Hargreaves Lansdown reaps cash interest reward as market growth pushes up assets under new CEO
Hargreaves Lansdown reported market growth and interest from cash push its assets under administration for the firm up to £142.2bn.
Market growth pushed up assets by £7.2bn for the firm in the second half of 2023, compared to just £1.7bn in 2022.
In the firm’s interim results, it revealed that revenue had jumped five per cent to £368.2m, though operating costs rose 24.7 per cent to a whopping £200m.
The growth in revenue came mostly from net interest earned from cash kept in customer savings accounts, an issue that Hargreaves Lansdown has come under fire for in recent months.
Net interest from cash saw its revenue margin jump from 168bps to 216bps, pushing revenue up from £121.6m to £132.8m.
“With regard to platform cash, we retained 41 per cent of interest received during the period, and we estimate we will retain 36 per cent of interest in the third quarter of 2024,” the firm said in their results.
The group’s share price fell 7.8 per cent on market opening this morning.
Meanwhile, net new business saw a decline, falling from £1.6bn in the last six months of 2022 to £1bn in 2023.
Client retention also took a slight hit, falling from 92.7 per cent to 91.6 per cent.
Growth continued to come from the firm’s active savings arm, while its platform stagnated, gaining only £100m in new business over the six months.
CEO of Hargreaves Lansdown Dan Olley said: “It is now six months since I took over as CEO and it is clear that the business is built on strong foundations; a proud heritage, with a trusted brand and knowledgeable, client-focused colleagues.
What is also clear is the work to be done to capitalise on those foundations to reposition HL to take advantage of the structural growth opportunities ahead. The detailed and data-led approach we are taking is giving clear insight into client needs which, together with our focus on execution, the strengthened leadership team and improvements in our technology capability, means we are off to a great start.”
The four priorities I set out in September are the right ones to drive the business forward and I am pleased with the tangible progress we have made in the first half.”
As the largest wealth platform in the UK, looking ahead, ours is a large and growing market with clear client needs. We have the scale needed to succeed and we have the right strategy and ambition to accelerate our growth.”