Egg, the UK's largest online bank, has narrowed pre-tax losses in the second quarter after it continued to cut spending at its loss-making French unit, but uncertainty remains over the identity of its potential new owner.
The Internet bank made a profit of £1m in Q2 2004 leading to an overall loss before tax for the first half of the year of £4.1m, down from £22.8m in H1 last year.
Operating profit at Egg's UK business dropped to £34.5m from £36.7m, which was blamed on rising interest rates and increased competition.
Losses at the France unit were down to £32.2m in the first half, compared with £48.7m a year ago. Egg announced its was calling time on the business last week, after having spent £280m on the venture. Costs of closing the French unit are estimated at £113m.
Looking forward, EGG CEO, Paul Gratton, says the group will look to grow its UK business through targeted acquisitions and cross-selling products to its 3.5 million customers.
"Research indicates Egg's existing customers have an exceptionally high propensity to buy further products from us. We plan to invest further in our brand, in targeted acquisition and in our cross-sales capability in the second half of the year," says Gratton.
Egg's majority shareholder Prudential has been in talks to sell its 79% since January.
The announcement last week that Egg was finally closing its loss-making French business came after Prudential said no potential buyer was prepared to invest in the unit. This led to intense speculation on potential bidders, which included US credit card firm Capital One and JPMorgan Chase. Furthermore, a report in a UK newspaper today says Prudential was in talks with The Royal Bank of Scotland about setting up a possible 50/50 joint venture investment in the online bank.
It was rumoured that Egg would unveil its new owner when it posted its H1 results, but the bank says talks are still ongoing. Egg's annual meeting is next week.