosted by the Provident Financial fallout."
At 0850 BST, Morses Club shares were up 7.5% to 139.95p.
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