SelfWealth stems cash burn, continues to benefit from rising interest rates

While online share trading platform Selfwealth (ASX: SWF) may be best known as a website where investors can buy and sell shares, it makes no secret of the gains it makes on interest from cash held in customer accounts as a handy means of revenue.

Brokerage on trades has generally been Selfwealth’s most reliable source of revenue but as the Reserve Bank of Australia has raised interest rates for six consecutive months (250 basis points) to a cash rate of 2.6%, Selfwealth is cashing in with bonus revenue. Earning interest on cash held in customer accounts as net interest margin (NIM), rising interest rates are great for asset managers like SelfWealth which don’t pass the income on to their customers.

This was evidenced by $7.15 million in operating revenue for the September quarter, a 24% increase on the July quarter and 30% increase on the previous corresponding quarter when the RBA cash rate was near zero.

As of 30 September 2022, Selfwealth customers held $638 million in their cash accounts on the platform, which is capitalised on by generating interest revenue for Selfwealth. That figure was down from the $738 million at the end of July as customers withdrew funds to collect the interest themselves, or used the cash to purchase shares on the platform which holds $7.7 billion in assets for its customers.

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Source: SelfWealth stems cash burn, continues to benefit from rising interest rates – The Sentiment