Bad debt fears take gloss off Egg's profits

A jump in provisions for bad debts overshadowed a better-than-expected profit performance for 2004 at Egg, sending the internet bank's shares lower yesterday.

A jump in provisions for bad debts overshadowed a better-than-expected profit performance for 2004 at Egg, sending the internet bank's shares lower yesterday.

Egg, which has offloaded its loss-making French operations to concentrate on Britain, unveiled operating profits of £74m for the year to the end of December at the UK business, compared with £73m the previous year. That comfortably beat the analysts' consensus forecast of £69m. The group posted a pre-tax loss of £106.7m, including losses and provisions from its French unit of £148m.

However, there was concern in the City that Egg's provisions for bad debts had risen 44 per cent to £182.4m - while other banks such as Barclays and Standard Chartered have reported falls in their bad debt charges. Paul Gratton, Egg's chief executive, said the increase was not surprising as lending was up 30 per cent and the business mix had changed. Egg sold fewer mortgages, which attract smaller provisions, and focused on cross-selling personal loans and general insurance to its core credit card customers amid tough competition in the credit card market. The debt charge on personal loans worsened to 6.2 per cent of lagged assets - a rate that analysts called "alarming" and predicted could well get worse in coming months. But Egg vowed to tighten its lending criteria for personal loans - which will slow income growth - to bring the rate down.

Egg is majority-owned by the insurer Prudential, which last August abandoned efforts to sell it after seven months of searching for a buyer. The shares have risen in the past three months on fresh bid speculation. Mr Gratton said: "If someone walked into the Pru and offered a large cheque, [the chief executive] Jonathan [Bloomer] would have to deal with it, but we are focused on running the business."

He was confident of maintaining double-digit revenue growth this year as the bank broadens its range to include products such as home insurance. Egg's exit from France will be completed within the next couple of months, and the associated costs are in line with its previous estimate of £113m.

The shares closed down 1.75p at 113.25p.

Suggested Topics
News
peopleFrankie Boyle responds to referendum result in characteristically offensive style
News
news
Life and Style
Couples have been having sex less in 2014, according to a new survey
life
New Articles
i100... with this review
PROMOTED VIDEO
Voices
Holly's review of Peterborough's Pizza Express quickly went viral on social media
Sport
footballTim Sherwood: This might be th match to wake up Manchester City
Arts and Entertainment
musicHow female vocalists are now writing their own hits
New Articles
i100
News
ebooksAn unforgettable anthology of contemporary reportage
News
news
Arts and Entertainment
musicBiographer Hunter Davies has collected nearly a hundred original manuscripts
News
Blahnik says: 'I think I understand the English more than they do themselves'
people
Arts and Entertainment
Michelle Dockery as Lady Mary Crawley in Downton Abbey
TVInside Downton Abbey series 5
Life and Style
The term 'normcore' was given the oxygen of publicity by New York magazine during the autumn/winter shows in Paris in February
fashionWhen is a trend a non-trend? When it's Normcore, since you ask
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Senior BA - Motor and Home Insurance

£400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...

Market Risk & Control Manager

Up to £100k or £450p/d: Saxton Leigh: My client is a leading commodities tradi...

SQL Developer - Watford/NW London - £320 - £330 p/d - 6 months

£320 - £330 per day: Ashdown Group: The Ashdown Group have been engaged by a l...

Head of Audit

To £75,000 + Pension + Benefits + Bonus: Saxton Leigh: My client is looking f...

Day In a Page

Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

Despite the result, this is the end of the status quo

Boyd Tonkin on the fall-out from the Scottish referendum
Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

Manolo Blahnik: Flats, Englishness, and Mary Beard

The shoe designer who has been dubbed 'the patron saint of the stiletto'
The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

Scrambled eggs and LSD

Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

'Normcore': Blending in is the new standing out

Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

New leading ladies of dance fight back

How female vocalists are now writing their own hits
Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments
These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

Widespread fear of Isis is producing strange bedfellows

Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
Topshop goes part Athena poster, part last spring Prada

Topshop goes part Athena poster, part last spring Prada

Shoppers don't come to Topshop for the unique
How to make a Lego masterpiece

How to make a Lego masterpiece

Toy breaks out of the nursery and heads for the gallery
Meet the ‘Endies’ – city dwellers who are too poor to have fun

Meet the ‘Endies’ – city dwellers who are too poor to have fun

Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

Ian Paisley’s decision to make peace with his IRA enemies

His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam