Morses Club sees booming demand for digital lending

The Batley-based firm said the quality of lending in its digital division remains high.

The group said that whilst there is uncertainty over the impact that the end of furlough and the removal of enhanced Universal Credit may have on customers’ ability to repay, it is taking a measured approach to growth to manage the quality of its loan book.

Paul Smith, chief executive of Morses Club, said: “We are keeping a weather eye on that. In the home collect credit market, macro-economic factors haven’t really had an impact historically and a lot of those customers were not subject to furlough because many of them were part time workers or on a zero hours contract.”

He expects that the cut in Universal Credit will “cause a ripple, but nothing catastrophic”.

“In the digital side of the business there will undoubtedly be workers who will have been furloughed, but when we examine the stated job roles that our customers have, those customers have been largely unaffected by furlough,” he said.

“We’ve got a lot of retail-based staff that work for companies like Asda, Sainsbury’s and Tesco. Their hours would have been extended during Covid.

“We also have a large number of people who work in care industries. They wouldn’t have been furloughed during Covid.

“We’re keeping an eye on it and keeping an eye on the increasing utility bills, but we don’t expect it to send a massive shock wave through our repayments performance.”

The group said digital home credit is proving popular, with 65 per cent of all lending and 86 per cent of payments now cashless.

Mr Smith said this was partly due to a complete rehousing of the system from old technology to new.

“We invested in a brand new loan management platform and we also invested in a new call centre system. All of those things combined mean we’ve been able to remove a lot of black box manual things,” he said.

“It’s a real win from the investment strategy that we’ve developed over the years.

“Secondly, a lot of the online providers of old used to be involved in the payday lending market that the FSA put a stop to a number of years ago.

“Given that they had very large legacy bases of payday lending customers, they were an absolute prime target for mis-selling claims.

“A lot of those companies have subsequently withdrawn themselves from the UK market and gone back over to the USA or if they were UK-based, they have gone into liquidation so that leaves a much more competitive landscape for us to play into.”

Over 75 per cent of home credit customers are now registered for the customer portal and customer satisfaction in home credit has been maintained at 98 per cent.

Total group customer numbers have fallen from 205,000 to 196,000.

The firm said it is making progress in its plan to restructure the group.

Revenue increased by 4.4 per cent to £52.4m in the six months to August 28 and total credit issued to customers rose 29.2 per cent to £77.8m.

The group made a statutory pre-tax profit of £1.8m, up from £800,000 in the previous half year.