Financial services firm Hargreaves Lansdown (HL) has reported a fall in profits amid a macroeconomic and geopolitical climate “not seen in a generation”.
The Bristol-based investment company saw underlying profit before tax decrease 19% to £297.5m for the year ending June 30, 2022. Revenue also fell from £631m in 2021 to £583m.
But chief executive Chris Hill said the company had made “strong” progress since February, following the launch of the first of its new funds and an acceleration in its saving proposition.
HL reported net new business of £5.5bn for the year and 92,000 new clients – taking the firm’s customer base to more than 1.7 million. The company’s ordinary dividend was up 3% at 39.7 pence per share.
“Our focus is firmly on servicing our clients, disciplined cost management and delivering our strategy because we remain confident that it will deliver outstanding client service, strong shareholder returns and market leadership for HL,” said Mr Hill.
The listed firm’s assets under administration (AUA) were down 9% for the year, which the company said was driven by market falls to £123.8bn.
Mr Hill said investor confidence had “fallen significantly” in a year of “contrasting moods”.
“It was welcome to see signs of recovery from the Covid-19 pandemic, but that sense of optimism has been replaced by new challenges including inflationary pressure, international conflict and a worsening cost of living crisis that is now having an impact on so many lives,” he said.
HL said its focus for 2023 would be launching new funds and developing investment solutions, starting with a US fund launch in the second quarter of the financial year (subject to regulatory approval).
It also said it would “build on the momentum” that it had seen with its active savings product and would launch a pilot for its augmented advice service at the end of the first half of next year.
The company said it expected the “economic turbulence” to continue into next year. For 2023, it said it expected a revenue margin of between 44 and 47 basis points, primarily reflecting the higher revenue margin on cash resulting from higher interest rates.
HL also said it expected underlying cost growth of between 9.5% and 11.5%, and £65-75m of strategic spend, with no change to its overall strategic spend to the end of 2026 (of £175m and £20m of dual tech running costs).
