In its interim management statement for the second quarter, the direct-to-consumer platform reported a £100m increase in assets under administration during the three months to 30 September to £47bn, but said that because investor confidence remains low it expects client activity may be significantly skewed towards H2 2015, when, it said, “traditionally the tax year end acts as an incentive to invest and in previous years up to 68% of annual net new business has been gathered”.
Part of the reason for the poor investment sentiment in the previous three months, it said, was the poor performance of the FTSE.
“Potential stock market gains are a key incentive for retail investors to act and have not been present this quarter, as markets have reflected uncertainty regarding the Scottish referendum, concern over Middle East and Ukrainian conflicts and unfavourable Eurozone economic data,” Hargreaves Lansdown said.
During the period, net new business inflows of £970m were reported, while client-initiated share deals increased 10% to 606,000 during the quarter, while total client numbers rose by 10,000.
Numis Securities, which has a buy rating on the stock said, Hargreaves Landown’s underlying growth profile “remains strong with the industry expected to grow by 150% due to the increase in self investment and it is expected to expand by an even greater amount due to the shift from defined benefit pensions to defined contribution pensions.”
Explaining its view, Numis wrote in a note to clients on the release of the Hargreaves Lansdown interim management statement, “The group's scale benefits are substantial and unmatched providing it with by far the highest operating margin and the buying power to provide cheapest fund prices in the market. We expect the exceptionally high marginal margin and industry growth to more than offset the expected ongoing industry price compression.”
New products
The group also said it was working to develop a “suite of new cash-related services for clients” but said that it could be done “without any current need for a banking licence”.
Hargreaves Lansdown added that its previously announced plans to launch three new multi-manager funds continued, with launch expected in the new year, subject to regulatory approval.
“We continue to progress our new retirement planning service and other initiatives. Corporate business remains strong, with a number of new schemes gained during the period,” it said.
