Egg will now remain in Prudential's hands

Egg said UK operating profits in the three months to 30 September rose to �17.9m from �13.9m last year.

The bank said it had put in a "solid performance" despite widespread competition in the industry.

Prudential added it would be holding onto the business to build on "strong franchises" in the UK and generate more value for customers and shareholders.

Egg said its results represented "a solid performance... at a time when the unsecured lending market remains highly competitive and is seeing much lower levels of growth and increased levels of bad debts".

Egg ... provides the expertise and infrastructure as our entry point into the highly profitable personal savings and loans market Prudential See Prudential's share price See Egg's share price

The bank said bad debt charges had risen to �60m in the third quarter from �47.1m a year ago, and from �58.3m in the previous quarter.

Egg added that bad debts in the fourth quarter were now set to be worse than expected, rising above �60m.

New opportunities

Prudential said its decision to hold onto Egg was in line with moves to target business opportunities outside of its usual markets.

"We see a need, looking to the future to target a broader spectrum of opportunity than just life insurance - important and profitable though we expect that sector to be for us," said chief executive Mark Tucker.

The insurer said it had decided to hold onto the Egg business as it had built a "strong customer franchise, with over three million younger more affluent customers" which complemented its own customer base, its strong brand and direct distribution model which promotes strong growth.

"Egg also provides the expertise and infrastructure as our entry point into the highly profitable personal savings and loans market," Prudential added.

After many months of debating whether to sell off its majority stake in the business, Prudential said it would now be "considering whether there is a financial case for bringing Egg fully into the group" - possibly through a share exchange.

The news came as Prudential, the UK's second largest insurer, also unveiled its third quarter figures.

Sales at its UK, US and Asian operations rose to �1.6bn during the nine months to September, up 27% on the same period last year.

Mr Tucker said all three regions offered potential for strong organic growth, adding that his review found that the strategy followed by his predecessor Jonathan Bloomer had been sound.