UK insurance group Prudential says its Internet banking operation Egg has posted an operating loss of £39 million for the six months to the end of June, compared to a profit of £15m for the first half of 2005.
The surprise losses at Egg came after a 42% increase in bad debts, which jumped to £166 million.
Commenting on the results, Mark Tucker, chief executive, Prudential, says: "Difficult trading conditions in the personal loan market resulted in a loss at Egg in the first half of the year but we expect Egg to report an operating profit for the second half."
Prudential paid £240 million in February for the 22% stake it didn't already own in Egg. The group originally put Egg up for sale in January 2004 but failed to find a buyer for the business.
The insurer is currently restructuring the unit under cost-saving measures introduced in December last year. In today's statement Prudential says it is increasing the £40 million-a-year UK cost-saving initiative to £150 million.
In April the group said it was shutting down the London head office of Egg, along with two other sites, under plans to move 700 jobs to India and other parts of the UK.