UK stock broker AJ Bell (AJB.L) continues to benefit from surging interest in stocks among a new generation of investors.
The company on Thursday reported a record number of new customer sign-ups at the start of this year, as assets under management, revenues, and profits all soared.
AJ Bell said it signed up 51,492 new customers in the six months to the end of March 2021. That was a record total for a half-year and up 32% on the same period a year ago. The boom in new sign-ups led to record inflows of £3.1bn and record levels of trading.
The surge in sign-ups coincided with heightened interest in the stock market at the start of this year. Amateur investors caught the world's attention in January when a group of traders from the Reddit forum r/WallStreetBets waged war against hedge funds targeting stocks like GameStop (GME) and AMC (AMC). The battle attracted global attention, with platforms like Freetrade in the UK reporting huge interest among UK investors.
AJ Bell's 41,584 new sign-ups in the period were for its direct to consumer offering. The company reported "increased demand for dealing in US equities" and increased dealing activity, which helped transaction fee revenues almost double.
"We continue to see an increase in applications from younger and less experienced investors, as a growing number of people look to take control of their financial future," the company said.
Andy Bell, chief executive officer at AJ Bell, didn't specifically name GameStop or Reddit and instead said low interest rates caused by COVID were behind the boom.
"The average age of our new direct-to-consumer customers was 38 in the first half of the year, five years younger than the average of the wider customer base," he said. "Our record number of new customers has been helped by the low interest rate environment, as savers seek higher returns on cash held in savings accounts and Cash ISAs."
The retail investor boom helped AJ Bell report a 21% rise in revenues to £73.9m. Pre-tax profit jumped 39% to £31.6m. The business hiked its dividend by over 60% to 2.46p. Shares in the company had rallied ahead of the interim results but dipped 0.4% on Thursday morning.
"While the strength of this performance is sure to be taken well, implicit guidance for lower revenue margins and profitability in H1 2021 and 2022 may raise questions over the persistency of this strength," analysts at Barclays said.
The r/WallStreetBets saga represented the peak of a boom in retail investment that began last year as millions of people stuck at home around the world due to COVID decided to turn their attention to the stock market. Rival stock brokers like Hargreaves Lansdown (HL.L) have also reported surging new customer sign-ups over the last year.