AJ Bell sees customer numbers – and profit margins – jump

AJ Bell today shrugged off caution in UK markets to record another jump in profits and customer numbers.

The investment platform saw customer numbers grow past half-a-million as 27,000 new investors signed up.

Revenue in the half year was up 27% to £131 million, with profit up 47% to £61.4 million. That leaves AJ Bell with a profit margin of nearly 47%, an astonishing figure that few other sectors get anywhere near.

Critics say it is a sign of over-charging. CEO Michael Summersgill insists it is a competitive market.

Research has shown that investment platforms make £1.3 billion a year from paying low interest on cash deposits. The FCA has pledged to crack down.

He said: “There was been a lot of doom and gloom around UK capital markets. That doesn’t apply to AJ Bell, we are in a great part of the market.”

He added: “There is a big long term need for people to invest to build their own retirement funds. There is plenty of runway to attract new customers.”

An improved dividend of 4.25p a share will be paid, a large chunk of which goes to founder Andy Bell.

AJ Bell shares rose 33p to 395p which leaves the business valued at £1.65 billion. The stock is up 26% in the last year. It may have benefitted from strife at arch rival Hargreaves Lansdown which yesterday turned down a £5 billion takeover bid from a group of private equity firms including CVC.

Summersgill added: “Our philosophy is to use our economies of scale to provide customers with one of the most competitively-priced platforms in the market. On 1 April we reduced our custody fees for advised customers and halved our headline dealing fee for D2C customers to £5, whilst also increasing the interest rates payable on cash balances held across our products. This focus on keeping our charges low, combined with high service standards and easy to use products, puts us in a very strong position to continue growing our market share in the future.”

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