UK Internet bank Egg has reported a sharp reduction in annual losses and begun exploring opportunities to enter the US consumer banking market.
Group losses for the year ending December 2002 slimmed to £16.6 million, against £87.8 million a year earlier. Egg UK delivered a profit before tax of £13 million in Q4 giving full year profit of £34.8 million (2001: £75.7 million loss), a turnaround of over £110 million.
The company recruited 610,000 new UK customers during 2001, giving a total customer base of 2.6 million. Business was fuelled by a 98% rise in personal loan drawdowns to £829 million and continuing growth in credit cards, with total balances reaching £2.3 billion by year end (Dec 2001: £1.77 billion).
The year also saw Egg extend the brand to the continental market with the acquisition of online outfit Zebank and the launch of its own credit card in the fourth quarter. The company says 44,000 people were accepted as potential card customers in the first two months post launch, with 27,000 expected to make the grade once all checks have been completed. The total French customer base now stands at 90,000 following conversion of selected Zebank customers.
Chief Executive Paul Gratton (pictured) says: "We are pleased with the quality of customers we have attracted to date; early findings from our research shows customers using their card an average of 15 times per month, and that la Carte Egg is establishing itself as 'front of wallet'."
He says the company is committed to developing Egg as a global business and has been researching different territories throughout 2002.
"Specifically, we have been exploring potential entry strategies for the US market and have embarked on some qualitative and quantitative consumer research in Q1 2003 to establish the scale of the opportunity available," states Gratton.
He says early results indicate a high level of disatisfaction among US consumers about financial services provision.