5th Feb 2014 07:48
LONDON (Alliance News) - Hargreaves Lansdown PLC Wednesday reported record pretax profit and revenue for the half year, as it continues to add new clients amid buoyant stock market conditions in London.
In a statement, the FTSE 100 stockbroker said it made a GBP104.1 million pretax profit for the six months ended December 31, 2013, compared with GBP93.7 million for the corresponding period last year, as revenue rose by GBP18.1 million to GBP158.4 million.
Hargreaves Lansdown declared a 7.0 pence interim dividend, up from last year's 6.3 pence.
Meanwhile, total assets under administration rose to GBP43.4 billion from GBP30.4 billion, boosted by net business inflows of GBP2.80 billion, significantly higher than the GBP1.65 billion reported for the corresponding period in 2012.
Chief Executive Ian Gorham described the rise in pretax profit as "healthy" but said interest rate drag was the reason it lagged behind the 43% rise in assets under administration.
"The last six months has continued to see the government lending money to banks on cheap terms and commensurately lower rates for savers as banks have slashed the interest rates paid to their loyal UK savers. This continuing scenario now makes equity investment even more attractive, as the yields available on equities and bonds far outstrip those available on cash," Gorham said in a statement.
"However, in the short term, in addition to reducing the interest rates payable to UK savers, it will also reduce revenue from cash margin across the savings and investment industry, including that received by Hargreaves Lansdown," he added.
Gorham warned that if interest rates stay at historic lows, profits will continue to be hurt, as the stockbroker's term deposits will be gradually replaced at significantly lower rates.
"Whilst we have had an excellent first half, the second half of our trading year is perennially the stronger half, including as it does the tax year end, which acts as a natural incentive for clients to use tax allowances. This year may turn out to be a little unusual, given the exceptional Royal Mail event that occurred in the first half of the year, but there is no doubt the second half of the year will again be key to our full year performance. January 2014 has delivered a positive start," Gorham said.
By Samuel Agini; [email protected]; @samuelagini
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