Hargreaves Lansdown had a bumper start to the year as assets under administration hit £132.9bn, but it warns share dealing volumes could slow as lockdown restrictions are eased.
In a trading update for the year to 30 April, the FTSE 100 company reported net new clients for the period of 126,000, bringing total active client numbers to 1.6 million. Year to date, Hargreaves has added 210,000 new clients, a 15% increase.
Hargreaves Lansdown chief executive Chris Hill (pictured) described it as a period of “very strong growth with record net new business, record Isa subscriptions, record client growth and record share dealing volumes, reflecting the benefits of the investment we have undertaken in recent years in our digital platform and the diversity and strength of our client proposition”.
Platform sees £4.6bn of net new business
Hargreaves attracted £4.6bn net new business in the first four months of this year, with year to date net new business of £7.9bn, as lockdown saw a boom in retail investors wanting to put their money to work in a low interest rate environment.
The platform provider profited from a burst of activity before the Isa deadline with “record numbers of clients making contributions into the tax beneficial Isa and Sipp accounts”. It saw a 48% increase in new money into Isa and Sipps between 12 February and 5 April, compared to the same period last year.
It also experienced a 54% increase in new Isa and Sipp account openings according to Hill.
Assets under administration increased by £7.9bn which, combined with net new business and founder transfers, brought AUA to £132.9bn at 30 April.
The record dealing volumes brought with it a 19% increase in year to date revenue of £532.7m. The report said that the recovery in stock markets helped drive platform fees higher with the FTSE All Share on average being 9% higher in the period compared to last year.
However, these positive impacts were offset by the continued fall in net interest margins as emergency cuts to the UK base rate in March 2020 are still being felt.
Less positive outlook
Hargreaves warned that while elevated levels of client acquisition, trading volumes and debit card payments onto the platform has boosted revenues, the associated costs will begin to show in the second half of the financial year, alongside the costs of its brand marketing campaign.
Additionally, the increase in the FSCS budget for 2021/2022 will most likely increase the charge for the current year to around £15.8m, compared to £13.7m last year.
Hill said: “Conditions look more positive than they did at the end of December. However, there remains much uncertainty and like many businesses, we cannot predict levels of new business or client activity.”
The firm highlighted that the easing of previous lockdowns has been accompanied by a reduction in share dealing volumes in both the UK and overseas trades.