Egg set to hatch first profits in 2001
The launch of a co-branded credit card with high-street retailer Boots, has given online bank Egg access to 8.5m customers, as it prepares to record its first profits in the new year.
The launch of the new card helped Egg reverse a third quarter slowdown in new customers, the Financial Times reported today. From 11 October to 1 December, Egg attracted 121,000 new customers compared with figures of 107,000 the previous quarter, an 11% rise.
At present Egg can claim a customer base of 1.33m with more new customers expected to be attracted in 2001.
Analysts said this growth was better than expected, particularly as competition in online banking intensifies, with the likes of Abbey National’s Cahoot, HSBC’s Firstdirect and Halifax’s Intelligent Finance. Already the tough competition has forced Lloyds TSB to scupper plans to launch an online bank.
Egg recorded a reduced outflow in net deposits of £154m in the fourth quarter, compared with an outflow of £443m in the third quarter. Mike Harris, CEO of Egg blamed the poor showing in the third quarter on unfavourable interest rates, which resulted in telephone-based customers closing their accounts.
However he said Egg was attracting new deposit customers to offset the more rate sensitive customers that left the bank in the third quarter. Egg is expected to outsell the 70,000 products they shifted in the third quarter by year-end.
At the time of their IPO, Egg recorded a third quarter loss before tax of £80.7m, compared with a loss of £69.7 in the second quarter. The IPO raised capital of £150m.
Following the disclosure of results in October, Harris said Egg would prosper in a ‘low margin era’. Harris singled out the strength of their brand name and an established customer base as indicators of future success.
A survey by MMXI Europe in September rated Egg as the most frequently visited finance website in the UK.
In June, Egg recorded brand awareness at 79%. Other services successfully launched this year include an online mutual funds supermarket (in March) and a share dealing service (in July).
Egg was last trading at 112p per share, a fall of 1.8%
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