AJ Bell posts record AUA, driven by customer growth and strong inflows

Investing.com -- AJ Bell (LON:AJBA) on Wednesday reported a strong start to the financial year, driven by an increase in customer numbers and record levels of assets under administration (AUA).

The investment platform added 19,000 customers in the first quarter, bringing its total to 561,000—a 16% increase compared to the same period last year. 

This growth was reflected in a sharp rise in AUA, which reached a record £89.5 billion, marking a 17% year-on-year increase.

The company saw continued momentum in both its advised and direct-to-consumer segments. The number of advised platform customers grew by 8% to 174,000, while D2C customers surged by 20% to 387,000.

Strong investor engagement led to gross inflows of £3.6 billion, up from £2.7 billion in the previous year. Net inflows also showed an improvement, rising to £1.4 billion from £1.3 billion.

AJ Bell Investments, the company’s asset management division, also performed strongly, with assets under management increasing by 38% year-on-year to £7.2 billion. Quarterly net inflows of £0.4 billion remained in line with the previous year.

The company attributed some of its strong inflows to investor concerns about potential tax policy changes affecting pensions, which were anticipated ahead of the UK’s October Budget.

“Ahead of the October Budget, speculation around the tax treatment of pensions caused a short-term behavioural change among retail investors, which normalised quickly once the content of the Budget became known,” said Michael Summersgill, chief executive at AJ Bell.

“We believe that pension savers deserve more clarity when it comes to the tax treatment of their long-term retirement plans. As such, we continue to call for Government to commit to stability through a Pension Tax Lock, providing additional clarity around key features of the pension tax system,” he added. 

In a note, analysts at RBC Capital Markets said, “AJB’s premium valuation of 19x FY25E P/E reflects its strong growth prospects, but also ascribes a full valuation to client interest turn, which we see as lower quality than other ad valorem charges.”

The UK-based company’s dual platform (advised and D2C) positions it well for growth in both markets. The company has consistently shown strong organic growth, particularly in its D2C business, RBC added.

However, recent revenue growth has been boosted by higher interest income on client cash due to rising interest rates. 

This has substantially altered the company’s revenue mix, with AJ Bell likely having the highest proportion of interest income among UK wealth managers.