11th Mar 2020 16:56
(Alliance News) - Stockbroker AJ Bell PLC on Wednesday said that it is currently "difficult" to estimate the impact of Covid-19 outbreak and the Bank of England rate cut on trading performance.
"At present, given the extent of current market uncertainty, it is difficult to predict the exact impact of these events on trading performance. This will largely depend upon the length of time for which COVID-19 continues, stock markets remain at or below current levels, base rate remains at 0.25% and the other related measures remain in place," the company said.
In regards to the financial year ending September 30 and first of financial 2021, the company expects the negative impact on revenue and pretax profit from the reduction in Bank of England's base rate to be partly mitigated by the "maturity profile and type of existing fixed term deposits and notice accounts utilised".
For the second half of the year ending on September 30, 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, AJ Bell said.
"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 Manchester-based company added.
Earlier on Wednesday, the Bank of England followed the US in announcing a surprise interest rate cut as it responded to the "economic shock" from the Covid-19 virus. The BoE's Monetary Policy Committee unanimously decided to cut UK interest rates by 50 basis points to 0.25% from 0.75% at a special meeting ending on Tuesday, back to the record low reached in the aftermath of the vote to leave the EU in 2016.
Shares in the company closed down 0.3% at 315.63 pence each in London on Wednesday.
By Tapan Panchal; [email protected]
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