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Egg back in the black; sale under review

27 July 2005  |  4701 views  |  0 egg card close-up

Internet bank Egg has moved back into the black after a strong performance by its core UK credit card business helped boost the group's first half profit.

The Web bank is reporting a group profit of £15m for the six months ending 30 June 2005, compared to a loss of £1.7m for the same period last year.

But in the UK the bank's operating profits fell to £23m, down 36% from £35.8m in H1 2004, as bad debts rose from £82m last year to £117m.

However, UK revenue climbed five per cent to £251m, boosted by strong growth in credit card balances. Egg says this also offset reduced commission from a planned decrease in personal loan sales.

Egg says costs fell by £10m, or eight per cent, compared to last year, and its cost to income ratio improved to 44% compared to 51% in the same period last year.

In France, where Egg is still trying to dispose of its operations, the bank posted a £5m profit, compared to an operating loss of £31.8m a year ago. Exit costs of Egg France are now expected to be EUR165 million and the bank says EUR5 million of the provision has been released in the first quarter.

In a statement, Egg chief executive Paul Gratton, says: "Overall the result for the first half was in line with our expectations and we remain confident about the remainder of the year."

Mark Tucker, the new chief executive of Egg majority shareholder Prudential, said the future of its 79% shareholding was under review. The Pru, under former chief executive Jonathan Bloomer, failed to sell Egg last year for £1.5bn.

Tucker is understood to be amenable to a price just below the £1 billion mark. US bank Citigroup is said to be running the rule over the business.

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