Thursday 21 May 2020 8:16 am

AJ Bell's revenue jumps 22 per cent as investors take advantage of market volatility

AJ Bell has reported a 22 per cent increase in revenue after it saw record numbers of new customers flock to the investment platform amid the market volatility.

Read more: Brexit certainty helps AJ Bell boost platform assets by 27 per cent

The figures

Revenue increased 22 per cent to £60.9m, with profit before tax up 28 per cent to £22.7m in the six months to 31 March.

Total customers increased by a record 30,113 in the period to 262,179, up 22 per cent over the last 12 months and 13 per cent in the first half of the current financial year. And AJ Bell saw net inflows of £2.5bn to its core platform offering.

Total assets under administration (AUA) increased one per cent over the past year, closing at £48.3bn. AUA in the six month period fell eight per cent due to adverse market movements.

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Why it’s interesting

While other companies have struggled during the coronavirus crisis, AJ Bell has somewhat benefited from the market turbulence. Investors flocked to the platform which helped inflows surge higher.

Revenue from transactional fees – comprising dealing fees and pension scheme activity fees – grew 45 per cent to £11.5m. This was driven by higher levels of customer dealing, particularly towards the end of the period, as market volatility resulted in more investors trading.

Andy Bell told City A.M. that a lot of the new business is in ISAs and said he was “impressed with the quality of the customer base”.

In light of the strong financial performance, AJ Bell has declared an interim dividend of 1.5p per share.

FinnCap group aalyst Nik Lysiuk said: “Shares have flown, now approaching new highs. The story has always been positive and remains to be so, but on an immediate term view the chart looks a little too excitable given the current market and economic backdrop.”

“On the other hand, on the long view, investors will probably ask why they didn’t buy it at 450p.”

Shares were down 0.56 per cent in early trading, before trading up 0.33 per cent.

What AJ Bell said

Chief executive Andy Bell said:

The effects of the COVID-19 crisis are likely to be felt for a long time, although the precise impact it will have on markets, investor sentiment and economic policy is hard to predict. However, we have operated profitably during periods of market volatility and low interest rates before and our business model has proved very resilient. The long-term growth drivers of the platform market remain in place and our strong capital position, coupled with a buoyant trading performance mean the outlook for the future of the business remains positive.”

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