- Net inflows of £1.3bn as investors perk up
- Rising interest rates boost deposit income
The pick-up in business for the major share and fund dealing platforms has continued into the new year. AJ Bell (AJB), the smaller of the UK’s leading platform brands, reported an increase in net inflows to £1.3bn, or up 63 per cent on this time last year. The company attributes this to the easing of pressure on household finances and a renewed sense of confidence in its retail investor base.
Overall, the net inflows meant that assets under administration rose by 7 per cent to £76.2mn. Uniquely, AJ Bell has a large, advised component to its business and assets here rose above £5bn for the first time, reflecting its specialisation in pension drawdown. The pensions angle is interesting as it also means that AJ Bell will hold large amounts of investor cash as these are drawn down.
The main issue recently for AJ Bell was how it responded to the Financial Conduct Authority's expectations on interest charges for customers holding cash on the platform. The company said it has lowered some charges and changed the interest rate it pays on customer deposits – the company reckons investors will benefit by about £14mn. The major platforms have benefited hugely from rising interest rates boosting the income they earn from cash deposits.
Jefferies’ analysts reckon that AJ Bell’s yield on cash is little changed and that the lack of a negative statement between now and the next results in March should be a positive for the shares. The broker currently rates the company at a 2024 price/earnings ratio of 18.5, a large premium to its nearest, and only real, rival, Hargreaves Lansdown (HL.).
Last IC view: Buy, 284p, 7 Dec 2024
