Egg pulled deeper into the red

By PATRICK HOSKING
Updated:

 

EGG, the online bank being auctioned off for about £1.5bn, reported worsening losses today as its French operation continued to haemorrhage cash.

The mushrooming of French losses to £89.1m overshadowed a strong performance from the core UK operation, which boasted a record 635,000 net new customers and a doubled profits contribution to £72.8m.

Overall, the group loss before tax grew from £16.6m to £34.4m.

Chief executive Paul Gratton said the French result was very disappointing, adding: 'We clearly underestimated the level of investment required to deliver a scale business.'

The business, which trades as La Carte Egg, is being kept alive pending a decision on Egg's new owner.

Prudential is auctioning its 79% Egg stake in a move that will automatically flush out a full bid for the listed online bank.

American credit card group MBNA and Lloyds TSB are among potential bidders for Egg. Royal Bank of Scotland's interest is said to have faded.

Loan quality remained strong, Gratton said, with delinquency levels below the industry average. But Egg still lifted bad-debt provisions from £84.1m to £126.7m to reflect its growing loan book and its greater exposure to unsecured creditors.

Egg has won 3.2m customers and carved out a 5% share of the UK credit card market through competitive offers and edgy advertising. It is also successfully cross-selling personal loans to credit card customers, boosting total net lending by £1.5bn.

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