Egg 'on course to break even'

The UK internet bank Egg has said it remains on target to break even during the last three months of the year.

"With revenues growing strongly quarter on quarter and costs remaining flat, we are moving confidently towards profitability," the company's chief executive Paul Gratton said.

The projection came as the bank recorded a pre-tax loss of £18.4m in the three months to September, against a loss of £25.5 the previous quarter.

The bank also said it is to cut up to 50 jobs as part of a cost-cutting exercise.

Terrorist impact

Despite the company's optimism, the loss reported was higher than analysts had been expecting.

The bank said it had won 83,000 new customers over the three month period, a smaller number than before.

Egg put the slower growth rate down to last months terrorist attacks, with a mail shot having been sent out the day before the atrocities.

"[The] expected September uplift in volumes was impacted by the tragic events in the US," Mr Gratton said.

But he added that sales volumes have picked up again this month following a TV advertising campaign.

Precautions

Even though the bank said it had seen no worsening in the credit quality of its business, it said it was increasing its provisions for bad debts, which it said was "prudent" given the current economic concerns after the terrorist attacks.

Egg also said it was to reorganise its internet banking business to cut costs, and as a result between 30 and 50 jobs would be lost.

It said the restructuring measures would save more than £4m, but it would take a one-off charge of £2m in its next set of results.

In the City, traders were disappointed at Egg's bigger than expected losses for the quarter and its shares closed down 7p at 144p.