Internet bank Egg to hit break even point
July 24, 2001
The online operation, which floated last year, added a total of 370,000 customers in the first six months, and most signed up for a credit card.
Egg said its credit card customer base was 1.1 million at the end of June – more than double the amount registered last year – with credit card balances rising to £1.5 billion.
The growth helped the bank to offset a fall in both savings balances and mortgage sales.
Overall, Egg made a pre-tax loss of £63.4 million in the six months to June 30, compared with £80.7 million in the first half of last year.
Second quarter losses were cut back 33 per cent to £25.5 million and chief executive Paul Gratton said he remained confident Egg could break even by the end of the year.
He added: “This has been a strong performance for the first half of the year.
“We are growing our customer base whilst driving down acquisition costs significantly and this positions us well to deliver a profitable business in line with our stated plans.”
Egg, which is 80 per cent owned by Prudential, now has 1.7 million customers and Mr Gratton said an increasing amount were taking out more than one of the bank’s products.
Mr Gratton added he was particularly pleased that most of Egg’s credit card customers – 89 per cent – were remaining loyal after a six-month incentive period.
The amount borrowed on the cards was also high, with an average monthly balance of £1,750, twice the UK average, he said.
Egg made its first move towards international expansion last week when it agreed a partnership with Microsoft.
The bank plans to launch an investment funds marketplace on MSN, the computer giant’s web portal, in the UK next February before extending it into Europe. The deal follows on from a co-branding deal struck with retailer Boots last year.