Hargreaves Lansdown chief prepares to depart as firm reports Brexit boost

Market volatility driven by the EU referendum helped boost trading volume for Hargreaves Lansdown during the year to 30 June, the broker said today as it unveiled a bumper set of results.

Separately, the company announced this morning that chief executive Ian Gorham will step down no later than 30 September next year. 

Chief financial officer Chris Hill will become deputy chief executive from 1 October this year with a view to succeeding Gorham.

The figures

Net revenue was up 11 per cent year-on-year, to £326.5m from £294.2m, while profit before tax was up 10 per cent to £218.9m from £199m, which the company said was a record.

Total assets under administration increased 12 per cent to £61.7bn from £55.2bn.

Diluted earnings per share went up by 13 per cent to 37.3p, from 33.1p, and this was all off the back of a slight reduction in net new business inflows, which dipped by two per cent to £6bn from £6.1bn.

The group added 100,000 new active clients, and hiked its dividend by three per cent to 34p per share.

Why it's interesting

According to Hargreaves Lansdown, client equity trading volumes during the year were considerably higher, up nine per cent at 3.7m (2015: 3.4m), driven particularly by speculation and volatility around the EU referendum, with a record 63,000 trades conducted on 24 June 2016. The additional trading drove higher stockbroking commission.

"In the short term we have seen elevated levels of equity trading in response to volatility, and weakness in the pound leading to strong relative performance of overseas funds and investments," the company said.

The group, which maintained a neutral stance during the run up to the EU vote, said the decision has had a "major impact on market outlook", and while in the short-term the Brexit result has been to the firm's advantage, the long-term implications of the vote are unknown.

The company said that "by far the most substantial profit headwind" during the year was the level of stock markets during the period, adding that a late "post-Brexit" rally at the end of June 2016 "masked considerably depressed stock market levels throughout the year".

What Hargreaves Lansdown said

"We are delighted to present a set of results demonstrating a healthy profit growth and continued substantial new assets and clients," said Gorham.

"Hargreaves Lansdown is well positioned to take advantage of the structural opportunity for growth in the savings and investments market, including the launch of the Lifetime ISA in April next year."

In short

Hargreaves Lansdown got a bumper Brexit boost in 2016, but it's not counting its chickens just yet.