AJ Bell shares soar as platform hikes dividend and earnings leap

AJ Bell shares rose over 10 per cent on Thursday after the investment platform upped its dividend amid higher half-year profit and revenue. 

In a boost for AJ Bell shareholders, the group announced an interim dividend of 4.25p per share, up 21 per cent on the same period a year earlier.

AJ Bell’s pre-tax profit jumped 47 per cent to £64.1million in the six months to the end of March, while revenue grew 27 per cent to £131.3million. 

The group is honing in on people with long-term cash savings looking for an alternative location for their money.

Rapid ascent: AJ Bell shares climbed by over 10% on Thursday 

Chief executive, Michael Summersgill, said: ‘Long-term cash savings represent a significant part of the addressable market for platforms such as ours. 

‘There are millions of people in the UK who hold cash savings for long periods of time, missing out on the superior returns offered by risk-based assets.’  

Across AJ Bell’s platform business, which operates things like Sipps, a stocks and shares Isa and Lifetime Isa, net inflows reached £2.9billion, up 45 per cent by the same point a year ago. Assets under management grew to a record £80.3billion. 

AJ Bell shares were up 11.59 per cent or 42.00p to 404.50p on Thursday, having risen over 27 per cent in the last year.      

Summersgill, said: ‘I am pleased to announce an excellent set of first-half results. 

‘Our dual-channel platform continued to deliver strong organic growth with 27,000 customers added in the period and total platform customers surpassing half a million, a significant milestone for the business.’

He added: ‘This growth in customers and AUA drove very strong financial performance, with both revenue and profit before tax up significantly.’

The group’s customer retention rate slipped to 94.5 per cent in the period, down from 95.5 per cent a year ago. 

On 1 April, AJ Bell reduced its custody fees for advised customers and halved its headline dealing fee for direct-to-consumer customers to £5. 

It added: ‘For our D2C customers, we have halved transactional dealing charges on shares, ETFs, investment trusts and bonds from £9.95 to £5.00 per trade, while charges for frequent traders have been reduced from £4.95 to £3.50.’

Investment platforms are locked in a battle to lure in more customers and keep their fees and charges competitive. 

Britain’s biggest investment platform, Hargreaves Lansdown, has become the latest London-listed firm to be targeted by foreign bidders.

After the market closed on Wednesday, Hargreaves Lansdown said it had received two approaches from a consortium of buyers regarding a possible takeover.

The latest offer, worth 985p a share or £4.67billion, was unanimously rejected by the board ‘on the basis it substantially undervalues Hargreaves Lansdown and its future prospects.’

But the suitors – private equity firm CVC, Nordic Capital and Platinum Ivy, which is owned by the Abu Dhabi Investment Authority – are understood to be considering a fresh offer.

Hargreaves Lansdown shares were up 7.71 per cent or 75.50p to 1,054.50p on Thursday, having risen 27 per cent in the last year.