Hargreaves Lansdown revenues grew in last quarter after rising interest rates helped boost the wealth manager’s net interest margin.
Revenue grew to £162.9 million in the quarter end September, up from £142.2m in the same period last year. Hargreaves Lansdown’s increase in revenue reflected rising interest on cash that mitigated the impact of falling share dealing transaction.
Hargreaves Lansdown are now operating in a world where competitors are offering share dealing services for free, meaning Hargreaves have had to broaden their offering to remain competitive.
This is evident in the upcoming launch of the new HL US Fund, scheduled to open to investors 1st November. The fund will be managed by external fund managers and is aimed at long term growth in US mega caps. Investors are able to invest in the fund from £100. They also plan a similarly managed UK-focused fund.
Net inflows for the period were £0.7 billion, but assets under administration (AuA) fell £1.8 billion due to adverse market conditions. Hargreaves also warned of an ‘uncertain economic environment’ which may put further pressure on clients’ assets.
“The impact of the challenging macroeconomic and geopolitical backdrop on asset values, client confidence and propensity to invest has been seen across our industry. Against this backdrop we have delivered £0.7 billion of net new business and welcomed a further 17,000 net new clients in the quarter, reflecting both the diversified nature of our platform and also the trust clients place in us,” said Chris Hill, Hargreaves Lansdown Chief Executive Officer.
“Our focus remains on helping new and existing clients navigate these tough times and engaging with them to help improve their financial resilience. Cash savings are high on the agenda for clients and we have seen a further £0.7 billion of net flows into Active Savings leading to a record £5.3 billion of assets. Although flows into risk based investments remain subdued, both client and asset retention rates remain strong and in line with last year.”
Woodford legal case
The trading statement comes days after Hargreaves Lansdown were targeted by 3,200 former Woodford investors seeking £100m for Hargreaves involvement in recommending the failed Woodford Equity Income Fund.
The fund held a number of illiquid investments that were central to the funds collapse and claim alleges Hargreaves Lansdown knew the problems with Woodford’s fund, but continued to encourage investors to invest.