Almost two million people have taken loans with interest rates of up to 100 per cent from Britain’s biggest doorstep lender after high street banks abandoned borrowers with poor credit histories.

Provident Financial, which sells small loans door-to-door, reported a bumper 2007, with pretax profits from continuing operations up almost 11 per cent to £115.2 million for the year to December 31.

Since last year’s meltdown in the US sub-prime mortgage market, high street banks have introduced stricter rules on who they will lend to. That has forced more people with bad debts or county court judgments against them to borrow from doorstep lenders.

Peter Crook, Provident’s chief executive, said that the outlook for 2008 continued to be strong. “Current market conditions are favourable for us, as mainstream banks continue to tighten their lending criteria,” he said.

Provident said that the number of people who fit in the “nonstandard” category of borrowers – those who find it hard to get loans or credit cards from high street banks – had grown to about ten million.

Provident’s home credit business, which employs almost 12,000 collection agents to make 80 million home visits a year, saw its customers increase by more than 5 per cent to a record 1.6 million last year. Most customers borrow about £400 and pay 100 per cent interest on their loans, but Provident does not levy default charges if they miss a payment.

Debt charities have said that although it is not ideal that borrowers with poor credit records are turning to high-interest loans from doorstep lenders, it is better than some alternatives.

Frances Walker, of the Consumer Credit Counselling Service, said: “It’s a very difficult issue . . . and while I don’t want to say [doorstep lenders such as] Provident are great, I would be concerned that if you take them out of the equation when mainstream lenders are withdrawing, the alternative are illegal loan sharks.”

Provident’s new credit card business Vanquis Bank made a loss of £900,000 overall last year, but showed a profit in the second half. Vanquis charges interest of about 39 per cent on its cards.

Provident is also piloting a business, Real Personal Finance, that allows clients to buy a loan from an agent but pay it off by direct debit.

John van Kuffeler, Provident’s chairman, said that the company’s clients “continue to experience pressures on their disposable incomes from rising food, fuel and utility bills”. However, Provident had not yet been hit by clients losing their jobs.

Provident has tightened its Vanquis cards’ lending criteria twice in the past six months and plans to do so again. It rejects 70 per cent of applicants.

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