14th May 2020 08:35
(Alliance News) - Hargreaves Lansdown PLC said Thursday it has performed strongly in the first four months of 2020 despite the "exceptionally volatile and challenging period".
Shares in the fund supermarket were 8.3% higher in London on Thursday morning at 1,723.50 pence each, the best performer in the blue-chip index.
In the four months to April 30, Hargreaves recorded GBP4.0 billion of net new business, with 94,000 new clients joining the firm. In the same period last year, Hargreaves recorded GBP2.9 billion in net new business.
Net new business growth was driven by the "usual factors", Hargreaves said, of existing clients using tax allowances during the ISA season, ongoing wealth consolidation onto its platform from existing clients and flows into its cash management service, Active Savings.
The growth was further accelerated following the significant market falls in early March, the fund supermarket added, as existing clients added money to accounts and new clients sought to take advantage of the opportunity to invest at lower prices.
"The investment that we have deliberately undertaken over the past three years into our service, its scalability, our marketing and our technology has enabled us to support and protect the interests of our clients throughout the Covid-19 crisis. In these challenging times, it is critical we can support people in managing their investments and savings according to their desired outcomes. Retail investors have a vital role to play in the recovery, and I would like to thank all of our clients for their continued support," Chief Executive Chris Hill said.
Despite this, Hargreaves ended the period with GBP96.7 billion in assets under administration, down 8.1% from GBP105.2 billion at December 31.
The driver behind the fall was a GBP12.4 billion hit from market movements.
In the ten months to April 30, Hargreaves recorded GBP6.3 billion in net new business, which is 17% ahead of the total for financial 2019. The company's financial year ends on June 30.
Hargreaves started financial 2020 with GBP99.3 billion in assets under administration, but has seen market movements shave GBP8.8 billion off total funds.
In the four-month period, revenue was up 19% year on year to GBP190.2 million.
"The period had two distinct phases where revenues initially benefited from a greater level of AuA at the beginning of the calendar year and a higher cash revenue margin," Hargreaves said.
The firm continued: "However, at the start of March, the significant market falls caused by Covid-19 and the subsequent emergency cuts to the UK base rate of interest negatively impacted asset-related revenue streams. These impacts were more than offset by significantly higher stock broking revenues driven by record dealing activity."
Hargreaves said its current intention to is to keep its dividend for financial 2020, due to its "strong" trading results.
CEO Hill added: "There remains much uncertainty in the coming months and hence, like many businesses, we cannot predict levels of new business or client activity. However, we are confident that the strategy we have invested in, with our focus on the needs of UK investors and savers and delivering the highest level of client service, means that we are well positioned to deliver continued attractive long-term growth."
Hargreaves ended April with 1.4 million clients.
By Paul McGowan; [email protected]
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