Hargreaves Lansdown profits jump as retail investors put money to work around Brexit
Profits before tax at retail broker Hargreaves Lansdown grew by more than a fifth in the second half of 2016, as booming inflows stymied fears investors would hold on to their cash after the Brexit vote.
The figures
Pre-tax profits rose 21 per cent in the last six months of 2016 compared with the first half of the year to reach £131m.
Assets under administration grew to a record £70bn, rising 13 per cent since the week after the EU referendum result. New business accounted for £2.34bn of inflows, a 10 per cent rise when ignoring the effect of acquisitions from Jupiter and JP Morgan.
Revenue jumped 16 per cent to £184.8m as active client numbers reached 876,000.
The Bristol-based broker announced a 10 per cent hike in its dividend to 8.6p per share.
Why it’s interesting
Everyone secretly fancies they could do better than the pros when it comes to investment. Hargreaves Lansdown is profiting from the increasing number of people who think they’ll give it a try, as it connects retail investors to a wide variety of funds.
And it seems those investors are not afraid of macroeconomic turbulence, adding cash to the pot even during a period of massive investment uncertainty.
Brexit seems to have prompted retail investors to put money to work. Hargreaves Lansdown reports “significantly elevated” trading levels, with a 51 per cent rise in equity deals from its clients.
The weaker pound since Brexit has also proved attractive for investors as earnings in foreign currencies become more valuable.
What Hargreaves Lansdown said
Ian Gorham, chief executive of Hargreaves Lansdown, said: “The diversified nature of the Hargreaves Lansdown business has enabled us to deliver significant growth in both revenue and profit.
Despite macroeconomic uncertainties impacting investor confidence and net new business, clients continue to trust us with their money and benefit from our market-leading investment services.
He added: “Mobile technology is a key part of our strategy and our new generation of iPhone and Android apps offer opportunities to further enhance our clients’ mobile experience”
In short
Retail investors can’t get enough of macroeconomic volatility in the UK and worldwide. Hargreaves Lansdown is set to make hay when the rain falls, it seems.