The Bradford-based sub-prime lender, which specialises in doorstep loans of under £500 with weekly repayments, yesterday reported a 34 per cent rise in first-half profits, as more householders turned to it for credit.

Provident said it expected to increase its Bradford staff by up to 100 to cope with the rise in business.

The group, which typically lends out an average of £400 to low-income householders, saw customer numbers grow by more than 10 per cent to two million in the first six months, compared to the same period last year.

Pre-tax profits grew from £38.2m a year ago to £51.3m, and analysts said the group was in line to deliver a strong full-year performance.

The company said it has benefited from mainstream lenders tightening their purse strings, or withdrawing entirely from the market.

However, Provident said it was taking an "increasingly cautious" outlook to lending, as customers came under increasing pressure from rising food, fuel and utility bills, and a growing risk of unemployment.

The group announced an interim dividend of 25.4p, unchanged from a year ago.

"It's probably the best rate of growth we have seen for 10 years," said chief executive Peter Crooks.

"We have continued to expand customer numbers and our responsible approach to lending means this growth is both sound and profitable. We have been very picky about who we take on. We have been anticipating the economic slowing for some time and we believe it will continue slow into 2009.

"We think we are pretty well placed to continue the strong performance through the rest of the year. Because of the way we do business we are very robust when the economy slows down."

Provident employs about 650 staff in Bradford, and Mr Crook expects to recruit up to 100 more for its expanding call centre.

Provident's home credit division, which makes up the bulk of its business, saw customer numbers grow from 1.55m to 1.66m, an increase of seven per cent.

The division, which employs a network of agents who meet householders face-to-face and assess income and ability to repay loans, saw profit grow by almost seven per cent to £50.2m in the first six months of the year. As a percentage of revenue, impairment – or bad debt – fell to 30.4 per cent from 31 per cent.

"We must be quite a stick-out story, doing it in a way that has not resulted in an increase in bad debt levels," said Mr Crook.

Provident said it was preparing a national roll-out of its Real Personal Finance arm, which allows people to repay loans by direct debit, and hopes this will secure it more long-term customers.

Provident's credit card business, Vanquis, also saw a significant increase in customers, up 29.4 per cent to 374,000. Even so, it has tightened its credit criteria four times in the year, and now turns away more than seven in 10 new credit card applications.

Mr Crook said: "Market conditions are very good for this business because the mainstream credit card companies are not lending to as many people as they used to."

Vanquis returned a £3m profit, compared to a £4.2m loss a year ago. Impairment as a percentage of revenue for Vanquis was reduced to 36.8 per cent compared to 50.1 per cent a year ago.

Mr Crook said Provident is "very well funded and capitalised", with undrawn banking facilities of more than £380m.

In a note, brokerage Cazenove said: "A good first-half performance, ahead of our estimate and probably ahead of consensus. The £3m profit from Vanquis shows that the company's long standing targets for this business are sensible and achievable."

Citigroup said in a note: "We believe Provident offers a defensive business model for the current environment."

Provident's shares closed up 9.09 per cent at 894.5p.