Internet bank Egg has strengthened its position as the largest of the UK online banks, but its expansion has resulted in a widening financial loss.
Egg said it added 120,000 new customers between July and September, bringing its total customer base to 1.2 million. However, Egg’s loss during the first nine months of 2000 widened to £115.1m, compared with £108m for the same period last year. Executives blamed investments in branding, marketing and new products for the extra loss.
Egg also reported that most account closures were by its older postal and telephone-acquired customers, but said they were being replaced by younger, internet-friendly professionals. However, the departing older customers evidently had more cash in their accounts as the total funds managed by Egg fell by £443m in the three months to September.
Despite having less funds to manage and a widening loss, Egg executives claimed the bank would break even by the end of next year.
Chief executive Mike Harris said: ‘We have seen good acquisition performance in the third quarter, adding over 120,000 new customers. We have continued to provide innovative new products and services that are proving attractive to our core customer base, with 70,000 new products cross-bought in the period.
‘Even the decline in total deposit balances is on the whole positive for Egg, as it reflects a transition to a more valuable customer base with a high propensity to transact over new channels, especially the internet.
‘Our results this quarter reinforce our belief that the UK businesses will break through into profit during the fourth quarter of 2001.’
Egg’s share price had risen marginally from Friday night’s close of 126p to 130.5p as of 11.30am Monday, still well below the 176p they commanded at the time of Egg’s flotation in June.