Cattles, the sub-prime and doorstep lender, on Thursday scrapped its dividend payouts for at least a year.

Analysts reckon that Cattles will save almost £100 million by abandoning the final dividend for this year as well as a 6.3p-a-share payout scheduled for the first half of 2009.

Cattles gave no indication of when it would resume payments, but some observers suggested that it could be almost two years. Ian Poulter, an analyst with Teathers, said: “Given the uncertainty, we are assuming no resumption of payment in the second half of 2009 or 2010.”

Cattles, based in Batley, West Yorkshire, has come under mounting pressure in recent weeks amid potentially damaging delays in its application for a banking licence.

The group, of which David Postings is chief executive, wants to secure about £1 billion in retail deposits by 2010 to help to reduce its reliance on the wholesale markets for funding.

Its application for a banking licence went to the Financial Services Authority in August, but a tougher approach by the regulator means that Cattles has had to rethink its February schedule. The lender provided no fresh clues about the imminence of the licence yesterday.

Cattles is also in talks with its banks, led by Royal Bank of Scotland, about renewing the terms of its increasingly expensive £500 million credit facility, which is due to come up for renewal next July. Analysts in Citigroup, the Cattles broker, said that they were hoping for an update from the lender on this issue before the end of the first quarter of next year.

Cattles shares have plunged 65 per cent since since the beginning of the month amid market speculation that the FSA will turn down its application.

On Thursday, Cattles said that it had headroom of £129 million on its current facility, while its total borrowings had risen from £2.5 billion to £2.6 billion since September. The company added that although trading for the year was in line with expectations, pressure on its customers' disposable income meant that arrears on loan repayments had risen from 7.4 per cent to 7.8 per cent.

Cattles is forecast to make a pre-tax profit for the year of about £170 million. It on Thursday said it was on course to meet analysts' targets, helping to lift its shares by 5p, or 2.8 per cent, to 18p. It described its decision temporarily to halt dividend payments as “prudent”.

Robert East, who joined Cattles as banking director in June, was on Thursday named as group finance director. He will replace James Corr, who said in June that he would be leaving the company in February.

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