Hargreaves Lansdown posts record revenue and profit
Financial services company Hargreaves Lansdown has announced record revenue and profit growth in the second half of 2013, despite a “low interest rate environment”.
Profit before tax growth of 11 per cent to £104.1m in the six months ended 31 December, with revenue up 13 per cent to £158.4m.
The firm continued to see substantial growth in new clients and assets, with assets under administration exceeding £43bn – up £13bm from just a year earlier, and ahead of forecasts. Investment bank Numis has expected the figure to be £41.8bn.
Hargreaves also had 77,000 new clients join in the period – 27,000 of whom are trading solely in Royal Mail shares. Around 18.5 per cent of the 118,000 people who invested in the Royal Mail did so through Hargreaves Lansdown.
It’s upped its dividend for the period by 11 per cent to 7.0p (from 6.3p), which'll be paid on the 11 April.
In the statement this morning, the company outlined the impact of changing interest rates on its business:
If interest rates remain low, then a profit impact will continue to be felt as our term deposits will be gradually replaced at significantly lower rates. However, in due course the drag should cease as the effect of comparison with substantially higher rates obtained in the financial year 2012 and early 2013 washes through.
Whilst the outlook for interest rates remains low in the short term, as the economy recovers it is possible rates may rise.
Hargreaves remains the dominant investment supermarket in the UK, with an estimated 32 per cent of the market share.
In light of the results, Numis has updated its outlook on the company:
This market continues to develop at a rapid pace and consequently we expect the group to continue to deliver strong growth. Valued 41x prospective earnings; the shares are only a Hold.
Shares haven't fared well on the news this morning, tumbling over five per cent:
(Google)