Internet-only bank Egg says it remains on course to break-even in the fourth quarter after posting third quarter losses of £18.4 million, down from £25.5 million in Q2.
"Our core UK business remains on-track to break-even at some point during the fourth quarter," says Paul Gratton, Egg CEO. "With revenues growing strongly quarter on quarter and costs remaining flat we are moving confidently towards profitability."
Egg says it acquired 83,000 new customers in Q3 (Q3 2000: 107,000) taking the total to over 1.8 million. Growth has slowed significantly over the quarter, however, with the company recording only a 2 per cent rise in credit card balances. The company boasts a cross sales ratio of 1.4, with 112,000 products sold in the quarter.
Gratton insists the credit card portfolio is performing well, with margins continuing to grow. He says the 11 September attacks dampened volumes, but reports no deterioration in credit quality.
"However, we have taken prudent action by increasing our general bad debt provision on cards to reflect resulting macroeconomic concerns," he adds. "Encouragingly, we have witnessed a recovery in our sales volumes in October."
Egg is currently looking at opportunities to expand into Europe. The company is awaiting regulatory clearance on a deal with Microsoft consumer portal MSN, which will make its online supermarket Egg Invest available in France and Germany.
'Our discussions with other possible partners in Europe are progressing, albeit more slowly than we had hoped," says Gratton. "We remain confident that in time we will conclude a deal which will generate significant value for shareholders."
The company, one of the few stand-alone Internet banking success stories, is 79%-owned by Prudential, Britain's largest insurer.