AJ Bell PLC (LSE:AJB) announced surging profits and revenue thanks to a boom in the number of new customers attracted to the investment market for the first time.
The investment platform added 87,449 new customers in the year to 30 September 2021, taking the total number to 382,754.
The company said the pandemic has seen a growing number of people wanting to invest for the first time
According to the Financial Conduct Authority, there are around 8.6 million people in Britain with £10,000 in “investable” cash.
AJ Bell believes the surge in new investors will lead to a rise in demand for trading apps. It recently launched Dodl, a commission-free app which targets younger investors.
“One of the challenges everyone has is to read the market. The regulators really want those people to be invested. Certainly, there is no shortage of assets or potential customers,” AJ Bell chief executive Andy Bell told the Evening Standard.
The company reported revenue of £145.8mln for the year to September, up 15% on the previous year, with pre-tax profit rising 13% to £55.1mln.
Such a high profit margin could come under threat from low-commission trading apps.
“The mistake would be to try to protect profit margins. We need to broaden our reach by going for the younger, less experienced investors,” Bell told the Standard. “But we are not looking for the GameStop investor, or for people who want to day trade.”
AJ Bell recorded net inflows of £6.4bn during the year, with total assets under administration closing at a record £72.8bn.
The company is paying a final dividend of 4.50p per share and also announced a special dividend of 5p.
Commenting on the results, the chief executive said: "We continue to see significant long-term opportunities in the investment platform market. The pandemic has highlighted the need for people to take more control over their financial future, with increasing numbers of people investing for the first time.”
He said Dodl and the new mobile-led investment platform Touch will broaden the company’s reach in both the D2C and advised markets.
“We expect both to launch during 2022 and we will be investing further in our brand and marketing activities to support their initial phase of growth.”