AJ Bell posts record profits despite fee cuts

AJ Bell shares rose sharply on Thursday after the group revealed record annual profits and revenues, thanks to a rise in interest rates on customer cash.

The group saw its pre-tax profits rise 50 per cent to £87.7 million in the year to September 30, while turnover grew 33 per cent to £218.2 million.

AJ Bell stock rose 16.98 percent or 43.80p to 301.80p on Thursday afternoon, having fallen more than 16 percent in the past year.

The group said the number of customers using its investment platform rose by 50,880 to 476,532, with net inflows of £4.2 billion, up from £5.8 billion a year ago. Share trading income fell 17 percent to £27 million.

Assets under management were £70.9bn, up 11 per cent thanks to inflows and 'favorable market movements of £2.6bn'.

Diluted earnings per share rose 46 percent to 16.53p, compared to 11.35p a year ago.

Recurring ad valorem revenue increased by 58 percent from £102.2 million to £161.2 million.

AB Bell said: 'The main driver of this growth was the higher interest generated on cash balances on the platform due to increases in market interest rates in the year, combined with higher average cash balances in the first half of the year. '

In November, AJ Bell began offering customers the option to buy a select list of government bonds online in response to increased demand against the backdrop of higher interest rates.

AJ Bell is proposing a final dividend of 7.25p, raising the total dividend for the year by 46 percent to 10.75p per share, up from 7.37p per share the year before.

Michael Summersgill, CEO of AJ Bell, said: 'After reducing several fees on the platform in 2022, we have increased the interest rates paid to customers several times this year and will soon increase them further, with a particular emphasis on withdrawing pensions. where a customer must hold cash to fund income payments.”

He said the group “continued to perform strongly against the current backdrop of high inflation and interest rates.”

Neil Shah, research director at Edison Group, said: 'AJ Bell has ridden the wave of inflation, which is driving investment activity as well as overall retail investment growth since the pandemic.

'The decision to add bond and government bond purchases to the platform has also enabled AJ Bell to reap some of the benefits of rising interest rates.

'The growth of the platform, combined with the addition of new tools for institutional investors, shows a company with great ambitions to place itself at the heart of the UK financial services industry.'