Exceptional costs of pounds 5.5m relating to the group's withdrawal from aircraft financing and a construction equipment venture plunged Baltic into the red.
The interim dividend has been chopped from 1.83p to 0.5p.
Operating profits halved to pounds 2.8m ( pounds 5.6m), after the group provided pounds 2.3m to cover bad and doubtful debts.
Harry Hyman, finance director, said the damage to operating profits from continuing bad debts was likely to be repeated in the second half. Since the end of June 'things had got notably worse'.
He said the company had taken prompt action to minimise bad debts and realise the value of repossessed assets. He emphasised the company's strong balance sheet, good cash flow and relatively low levels of debt. But he acknowledged that the trading outlook remained 'pretty gloomy'.
Chris Smith, an analyst at James Capel, said: 'The losses weren't a tremendous shock and for a small lender in the most difficult market we've ever seen they are doing all the sensible things.'
However, he was surprised at the 'savaging of the dividend'.
The shares are trading at a substantial discount to net asset value, which is about pounds 1.35 a share.