The catastrophic collapse of Provident Financial has handed rival Morses Club a huge boost to profits.
The UK’s second largest doorstep lender today posted bumper half-year figures with one analyst saying it is “stealing business hand over fist” from Provident.
“It’s clear that we have benefitted from it in that we have taken on quite a few agents that were surplus to requirements there," Morses chief executive Paul Smith told City A.M..
Total credit issued rose by a quarter to £82.2m, while customer numbers swelled by 12 per cent to 233,000 in the six months to 26 August.
Last week, shares in the then FTSE 100 firm Provident Financial plummeted almost three-quarters in hours after revealing a shopping list of woes. The group’s market capitalisation has subsequently bounced back but is still 30 per cent of its May value. Yesterday, the firm was relegated out of the blue-chip index.
Smith stressed the pieces for expansion had been put in place months before the Provident news.
“It just so happened it has been accelerated a bit by Provident’s decision and their handling of the situation," he said.
Reflecting on Provident's operational shake-up Smith questioned the idea of breaking up the agent network.
I don’t think it is a path we would go down.
We’ve always felt the symbiotic relationship between an agent and a customer is absolutely critical.
ETX senior analyst Neil Wilson said: “More evidence of the botched revamp at Provident Financial – rival Morses Club is stealing business hand over fist.
Morses says the territory builds have performed ahead of management's expectations set at the beginning of the year. This is perhaps an understatement – they could not have known how badly Provvy would botch its changes and quickly agents would switch to them.
He continued: “This is more evidence that the idea to change a business model that’s worked perfectly well for 130 years was not so clever.”
Shore Capital Markets analyst Gary Greenwood said:
Overall, full year profit performance is expected to be in line with market expectations, notwithstanding additional upfront costs associated with a significant increase in agent recruitment as the group has taken advantage of the fall out from the poorly managed restructuring by market leader Provident Financial of its home collected credit business.