Hargreaves Lansdown’s new chief Dan Olley was given a boost today as the retail investment platform sailed past analyst estimates and posted a bumper 50 per cent boost in annual profits.
Like a host of retail financial firms over the past year, Hargreaves has reaped the rewards of rising interest rates. Its savings products notched a record £3.2bn of inflows as savers looked to make their cash work harder.
Net interest income – the amount of cash the firm made on its held balances – rocketed to £268.7m over the year, up from £50m last year, as revenues surged to £735.1m – up from £583m last year.
The numbers may put a spring in the step of the new chief after he took over the reins of Britain’s biggest retail investment firm from Chris Hill earlier this year.
But Olley’s task may still be considered an unenviable one by some in the City. Hill’s time at the top was punctuated by unhelpful headlines on a spat with founder and major shareholder Peter Hargreaves, who slammed the former chief over the firm’s flagging share price and swelling cost base.
Hill bet on a financial hybrid advice model, which required major investment, and Hargreaves said it was “hardly surprising shares have collapsed” as Hill “indulged in completely unnecessary irrelevant programmes, which have distracted the firm from its prime objective”.
Shares are trading down some 66 per cent below a 2019 peak. But analysts today cheered the profits boost and “back to basics” approach from the firm.
“New CEO, Dan Olley, is taking a pragmatic approach to steer the company toward capturing growth opportunities in the UK’s wealth market,” said Neil Shah, head of research at Edison.
“His focus on cost discipline and the commitment to delivering for clients and shareholders bodes well for the company’s future.”
Analysts at Barclays yesterday ramped up their guidance for the firm in part due to both its better revenue outlook and more controlled cost base.
Underlying operating costs of £314.6m were 11 per cent higher than the full year figure of £284.7m last year, but this was better than both Barclays’ forecasts of £317.4m and the consensus estimate of £316.3m.
While positive on the outlook for the firm, they warned Olley’s statement this morning “indicates that a more thorough update will be provided with the [first half] results in February”.
Olley said today he is still “in listening mode” after four months in the top job, but he was clear in his four priorities for the firm: Drive client and asset growth, increase pace, save to grow, and focus on our people.
Time will tell if he does enough to keep the former founder off his case.