AJ Bell updates investors on impact of market mayhem

AJ Bell CEO Andy Bell

Manchester-based investment platform AJ Bell gave a “market update” to its investors late on Wednesday, March 11, on the impact of the current market mayhem on its business.

It said the update related to “the impact of the recent COVID-19 related falls in global stock markets and the Bank of England’s announcement of a temporary reduction in base rate by 50 bps to 0.25% and other related measures, on its trading performance.”

In January, AJ Bell said its total customer numbers increased 4% in the quarter to December 31 to 241,152, with total assets under administration (AUA) up 5% to £54.7 billion.

AJ Bell said on Wednesday: “At present, given the extent of current market uncertainty, it is difficult to predict the exact impact of these events on trading performance.

“This will largely depend upon the length of time for which COVID-19 continues, stock markets remain at or below current levels, base rate remains at 0.25% and the other related measures remain in place.

“In relation to the company’s current financial year and the first half of the next financial year, which end on 30 September 2020 and 31 March 2021 respectively, the negative impact on revenue and profit before tax of the reduction in base rate will be partly mitigated by the maturity profile and type of existing fixed term deposits and notice accounts utilised.

“In relation to the second half of the financial year ending on 30 September 2021 and beyond, the impact will depend upon the length of time for which the reduction in base rate and the other measures put in place by the Bank of England remain in place.

“The impact may also be mitigated further by future management actions and influenced by related changes in customer behaviours, such as the level of trading activity and the extent to which customers hold cash balances.

“The market movement and interest rate risk sensitivity analysis previously disclosed for the year to 30 September 2020, which is available on AJ Bell’s website at https://www.ajbell.co.uk/investor-relations, remains a valid basis for calculating the financial impact on the business over the next 12 months. 

“However, the sensitivity analysis does not extend beyond that timeframe, so the financial impact on the business will then be influenced by both the above mentioned factors and mitigants.”