Doorstep lender Morses Club reported a 46 per cent leap in first half profits following a 13 per cent increase in customer numbers to 233,000.
Analysts said that Birstall-based Morses, the second biggest player in the home credit market, has benefited from the woes at market leader Provident Financial.
Analyst Shailesh Raikundlia at Panmure Gordon said: “The disruption at Provident Financial has presented Morses Club with an opportunity to increase territory builds to 434, well ahead of management’s year-end target of around 400.
“While the group maintains this target, as some agents will revert back to competition, the strong growth this year will feed into future years, given that each territory adds around 120 customers and average customer balances remaining broadly stable at £549.”
Bradford-based Provident issued a second profits warning in August following its decision to replace 4,500 self employed collection agents with 2,500 full time staff. The switch over did not go well with many agents decamping to rivals and Provident’s chief executive Peter Crook falling on his sword.
Morses said that reported pre-tax profits rose 46 per cent to £6.7m in the six months to August 26. Revenue rose 15 per cent to £54.2m and the net loan book rose 16 per cent to £65m.
Impairment as a percentage of revenue was 26.6 per cent, up from 22.5 per cent in the same period last year. Morses said that impairment is within its target range and the increase reflects its growth plans.
The group said its increase in customer numbers has introduced a number of high quality clients, ie, customers that pay their debts.
Morses CEO Paul Smith said that investment in IT has enabled field operators to deal with 28 per cent more customers.
“There is a lot of empathy between agents and customers. We wanted to keep that whilst getting rid of inefficient systems,” he said.
He said the group has taken a very different path to Provident and 120 former Provident agents have joined Morses alongside 55 managers.
“We’ve enjoyed a very strong influx from Provident,” he added.
The group said that its strong first half performance demonstrates the success of its credit policy and emphasis on high quality lending, as well as its ability to capitalise on market opportunities to increase our customer base.
“In light of the change in market conditions, we have placed considerable emphasis on ensuring that growth is sustainable and we are focused on developing products in line with customer demand and supported by our excellent customer service offering,” said Mr Smith.