City round-up: AJ Bell; GB Group

More than £1bn of net inflows during the quarter have helped push up assets under administration to a record high of £69.8bn at Manchester investment platform, AJ Bell.

In a third quarter trading update to June 30, 2023, the wealth manager revealed that customer numbers increased by 10,606 to close at 465,614, up 12% in the past year and two per cent in the quarter

The number of total advised customers was 156,368, up 10% in the past year and two per cent in the quarter, while total D2C customers were 309,246, up 12% in the past year and three per cent in the quarter

Assets under administration (AUA) closed at £69.8bn, up 10% over the past year and two per cent in the quarter

There were resilient AUA flows across the platform, which the company said demonstrates the strength of its dual-channel model, with momentum particularly strong for the D2C platform post tax year end.

Gross inflows in the quarter were £2.4bn (2022: £2.6bn), and net inflows were £1.1bn (2022: £1.6bn).

Market movements were negligible in the quarter.

Assets under management (AUM) increased to £4.3bn, up 72% over the past year and up 10% in the quarter, and net inflows in the quarter were £0.4bn, up 33% on the prior year (2022: £0.3bn).

Chief executive, Michael Summersgill, said: “Continued growth in customer numbers and net inflows of over £1bn onto our platform in the quarter once again demonstrate the strength of our dual-channel platform model. Assets under administration on our platform now stand at a record high of £69.8bn.

“Our investments business again grew strongly with assets under management increasing another 10% in the quarter to reach £4.3bn. In a market where many asset managers are suffering persistent net outflows, the strong performance and low-cost nature of our multi-asset investment solutions continues to attract new assets in both the advised and D2C markets, with net inflows in the quarter of £0.4bn.

“In the advised market there has been a moderation in transfer activity as advisers and their clients exercise more caution in the face of ongoing uncertainty in the macroeconomic environment. Despite that, we attracted £0.4bn of net inflows to our advised platform during the quarter and added almost 3,000 new customers.”

He added: “Momentum in the D2C market remained strong after the tax year end as customers took advantage of their new annual ISA and pension allowances. Our open architecture platform ensures that customers have the flexibility to choose from a broad range of investment options depending on market conditions.

“The sharp rise in interest rates has stimulated strong demand for short-dated government bonds and money market funds, with eight of the 20 most popular investment choices by traded value in the quarter falling into these categories.

“More broadly, we are well prepared for the implementation of the new Consumer Duty coming into force at the end of this month. We believe this will be positive for consumers, with an increased focus on value for money and ensuring good customer outcomes set to improve standards within the market.

“It is important that there is no delay beyond the next year in the new duty applying to legacy pension schemes, particularly given the FCA has recently stated that savers in older schemes may be at greatest risk of poor value for money.

“We continue to see significant opportunities for growth in the platform market and believe we are well positioned to capitalise on these in both the advised and D2C segments.”

Rae Maile and Ross Luckman, analysts with investment bank Panmure Gordon, reiterated their ‘buy’ call on AJ Bell after today’s update, saying: “As with Hargreaves yesterday, AJ Bell saw a strong trading period through the end of the tax year as clients made sure that tax allowances were utilised.

“That those customers have favoured money-market funds and short-dated government bonds is not surprising, the important factor is that clients have committed funds to the platform and we can all but hope that in due course they choose to switch into Equities.

“In the meantime, better than expected AUA offers a small increment to estimates, again. The PER rating is at the upper end of the sector, but the business performance continues to justify that. BUY.”

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Richard Longdon

Chester-based identification verification specialist, GB Group, will tell shareholders at its annual general meeting this morning that it sees broad opportunities in the future to counter the growing scourge of AI-based fraud.

At this morning’s AGM, non-executive chair, Richard Longdon, will tell investors: “As reported in our full-year results announcement on 15 June 2023, FY23 was a year of continued strategic progress as GBG reported its highest ever revenue and adjusted operating profit, supported by contributions from the businesses acquired in the previous year alongside strong delivery in Location and Fraud.

“Group revenue and profit in FY23 was lower than expected at the start of the year, largely due to significant macro uncertainty and challenging post-pandemic conditions in certain end markets, primarily impacting our identity business in the Americas.

“While there has been no material change in market conditions, we continue to expect some gradual revenue acceleration in the latter part of the year and to achieve our FY24 profit and cash generation expectations assisted by a group-wide focus on efficiency. We remain focused on cash generation and repayment of debt and are pleased with the improvement in our current net debt position to £90.9m, prior to the payment of the final dividend, which is subject to shareholder approval at today’s meeting.

“Looking to the future, the board is confident GBG is well placed to benefit from attractive structural growth in our markets.

“The increasing proliferation and sophistication of fraud through the advent of generative AI reinforces the need for customers to adopt multi-layered identity solutions. This presents a long runway of opportunity for GBG to capitalise on the breadth of its capabilities and global reach.”

GBG’s next scheduled trading update will be the pre-close trading statement in mid-October 2023.