Losses at UK Internet bank Egg more than doubled in 2003 as its troubled French business continued to sap results.
For the year-ending December 2003, Egg has posted pre-tax losses of £34.4 million, up from £16.6 million in 2002.
Operating profit in Egg's UK business more than doubled from £34.8 million to £72.8 million, boosted by new customer acquisitions and record sales growth. In contrast, the French operation, launched on the back of the acquisition of struggling Internet bank Zebank in 2002, posted a 91% increase in losses to £89 million.
Describing the performance in France as "disappointing", Egg chief executive Paul Gratton (pictured) confesses: "We clearly underestimated the level of investment required to deliver a scale business."
Egg's search for a partner to share the costs of its investment in France has been superseded by parent company Prudential's decision to find a buyer for its 79% stake in the group.
"In the meantime," says Gratton "we are managing discretionary expenditure tightly in Egg France as we await the conclusion of this process."
Egg UK now has almost 3.2 million customers, adding 635,000 new customers in 2003. Success in credit card sales has given way to growth in unsecured lending as the group reaps the benefits of investments in new customer relationship management technology.
"This has been at the heart of Egg's success both in cross-selling loans to the card base and in growing lending balances in total," says the company in its results statement. "Egg now runs over 80 campaigns a month into its customer base, focused on selling new products, encouraging value positive customer behaviours and maximising retention."