Egg, Britain's biggest internet bank, today reported a sharp reduction in losses last year and said that it was considering a move into the US.
Egg, 79%-owned by insurer Prudential, lost £16.6m in 2002, down from £87.8m the year before. But Egg shares were punished as losses came in slightly higher than anticipated.
The company's UK business beat market forecasts with profits of £34.8m pounds. But costs associated with the launch of an international Visa card in France, its first move overseas, pushed the group into the red.
"Egg has had another highly successful year," said the chief executive, Paul Gratton. "In the UK, customer acquisition remained strong with 610,000 net new customers joining Egg and an impressive UK profit of £35m."
But shares in Egg were down 7.4% at 105p in lunchtime trading. Numis Securities cut its rating on the company to "hold" from "buy" as results came in below the brokerage's forecasts, and on the expectation of difficult times ahead.
"The stock has fallen by 24% in the last three months and we expect that the going will get tougher for what is a mainstream lender," analyst Justin Bates wrote in a research note.
Egg's US ambitions also unsettled analysts. The company, which successfully launched an operation in France last year, said it would spend around £5m this year to research the US, the world's largest consumer market, although it added that these plans were at a very early stage.
"Early results confirm that there is clearly a high level of dissatisfaction among US consumers about US financial services providers," Mr Gratton told reporters.
He said that 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 US later this year.
The US economy is experiencing a "jobless recovery" as growth has been too weak to absorb the growing labour force. As in the UK, the Federal Reserve has cut interest rates to their lowest levels for decades to boost confidence and consumer spending.
"Egg might be trying to run before it can walk. I would prefer it if they kept their focus on France," Teather & Greenwood analyst Sarah Horder told Reuters.
