Egg boils to a £15 million profit |
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Thu, 28 Jul 2005 10:35
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LONDON: Internet bank Egg has announced a £15 million profit for the first half of 2005 setting fears that the bank was in the red at rest. The Web bank's strong performance in the first six months of the year was attributed to a major boost in its credit cards division in the UK.
Egg's positive report came as a relief for investors who were bracing themselves for bad news. Pre-tax profits stood at £15 million ($26.1 million) in the six months to 30 June, as compared to a loss of £1.7 million at the same time last year. But there was a telling decline in operating profits, which fell by 36 percent to £23 million ($40 million) as compared to last year.
Bad debts also soared, up to £117 million from the £82 million last year. But Chief Executive Paul Gratton told media persons, "I would be surprised if bad debts were as high as the bears have been thinking. In our book, performance is exactly as we expected."
Egg revealed that its credit card division had posted a remarkable increase of 5 percent as compared to the 2 percent concurrent increase in the industry. "Credit quality remains strong and as expected the impairment charge reduced slightly in the second quarter and as we noted in April we expect a lower charge in the second half of the year as the benefits from the changes we made to our loans scorecard and in our collections function continue to emerge," Mr. Gratton said in a statement. He added that Egg was optimistic about the results in the remainder of the year.
Meanwhile, it has emerged that Prudential, which owns 79 percent of Egg could be putting it up for sale. These speculations gained credence after the appointment of a new chief executive, Mark Tucker in May. However, he has refuted this and said, "We remain focused on optimizing the performance of the Egg business and the value of the Group's investment for Prudential's shareholders." Prudential reported a 31 percent operating profit increase which stood at £834 million ($1.45bn) as against £636 million posted last year at the end of the first six months.
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