Markets cheer bumper profits at Hargreaves

Michael Bow
Follow Michael
FINANCIAL adviser Hargreaves Lansdown was the FTSE’s biggest blue chip riser yesterday after reporting record revenue and profit for the second half of last year.

However it warned a new government initiative to boost lending would compress revenue margins for the outfit over the rest of this year.

The company, co-founded by Peter Hargreaves and Stephen Lansdown in Bristol in 1981, leapt to a record share price high in trading yesterday after delivering a 30 per cent jump in profits on revenues of £140.3m for the six months ending December 2012.

Hargreaves, who still sits on the company’s board as executive director, said customer trust and the company’s cost consciousness and efficiency had helped maintain its momentum over the period.

However, he warned that the government’s continued support for the Funding for Lending scheme (FLS) would hit short-term revenue from cash margins at the company.

“As margins decline we will need to accelerate our business,” he told City A.M.

The FLS was designed to give banks access to cheaper money to boost lending but has subsequently led to banks cutting interest rates paid to UK savers. The firm predicts this will result in a reduction on the revenue margins of its cash balances into 2014.

Hargreaves yesterday criticised the interference of FLS and other monetary policies such as quantitative easing and said the market should be left on its own to operate.

“The FLS is allowing a few people to soldier on paying their mortgage but what we need are thousands of repossessions to get the house prices down. The market should be allowed to cleanse itself,” he said.

The company, which offers a supermarket-style approach to picking investments for retail investors, built its assets under administration by 30 per cent over the half year. They now stand at just over £30bn. The company also increased its interim dividend from 5.1p to 6.3p on the back of the success. The firm first floated on the stock exchange in May 2007.