Chief executive, David Postings, said pre-tax profits increased by 16.8 per cent to £70.2m (2007: £60.1m), underpinned by income growth of 17.8 per cent.

The board has declared an interim dividend of 6.51p per share (2007: 6.20p) - an increase of five per cent.

Cattles said it had further tightened its credit criteria to new applications, taking account of the pressure on household budgets.

This had led to a lower acceptance rate and reduced volume growth compared to previous years.

Acceptance rates reduced to 5.2 per cent (2007: 6.3 per cent) and as a consequence new business volumes in the period were broadly unchanged at £661m (2007: £659m).

Mr Postings said the squeeze on consumers' disposable income had had some impact on arrears.

Instalment arrears increased to 7.2 per cent (against seven per cent for the whole of 2007) while customer balances with a proportion in arrears rose to 31.4 per cent from 29.2 per cent across the whole of last year.

The group's loan loss ratio was 8.4 per cent (full year 2007: 8.4 per cent).

Mr Postings said the Birstall-based group's trading in the second half of 2008, to date, was in line with expectations.

A recent rights issue achieved a take-up rate of 96.7 per cent and raised £197.6m, net of expenses, to provide the group with increased capital to support its application to the FSA for a banking licence.

The group intends to enter the savings market in a move which would considerably reduce its reliance on expensive wholesale funding.
It hopes to get around £1bn in deposits by 2010.

The savings operation, which will run under a new brand name, will target a totally different customer base to Cattles' existing clients.

Cattles has lent money to people who have been turned down by the traditional high street banks.

The firm recently awarded Newcastle Building Society a five-year contract to provide it with a new online savings operation as part of its drive to move into new areas.

*Cattles also announced that James Corr, group finance director, would be leaving the group next February, after seven years, 'to spend more time with his family and pursue other interests'.