Hargreaves Lansdown’s revenue hit £350m in the six months to 31 December 2022 (H1 2022), up 20% from the £291.1m at the end of December 2021 (H1 2021).
The platform’s financial first half saw net new business drop 30% to £1.6bn, however, having attracted £2.3bn the year before. Similarly, assets under administration (AUA) were down 10% at £127.1bn during the period.
Despite this, profit before tax was up 31% at £197.6m and the company announced a dividend of 12.7p per share, representing a 3.6% uplift.
As outlined above, fortunes were mixed during the period, with revenue and AUA from HL’s funds and shares offerings down compared with the same period a year ago.
Cash, however, proved king – delivering a near 1,000% increase in revenue on the back of the Bank of England’s rate hiking spree as it seeks to clamp down on inflation. The revenue margin for HL’s funds and shares segments were 40bps and 30bps, respectively. The revenue margin for cash was a staggering 168bps, a sharp rise from 18bps last year.
As a result, revenue from cash leapt to £121.6m in the six months to 31 December 2022, up from just £11.3m in H1 2021.
| Six months to 31 Dec ’22 | Six months to 31 Dec ’22 | Six months to 31 Dec ’22 | Six months to 31 Dec ’21 | Six months to 31 Dec ’21 | Six months to 31 Dec ’21 | |
|---|---|---|---|---|---|---|
| Revenue | Average AUA | Revenue Margin | Revenue | Average AUA | Revenue Margin | |
| £m | £bn | BPS | £m | £bn | BPS | |
| Funds | 117.9 | 59.5 | 40 | 133.2 | 68.1 | 39 |
| Shares | 70.2 | 47.4 | 30 | 101.8 | 54.5 | 37 |
| Cash | 121.6 | 14.5 | 168 | 11.3 | 12.8 | 18 |
| HL Funds | 27 | 8.2 | 66 | 31.4 | 9.1 | 69 |
| Other | 13.3 | 5.6 | – | 13.4 | 3.5 | – |
| Double Count | – | (8.1) | – | – | (9.0) | . |
| Total | 350.0 | 127.1 | – | 291.1 | 139.0 | – |
CEO Chris Hill (pictured), who is retiring in October, said he was delighted with the jump in profits, adding that it reflected HL’s diverse business model. He also pointed out that though share transaction levels have fallen year on year, they are still higher than before the pandemic.
In all, AUA grew to £127bn during the six months, up from £124bn at the start of HL’s financial year, as £1.6bn of net inflows combined with £1.7bn gained on market movements. The market rally in the last three months of the half salvaged the firm’s investment performance, with £3.5bn being added in AUA compared to a loss of £1.8bn in the three months to the end of September.
Despite the recent uptick, average AUA for the period was down 9% year on year, and HL’s inflows were 30% lower than in H1 2022. In addition, the rate at which the firm added clients slowed; 31,000 joined during the half, compared to 48,000 in the same period the year before.
Julie Palmer, a partner at management consultants Begbies Traynor, said this was reflective of recent uncertainty in markets, and she identified the key role that interest rates played in pushing up the firm’s revenue.
Palmer added: “The real test for Hargreaves Lansdown is how the cost of living crisis bites. Rising prices mean we’ve got less money to play the markets right now, and some customers may have to pull funds out of investment accounts to pay the bills.
“But the long-term trend for people taking a more active interest in managing what money they do have continues. Hargreaves Lansdown is one of the biggest platforms for this DIY investment and is well placed to benefit from this shift.”
HL launched its US strategy during the period, which now has over £500m of assets under management, and also converted the £1.8bn HL Multi-Manager Income and Growth Fund into the HL UK Income Fund.
However, the latter was recently flagged for underperformance, alongside three other strategies, in the firm’s recent value report.
