MARKETS
Prudential's Egg hatches more profits
24-04-2002
by Paula Mythen
Internet bank Egg plc reported a UK profit before tax of STG4.1 million, a huge increase from last year's Q1 loss of STG37.2 million.
Egg, formed in 1998, is 80 percent owned by Prudential and was the first of Europe's Internet-only banks to hit profitability last year. The bank said that it attracted 157,000 new UK customers in the first three months of 2002 taking the total to 2.1 million. Revenue per customer also grew strongly in Q1 to an annualised STG145, an increase of STG12 over the fourth quarter of 2001.
Credit card customers exceed 1.5 million in Q1 and Egg now claims over four percent market share of card balances in the UK. The bank's deposit customer base increased slightly in the quarter to 627,000.
With the growth in customers and revenue per customer, the company's operating income rose 102 percent in Q1 to STG73.7 million, from STG36.5 million a year ago. Earnings per share were STG0.02 for the quarter, up from a loss of STG0.034 per share a year ago.
Egg also said that its total assets increased to STG8.8 billion, up from STG7.8 billion with credit card balances reaching STG1.9 billion from STG1.3 billion a year ago.
"We have had a good start to the second quarter. The repositioning of the on-line savings offer, including new guarantee and bond products, has had excellent uptake from consumers with STG281 million of net inflows in Q2 up to 22 April," said Paul Grattan, chief executive. "The success of our new savings proposition, combined with continuing growth in card customers, has resulted in 50,000 new customers acquired in the first three weeks of Q2."
Earlier this week Egg announced that it will launch "Egg Pay", a new service that will let the Web-bank digitally transfer money via e-mail to any of the UK's 110 million bank accounts. Egg says that through the service, Egg customers can send up to STG200 to anyone with an e-mail address and a UK bank account.
The news from Egg follows reports in February that Egg and Microsoft had entered into an alliance to enable 10 million customers of Microsoft's Hotmail service to securely e-mail money.
In January of this year Egg, acquired French e-bank Zebank. Zebank, launched in February 2001 has some 70,000 customers in France and is backed by interests including Groupe Arnault. France will be important market for Egg, with 22 percent of Internet users already banking on-line and 45 percent expected to do so by 2005, according to research from Forrester.
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