Hargreaves’ asset growth, net new business slows; shares fall

7:12 am Tuesday, February 22nd, 2022

By Sinchita Mitra

(Reuters) -Britain’s biggest retail stockbroker Hargreaves Lansdown on Tuesday reported slower growth than analysts had expected in the assets it manages and net new business for the half year to December, sending its shares sliding over 15%.

London-listed Hargreaves reported net new business of 2.30 billion pounds ($3.12 billion) in the half year, but that was 18% below a company-compiled consensus. Assets under administration of 141.20 billion pounds were 2% below estimates.

The company in a media call attributed the decline to decreased investor confidence due to the Omicron variant of the coronavirus and worries over inflation. Hargreaves shares were down roughly 15% at 1,106.5 pence by 1015 GMT after having fallen as much as 22.3% earlier.

Trading platforms saw record levels of activity during the early stages of the pandemic on the back of a retail trading frenzy.

But the absence of events like “Vaccine Mondays” – which drove record levels of stockbroking, easing of market volatility and low interest rates for much of last year has hurt the value of cash balances Hargreaves held for its clients, the company said.

“In the first half of this financial year we saw a gradual return to the office and calmer markets which led to more normalised share trading levels,” the fund supermarket said in a statement.

Hargreaves reported fewer net additions of 48,000 clients during the period, compared with 84,000 a year earlier, but declared a 3% increase in interim dividend to 12.26 pence per share.

“Possibly (Hargreaves) has seen bigger clients leaving the platform or drawing down, while newer ones are smaller, which is a headwind to profitability,” Jefferies analysts said in a note.

The company also said it would suspend special dividends until 2024 to fund investments into expanding its Active Savings unit and digital services, having ear-marked 125 million pounds for that purpose.

Pre-tax profit stood at 151.2 million pounds for the six months ended Dec. 31, compared with a profit of 188.4 million pounds a year earlier.

($1 = 0.7368 pounds)

(Reporting by Sinchita Mitra in Bengaluru; Editing by Rashmi Aich and Shailesh Kuber)