Optimistic profits forecast at listed lender

Birstall-based lender, Morses Club, anticipates its Group pre-tax profits for FY21 will be ahead of current market expectations.

In a trading update this morning for the 52 weeks to 27 February 2021, the company adds it intends to pay a dividend for FY21, demonstrating its confidence in the Group’s prospects.

It says it was able to performed resiliently and profitably during a challenging year.

Morses Club moved to a remote Home Collect Credit (HCC) lending model, which was made possible by its previous investment in its digital capability.

The company says its advanced digital platform enabled it to resume lending to existing customers just three weeks after lockdown was announced in March 2020.

64% of lending in our HCC division is now cashless and transacted through its portal, with customers signed up to the portal rising by about 70% during the period. 

Total credit issued within HCC reduced by 37% to £109.7m (FY20: £174.2m), which the business says reflects reduced demand due to national and regional lockdowns during the year, along with the Group’s stricter lending criteria to protect the quality of the loan book.

The HCC gross loan book reduced by 28.6% to £102.1m (FY20: £142.9m) and total customer numbers within HCC were 152,000 (FY20: 221,000).

The firm’s Digital division was also hit by falling demand due to lockdown measures along with the Group’s tightening of lending criteria to maintain high quality lending.

Total credit issued increased by 21.4% to £19.3m (FY20: £15.9m) and customer numbers were 29,000 (FY20: 33,000).

However, Morses Club says this division is now primed for growth with new robust platforms and a significant target market.

Its trading update adds: “We took the opportunity to implement a number of structural changes to the business, supporting employees and agents working from home, and restructuring the Group’s property portfolio, which is now largely complete with all 89 branches operationally closed on a permanent basis.

“Morses Club has not furloughed any staff nor sought any Government assistance throughout the period.”