Hargreaves Lansdown reports higher profits as rising rates give boost to its savings platform
- Rising rates have pushed investors into Hargreaves Lansdown savings division
- Pre-tax profit rose 50%, while revenue rose 26% in the year to June.
Hargreaves Lansdown has reported a 50 per cent rise in profits this year as rising interest rates pushed customers towards its savings offer.
The group said its pre-tax profits had grown 50 per cent to £402.7 million, while revenue rose 26 per cent to £735.1 million in the 12 months to June 30. .
Hargreaves Lansdown said annual revenue growth reflected improved net interest margin as interest rates rose and more customers held cash in both their investment and savings accounts.
The average cash balance represented 10.8 percent of total average assets under management, an increase of 10 percent from the previous year.
Hargreaves Lansdown has reported higher profits as rising interest rates helped boost its savings division.
The group said this had “more than offset the impact of lower average asset values and lower stockbroking volumes resulting from negative market movements and low levels of investor confidence.”
Actions in Hargreaves Lansdown are down 0.55 per cent to 760.8 pence.
Dan Olley, who took over as chief executive in June, said rising interest rates had pushed investors to take advantage of the Active Savings platform, which attracted record new business of £3.2bn in the last year.
In total, Hargreaves Lansdown reported £4.8bn of net new business for the platform, up from £5.5bn last year, bringing Hargreaves Lansdown’s total assets under management to £134 billion.
The group also added 67,000 net new customers, bringing the total to 1.8 million, although it marked a slowdown compared to the 92,000 net new customers achieved in 2022.
The impact of the economic climate has had a significant impact on investor confidence, with share income falling 24 per cent to £147.6 million due to lower trading volumes and market volatility.
Average transactions per trading day in the first half of the year were 31,000 and increased in the second half of the year to 35,000 per day.
However, total transaction volume, including automated transactions such as dividend reinvestment, decreased 21 percent to 8.3 million.
But there are signs that sentiment may be improving: while fund income fell 7 per cent to £236.4 million this year, Hargreaves Lansdown said income had started to return to growth in the second half. of the year.
The company predicts that investor confidence will continue to be affected by the economic climate and therefore by net new investment flows and trading volumes, but “will provide a continued tailwind for flows into Active Savings” .
“In this context, we have already begun to take initial cost actions and will continue to carefully manage all operational costs and efficiency improvements, while balancing the importance of providing the high level of service and support required our constantly growing customer base.’, the group said.
Hargreaves Lansdown said it had increased its final dividend by 4.5 per cent to 41.5p to reflect its “positive” performance.