Cattles, the lender specialising in high-interest loans to borrowers on low incomes, defied the gloom in credit markets yesterday by beating City expectations with a sharp rise in profits.
It made £60.1m in the six months to 30 June on revenues of £444m, up from a £46.8m profit on revenues of £341.5m over the same period a year ago. Sean Mahon, chief executive, said Cattles had managed to achieve the improvement through "our accumulated knowledge of customer behaviour that enables us to identify profitable lending opportunities and successfully screen loan applications".
Credit markets have been rocked by the US sub-prime mortgage crisis. However, Mr Mahon said Cattles had benefited from its concentration on providing relatively small loans to "carefully selected customers". It does not offer home loans.
The company has also hedged against swings in interest rates. This meant its borrowing costs stayed stable during the first half, at 6.8 per cent. The level of arrears from bad loans was also relatively unaffected.
The credit industry remains controversial, however. A recent Competition Commission review accused lenders of making "excess profits" and demanded "behavioural" remedies, such as a price comparison website. The commission is also investigating payment protection insurance. Nonetheless, analysts gave Cattle's figures a warm response, although the shares finished .75p lower at 383.5p. It plans to pay an interim dividend of 6.2p against 5.65p last time.