British Internet bank Egg is reporting group losses before tax of £107m for the year ending 31 December 2004, more than treble last year's loss of £34m, as its retreat from France continues to hit earnings.
Shares in Egg were down 4.70% in lunchtime trading to 109.50 pence.
Egg says group losses include £148 million incurred in respect of Egg France, which it pulled the plug on last year. But Egg says it is ahead of schedule with its withdrawal from France and insists costs will be in line with its provision of £113m. The group has sold off its unsecured lending, savings and brokerage businesses in France and closed its current account business.
The group says it is now focusing on its UK operations and says strong sales of loans and insurance in Q2 helped increase annual revenues by almost 20% to £497m. But the bank is also reporting a steep rise in bad debt provisions, which increased 44% to £182.4m.
Operating profits at the group's core UK operations remained flat at £74m, compared with £73m last year, although the slight increase did beat analysts' forecasts.
The bank says uncertainty created by parent company Prudential's failed attempt to sell its 78% stake in the business also affected its performance in 2004. Prudential abandoned plans to sell the unit in August last year after failing to find a bidder in the face of mounting problems at Egg's French busines. But continuing speculation of a sale has driven up the bank's share price by nearly 25% over the past three months.
Looking ahead, Egg CEO Paul Graton told reporters that the bank expects to maintain double digit revenue growth in 2005.