Cattles said its pre-tax profit for the six months to June 30 was £70.2m($129m), up from £60.1m in the same period last year.

The group, which lends to consumers who cannot get credit from mainstream banks, added that customer accounts with a proportion in arrears rose to 31.4 percent of the total, up from 29.2 percent at the end of 2007.

Cattles, which is based in Batley, West Yorkshire, also said finance director James Corr is to step down in February next year.

David Postings, the chief executive, said: "Demand for the group's consumer finance products has continued to grow. The business has further tightened its credit criteria to new applications, taking account of the pressure on household budgets.

"This has led to a lower acceptance rate and reduced volume growth compared to previous years. Acceptance rates reduced to 5.2 per cent and as a consequence new business volumes in the period were broadly unchanged at £661m.

"The group's strategy is to enhance shareholder value by driving growth in traditional markets, managing credit quality and our impairment position, diversifying funding and focusing on profitability and capital strength.

"I am pleased to report that the group's trading in the second half of 2008 to date is in line with expectations. Together with my senior management team, I look forward to the completion of another successful year in 2008."

Cattles said it had funding headroom of £334.2m at the end of June, and that it would begin talks to refinance a £500m loan early in the new year.

The company said it had made "good progress" with its application for a banking licence, which would allow it to reduce its dependence on wholesale borrowing by raising customer deposits. The group aims to raise £1bn in deposits by the end of 2010 should its application succeed.

Cattles is paying an interim dividend of 6.51p per share, an increase of 5 per cent.