The sharp market gyrations caused by the coronavirus will have little short-term impact on the financial performance of AJ Bell, the company has said.
The platform released a statement to the stock market yesterday (March 11) saying: “In relation to the company's current financial year and the first half of the next financial year, which end on 30 September 2020 and 31 March 2021 respectively, the negative impact on revenue and profit before tax of the reduction in base rate will be partly mitigated by the maturity profile and type of existing fixed term deposits and notice accounts utilised.
"In relation to the second half of the financial year ending on 30 September 2021 and beyond, the impact will depend upon the length of time for which the reduction in base rate and the other measures put in place by the Bank of England remain in place.
"The impact may also be mitigated further by future management actions and influenced by related changes in customer behaviours, such as the level of trading activity and the extent to which customers hold cash balances.”
The company stated that were the Coronavirus to turn into a longer-term issues, this could have a material impact on its business.
The statement was released hours after the Bank of England cut interest rates by 0.5 percentage points to 0.25 per cent.
This should benefit platform companies such as AJ Bell as lower interest rates make holding cash less attractive, however the interest rate cut and increased government spending announced by the chancellor in the Budget yesterday (March 12) has not helped stock market opportunity, with the FTSE 100 down 5 per cent in morning trading.
david.thorpe@ft.com
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