The firm has invested in more marketing to attract customers

The news follows three years of falling customer numbers for the firm.

However, the amount of so-called bad debt - which denotes money customers fail to pay - has also risen.

The firm is planning to spin off its international arm, which covers Eastern Europe as well as Mexico, to focus on the UK market.

The firm plans to divest itself of its international business in early 2007.

'Encouraging' figures

"We are seeing some customer growth coming through now [in the UK], which is encouraging," said Robin Ashton, Provident's chief executive.

The firm typically provides short-term loans of between �200 and �400 in the UK. But gaining new customers has required further investment in marketing.

This has contributed to a "short term strain on profits", but in the longer term, such investments are "sensible and worthwhile", said Mr Ashton.

Initial losses in the international division have risen after the firm launched services in Mexico, Romania, and new products in Poland.

Total investments in these new markets will be about �15m in 2006, up from �4m in 2005.