AJ Bell says impact of rate cut, stock market declines 'difficult to predict'

Trading platform AJ Bell said on Wednesday that it was "difficult to predict" the impact on its trading performance of the Bank of England’s surprise interest rate cut and the recent slump in global stock markets on the back of coronavirus fears.

The company pointed to the extent of current market uncertainty as it said the exact impact of these events will largely depend on how long they last.

As far its current financial year and the first half of the next financial year are concerned - ending on on 30 September 2020 and 31 March 2021 respectively - AJ Bell said the negative impact on revenue and pre-tax profit of the lower 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 on the length of time the reduction in base rate and the other measures implemented by the BoE 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," it said.

Earlier on Wednesday, the BoE slashed interest rates by 50 basis points to an all-time low of 0.25%.