Morses Club has seen pre-tax profits hit due to the coronavirus pandemic, saying a decline in customer numbers during the six months to August 29 had been considerably steeper than expected. Restrictions on lending to new customers in place from March until mid-July meant it saw 25,000 fewer new customers.
The company has also seen its revenues drop to £50.2 million (H1 FY20: £66.3million), a 24.3% fall, in its interim results for the 26 weeks ended 29th August 2020. Total credit issued to all customers was £60.2 million (H1 FY20: £91.million), a drop of 33.8%.
Despite the pandemic, no staff has been furloughed and no Government debt or other support packages have been applied for.
The company says remote lending to its new Home Collected Credit (HCC) customers launched in July 2020, adding it had received a very positive customer response to its digital HCC offering.
Morses Club attributes the falls in both revenue and total credit issued to the challenges of lending to new and existing HCC customers and lower customer demand during the lockdown.
Paul Smith, Chief Executive Officer of Morses Club, said “In response to the Covid-19 pandemic, Morses Club responded decisively, leveraging its digital expertise and capabilities to accelerate its strategy of servicing customers remotely.”
“Within just three weeks of lockdown in March, we recommenced lending to existing HCC customers and launched digital lending to new HCC customers in July 2020. Credit issued and collections in the HCC division were inevitably impacted by the loss of face-to-face interaction, but customers responded very positively to our remote HCC lending product with c. 65% of loans now being delivered through bank transfer. The acceleration of the digitalisation of our business can only serve to improve choice and flexibility for our customers, employees and agents.”
“Our Digital division continues to make strong progress. In August, we announced a new strategic relationship with Modulr, which will enable us to offer services not typically available outside of mainstream banking providers. The forthcoming launch of our improved mobile application and new lending products by the end of this financial year will deepen and broaden our customer base further.”
“The way in which Morses Club has responded to the unprecedented challenges posed by Covid-19 is something that I am extremely proud of. I am hugely grateful to our colleagues across the company, all of whom went the extra mile to ensure that our customers’ needs were met and continued to receive excellent customer service.”
“The speed of progress we have made across the Group in the period is testament to our investment in technology over a number of years and Morses Club is well-placed to become a more complete financial services provider in the growing and fragmented non-standard credit sector.”
“Whilst we are pleased with the undoubted resilience shown by the business during H1, we are fully cognisant of the impact on consumer confidence due to the ongoing lockdowns across the UK, which directly affects the communities we serve. We accept that market conditions remain challenging but are confident that our approach will continue to deliver improvements.”