Egg confirms profit target in sight as income starts to overtake costs

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The Independent Online

Mike Harris, chief executive of egg, said yesterday the online bank was on target to meet its goal of turning a profit in the fourth quarter of next year after third-quarter numbers showed income exceeded expenses for the first time.

Mike Harris, chief executive of egg, said yesterday the online bank was on target to meet its goal of turning a profit in the fourth quarter of next year after third-quarter numbers showed income exceeded expenses for the first time.

"For the first time we have been able to show how this business is economically viable," Mr Harris said.

Shares in egg, which have dropped as low as 100p from their 185p peak, perked up 4.5p to 130.5p yesterday, despite the fact that customer outflow is accelerating as the bank seeks to find ways of making money out of its customer base.

Losses for the quarter narrowed to £34.4m against £80.7m at the half-year stage, as egg continued to pour money into product development and promoting its brand. Income for the quarter was £28m against administrative expenses of £25.9m.

Total customer numbers rose by 120,000, with credit cards and home loans sales taking over from deposits as the main drivers of the business. But balances fell by £443m as 13,000, mainly more affluent, customers took their deposits elsewhere. Mr Harrisclaimed the defections reflected a shift in the profile of the bank's customers, from retired people with large individual balances in favour of younger people who wanted credit cards, mortgages and other loans.

Egg is looking to profit from cross-selling products, and has set itself the target of two products per customer. However, just 70,000 products were cross-sold in the period.

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