Alpha Group client balances rise, interest rates stable

Alpha Group International updated the market on its client balances and interest rates for the third quarter on Wednesday, which contribute to its net treasury income from client funds.

The FTSE 250 company reported that the blended average client balance within its alternative banking division rose to £2.2bn in the third quarter, up from £2.1bn in the prior three month period.

Its blended average interest rate for the period was 3.8%, a slight decrease from 3.9% in the second quarter.

Over the last year, Alpha said it had seen steady growth in client balances, which increased from £1.6bn in the first quarter of 2023 to the current £2.2bn.

Interest rates on those balances had remained relatively stable, with a notable increase from 2.8% in early 2023 to between 3.8% and 4% throughout 2024.

Alpha said the figures reflected its capacity to earn interest on overnight deposits placed with 'A'-rated credit institutions.

The firm said its net treasury income was derived from the interest earned on client cash balances, which fluctuates depending on the size of the balances, the currency mix, and the prevailing interest rate environment.

It said the income stream was considered largely uncontrollable and transitory, particularly in the context of potential future shifts towards a lower interest rate environment.

In 2023, Alpha generated £73m in net treasury income, a significant increase from £9.3m in 2022, illustrating the positive impact of higher interest rates on its business.

At 0809 BST, shares in Alpha Group International were down 0.96% at 2,070p.

Reporting by Josh White for Sharecast.com.