Netwealth (ASX:NWL) share price lifts on record net inflows of $3.6bn

It was a busy quarter for Netwealth. Let’s take a look at what it got up to…

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Key points

  • The Netwealth share price is in the green today following its quarterly update
  • Further growth across all of the platform’s major metrics were reported
  • A new arrangement with the ANZ bank will see cash account margins shrink to 50 basis points

The Netwealth Group Ltd (ASX: NWL) share price is being embraced by investors today. This follows the release of the financial services platform provider’s December quarterly update.

Following the release this morning, the Netwealth share price opened slightly higher, at $16.45. At the time of writing, shares in the Aussie fintech are now commanding a price of $16.63, up 1.22% from its previous close.

Netwealth share price up on sustained growth momentum

  • Total funds under administration (FUA) reach $56.6 billion, up 46% year-on-year
  • Net inflows increase 41% from prior corresponding period to $3.6 billion
  • Funds under management (FUM) surge 48.3% year-on-year to $13.8 billion
  • Managed account balance increase 53.9% year-on-year to $11.7 billion
  • Category market share improves to 5.2% at the end of September 2021
  • Increase to FY22 FUA net inflows guidance, now to exceed $13.5 billion.

What else happened in the second quarter?

Netwealth shareholders will be happy to see the platform notched up additional account number growth in the December quarter. According to the update, accounts increased to 107,103 at the end of the period — this represents a 21.4% increase from the same time last year.

Furthermore, Netwealth also disclosed additional details surrounding the arrangement for its cash deposits. The arrangement currently in place with Australia and New Zealand Banking Group Ltd (ASX: ANZ) gives the company a margin of 95 basis points above the official cash rate.

A new deal with ANZ will see Netwealth take a 50 basis point margin on all cash accounts from 25 March 2022. When the company announced the termination of its previous agreement with ANZ in March 2021, the Netwealth share price took a 15% haircut.

What’s next?

Looking forward, Netwealth expects margins to improve as the Reserve Bank of Australia increases the cash rate. If the official rate were to bounce back to 50 basis points, the company estimates margins would exceed the 105 basis points currently received.

Notably, the platform provider has upgraded its FUA net inflows guidance for FY2022. This has been done based on the favourable conditions being experienced within the sector. As a result, the forecast is now for in excess of $13.5 billion in net inflows.

Netwealth share price snapshot

The Netwealth share price has been trading sideways since hitting an all-time high in October 2020. In the past year, the company’s shares have lifted a poultry 4.4% compared to the S&P/ASX 200 Index (ASX: XJO) rising 8.1%.

Based on the current valuation, Netwealth is offering up a 12-month trailing dividend yield of 1.13%.

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Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns and has recommended Netwealth. The Motley Fool Australia owns and has recommended Netwealth. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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