Egg wants to crack the US market

After announcing narrower losses for the previous year and profits for its UK operation, the Internet bank is setting its sights on the American market

Online bank Egg's losses have narrowed over the last year, with the UK operation recording a profit. Its new French arm is yet to get into the black -- but that hasn't put the company off further international expansion, with the US top of its list of priorities.

In the UK, Egg delivered a profit before tax of £13m in Q4 2002, giving full year profit of £34.8m, up from a £75.7m loss in 2001. Around 141,000 new customers signed up in the quarter, giving a full year total of 610,000. Egg UK now has a total customer base of almost 2.6 million.

The Egg group as a whole enjoyed a 73 percent hike in operating income to £327.3m in 2002, and saw its losses shrink from £87.8m in 2001 to £16.6m last year.

Paul Gratton, Egg group chief executive, said in a statement: "Egg has achieved substantial growth again in 2002. In the UK, we acquired 610,000 net new customers during the year, principally through our credit card business, which has now captured over 5 percent of total balances in the UK card market. The UK business has demonstrated it is sustainably profitable, successfully growing customer numbers and revenues in a challenging and increasingly competitive marketplace, whilst at the same time reducing both unit operating costs and marketing acquisition costs."

While the five-month-old French arm is making a loss, Egg claims its launch there has been a success. The company said that it is "particularly pleased" that brand awareness -- a key focus for the company in the French launch phase -- has reached 55 percent there, which is an improvement on the UK figure five months after its launch.

Looking to the future, Gratton added: "We remain committed to developing Egg as a global business and have been researching different territories throughout 2002. Specifically, we have been exploring potential entry strategies for the US market and have embarked on some qualitative and quantitative consumer research in Q1 2003 to establish the scale of the opportunity available."

The US economy has been mired in an economic slump, but the Federal Reserve has sought to buoy consumer spending by setting interest rates at their lowest levels in over 40 years.

Gratton said it was too early for Egg to form a view on the state of the US economy and that the company would decide whether or not to move into the United States later this year.

Egg shares have outperformed the FTSE banking sector by about 6 percent over the last year.

Reuters contributed to this story.

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