Customers flock to Egg

Egg's campaign to win new customers seems to have worked

UK internet bank Egg made losses of £37.9m in the first three months of 2001, a slight improvement over the same period last year.

And it saw customer numbers increase by almost 40%.

The bank won 223,000 new customers in January-March compared with 140,000 in the previous three months.

Despite only a modest narrowing of losses, the company insisted that it was on track to break even in the last quarter of this year.

Competitive environment

Chief executive Paul Gratton said the losses were in line with expectations and reflected ambitious investment in customer acquisition.

The bank spent £15m in brand and marketing investment during the first quarter, £3m higher than in the same period last year.

Egg's new products

Egg Insure

Egg Invest

Egg Boots card

Egg mortgage supermarket

"The acceleration in our rate of customer growth in an increasingly competitive environment is particularly encouraging," said Mr Gratton.

"Egg is proving attractive to a market that is becoming comfortable with using technology to manage its financial affairs."

Egg is banking on its "first mover advantage" to carry it through a wave of competition from established banks that now offer online banking such as Co-op's Smile, Abbey National's Cahoot and Halifax's Intelligent Finance.

It will now concentrate on "cross selling" - persuading its customers to buy more of its newer products including ISAs, car insurance and mortgages.

Prudential sales up

Egg shares were unchanged at 147.5 pence at 0823 GMT.

Egg floated last June at 160p, but parent company Prudential still holds 79% of the share capital.

Prudential also announced its first-quarter results on Friday, revealing first-quarter sales up 29% to £642m on an annual premium equivalent basis.

Prudential is the UK's second largest insurer, but has recently had its expansion plans in the US scuppered by a rival bid for American General from the world's largest insurer AIG.