Internet bank Egg has beaten market forecasts for third quarter profits in its core UK business, turning in a pre-tax profit of £9.4 million against the upper range of analyst estimates at £7.7 million.
The bank more than doubled Q3 profits in the UK, up from £4.6 million a year earlier. Group losses widened over the previous quarter however, from £1.2 million to £5.1 million before tax, as Egg made final preparations for its international launch and roll-out in France next month.
CEO Paul Gratton comments: "This has been another successful quarter for Egg. The UK business has delivered £9.4 million in profits in Q3 whilst acquiring a further 107,000 net new customers and keeping tight control of costs."
He says that take-up of the bank's new account aggregation service, Money Manager, has exceeded expectations, with the bank signing 100,000 users since launch earlier this year. This puts it way ahead of the only other equivalent UK service, Citibank's My Accounts, which pulled in 20,000 users in its first year.
The bank acquired 107,000 net new customers in the quarter (Q3 2001: 83,000) resulting in a total customer base of 2.4 million. Credit card balances grew by £126 million (Q3 2001: £27 million) and personal loans delivered record sales in Q3 with drawdowns of £269 million; up 79% on the previous quarter and 154% on the same period last year.
Says Gratton: "We continue to monitor credit performance closely and the credit quality of our card portfolio remains strong. Our proposition continues to attract upmarket customers."
Savings balances grew by £671 million in the quarter, reversing the £291 million cash outflow recorded in Q3 2001.
Margins were down slightly on the previous quarter, however, as the introductory impact of special offers on savings and credit card interest kicked in.
Total spend on international development is £22.0 million (Sept 2001: £3.6 million) of which £19.4 million relates to the new Egg France business. Egg CFO Stacey Cartwright told analysts that while the company had no immediate plans for further overseas expansion, it was currently researching prospective markets in the G7 territories and in the US.
Egg also announced that parent company Prudential has invested £5 million in subsidary Funds Direct in return for a 15% stake in the business. Funds Direct, which itself was acquired by Egg in Februrary this year, serves the business-to-business marketplace and is developing a business-to-IFA offering.