* Expects further 30 pct rise in customer numbers to 300,000
* Increased number of lending agents by 434 in last half-year
* Says many new agents came from bigger rival Provident Financial
By Noor Zainab Hussain and Emma Rumney
Oct 11 (Reuters) - Britain’s second-largest doorstep lender Morses Club is forecasting a jump in profits and customer numbers after recruiting dozens of agents from its bigger but now struggling rival, Provident Financial Group .
Provident’s shares have more than halved since a second profit warning in August when it revealed that its door-to-door lending business was in crisis after trying and failing to directly employ the agents who visit customers to lend cash and collect repayments.
Morses saw an increase in customers of more than 12 percent to 233,000 in the six months ended Aug. 26 and now expects to have 300,000 borrowers in the near term after hiring more than 400 new agents.
“We’ve always grown between 5 and 10 percent per annum (in home credit) under normal circumstances but this year we are growing much more than that,” said Paul Smith, Chief Executive, referring to the boost it has got to winning business from Provident.
Founded like Provident in the late 19th century, Morses now has more than 2,000 self-employed agents, who lend to and collect debts from its customers, often at their front door.
Some agents are former customers and the majority are women.
Banks’ reluctance to lend to risky borrowers since the financial crisis has made more Britons look to lenders charging high interest rates like Provident and Morses, which typically grant short term cash loans of between 100 and 1,000 pounds.
Unsecured borrowing in the United Kingdom increased by 23 billion pounds in 2016 - equivalent to 62 million pounds a day - with total household debt now almost 270 billion, according to consultancy and accounting group PwC.
Morses charges an interest rate of 50 percent on a 20-week loan, 65 percent on a 33-week loan and 82 percent on a 52-week loan, according to its website.
But sticking to the use of agents, Provident’s woes are not being mirrored at its rival.
Smith said that the recent rise in Morses Club customers, many of whom followed their agents from Provident to Morses, had occurred during the typically quieter spring and summer months, while business usually peaks around Christmas.
“I would think that you could expect to see Morses Club in the near-term future reach the 300,000 customer mark,” Smith said.
“Going into 2018 and 2019, the growth that you will see in terms of customer numbers and profitability will come from those people that we took on in 2017,” he said.
In the first half of its financial year the company increased its lending by about a quarter to 82 million pounds ($108 million), Morses reported last week. Provident will report on third-quarter 2017 results on Friday.
There are around 1.5 million people in Britain borrowing in this way, taking more than 1.1 billion pounds of credit. Most have been shunned by banks.
One example on Morses’s website showed a loan of 200 pounds repayable over 20 weeks. Each week, 15 pounds is collected. The interest rate of 50 percent means that the borrower would pay 300 pounds.
Self-employed agents, who Smith said often used to be customers themselves, prefer the flexibility of being able to choose their hours and take on other jobs.
Around two thirds of Morses’ agents are female, he said, and juggle their Morses commitments with childcare and other part-time work.
“They’ll go off and do a couple of hours at Tesco on the till, or work at BP filling stations,” Smith said. ($1 = 0.7584 pounds)
Reporting by Noor Zainab Hussain in Bengaluru and Emma Rumney in London; Editing by Greg Mahlich