Morses Club PLC – MCL – Trading Update

Morses Club PLC – MCL – Trading Update

Morses Club PLC ("Morses Club", the "Company" or, together with its subsidiary undertakings, the "Group"), an established provider of non-standard financial services, provides the following trading update for Q1 FY22 (1 March 2021 - 31 May 2021).

Despite the continued impact of the pandemic, the Group has seen a steady increase in customer demand across all lending products in both its Home Collected Credit ("HCC") and digital divisions. Strategic investment into the Company's technology infrastructure has continued to develop our service offering in line with evolving customer needs. Further platform development is underway for the current account product, which we expect will positively impact planned volume growth in the second half of the year.

Customer numbers in the digital division for short-term and long-term lending products have increased by 40%, with total loan book balances increasing by 99% relative to the FY21 year-end position. New credit issued is 33% above management's budgeted plan, with collections performance also ahead of budget, indicating the increase in lending volume is not directly reducing the quality of the loan book.

The significant increase in both demand and volume for longer and shorter-term digital lending products has led to the lengthening of the maturity profile of the loan book. This will increase the impairment range for the digital division in the first half of the year due to the IFRS9 requirement to take forward-looking provisions at the outset of the loan period. We anticipate volumes will stabilise and return to more normal levels during the course of the year, in line with our budgeted plan, and subsequently this will then lead to impairments reducing.

As a result of the changes to our HCC service model to cater for customer demands due to Covid-19, 66% of all HCC lending is now cashless and over 70% of customers are registered for the online customer portal. Customer numbers as at 31 May 2021 were 144,000, with strong collections performance being 104% of target and 118% ahead of the same period last year. Total new credit issued within HCC is 16% ahead of our budgeted plan, despite the continued impact of lockdown activity across the UK. HCC impairment charges are expected to remain within the guidance range. Customer satisfaction for the HCC division is at 98%.

Paul Smith, Chief Executive Officer of Morses Club, said:

"Despite the continued impact of the pandemic, trading performance across all of our lending products has been very strong in the first quarter of FY22. This encouraging start to the year has been achieved through standout delivery from all our teams and agents and continues the Group's strong momentum from the second half of last year.

"Our focus on becoming a leading provider of financial products and services for our target customers is unrelenting. The success of the remodelling of our services to meet the needs of customers in the context of the Covid-19 pandemic has made us all the more determined to become sector-leading in terms of meeting customer demand, and to continue to listen to our customers and key stakeholders to help shape our business for long term success.  

"The importance of a technology-led offering has never been clearer. Our investment and focus on ensuring our service model adapts to changing customer needs, whilst maintaining our core ethos of putting the customer at the heart of what we do, is central to our success as a Group."

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