AJ Bell shares rose sharply on Thursday after the group unveiled record annual profits and revenues, thanks to a jump in interest earned on customer cash.
The group saw its pre-tax profit rise 50 per cent to £87.7million in the year to 30 September on revenue growth of 33 per cent to £218.2million.
AJ Bell shares were up 16.98 per cent or 43.80p to 301.80p on Thursday afternoon, having fallen over 16 per cent in the last year.
Share shift: AJ Bell shares rose sharply on Thursday as the group published its annual results
The group said customer numbers using its investing platform increased by 50,880 to 476,532, with net inflows of £4.2billion, down from £5.8billion a year ago. Share dealing revenue fell 17 per cent to £27million.
Assets under administration came in at £70.9billion, up 11 per cent on inflows and ‘favourable market movements of £2.6 billion.’
Diluted earnings per share climbed 46 per cent to 16.53p, up from 11.35p a year ago.
Recurring ad valorem revenue jumped 58 per cent to £161.2million, up from £102.2million.
AB Bell said: ‘The key driver of this growth was the higher levels of interest generated on cash balances held on the platform following increases to market rates of interest in the year, combined with elevated average cash balances in the first half of the year.’
In November, AJ Bell started given customers the opportunity to purchase a select list of gilts online in response to increased demand amid higher interest rates.
AJ Bell is proposing a final dividend of 7.25p, bringing the total dividend for the year up by 46 per cent to 10.75p per share, up from 7.37p per share the previous year.
Michael Summersgill, chief executive at AJ Bell, said: ‘Having reduced several fees across the platform in 2022, this year we have increased the interest rates paid to customers several times and will soon be increasing them further, with a particular focus on pension drawdown where there is a customer need to hold cash to fund income payments.’
He said the group had continued to ‘perform strongly against the current backdrop of elevated inflation and interest rates.’
Neil Shah, director of research at Edison Group, said: ‘AJ Bell has ridden the wave of inflation, which drives investment activity, as well as the general growth in retail investment seen since the pandemic.
‘The decision to add bond and gilt purchases to the platform has, in addition, allowed AJ Bell to reap some of the rewards of rising interest rates.
‘The growth of the platform, combined with the addition of new tools for institutional investors, shows a company with big ambitions to place itself at the heart of British financial services.’
