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Hargreaves Lansdown resilience business model and client proposition

Hargreaves Lansdown plc (LON:HL) has published a trading update in respect of the three month period to 30 September 2020. The comparatives are for the period from 1 July 2019 to 30 September 2019.

Highlights

·       Net new business of £0.8 billion in the period

·       Net new clients of 31,000

·       Assets under administration (“AUA”) of £106.9 billion as at 30 September 2020, up 3% since 30 June 2020

·       Revenue for the period of £143.7 million (2019: £128.1 million), up 12%

Assets under administration and net new business

£ billionThree months to 30 September 2020Three months to 30 September 2019
Opening AUA104.099.3
Net new business0.81.7
Market movements2.10.8
Closing AUA106.9101.8

Net new business was £0.8 billion during the period (2019: £1.7bn, £0.8bn excluding back book transfers). This is a pleasing result given the period has seen weakening investor sentiment arising from COVID-19 and the re-emergence of Brexit uncertainty. As noted, last year benefited from direct back book transfers from J.P. Morgan and Baillie Gifford of £0.9 billion.

During the quarter, flows into Active Savings were hampered by the market leading rates on offer from the government backed NS&I. However, since NS&I cut their interest rates in mid-September we have seen a marked impact on flows back into Hargreaves Lansdown’s Active Savings.

A positive market movement of £2.1 billion, combined with net new business has driven AUA to £106.9 billion as at 30 September 2020.

We welcomed 31,000 net new clients in the period (2019: 35,000, 17,000 excluding direct back book transfers), taking active client numbers to 1,443,000.

Revenue

Revenue for the period was £143.7 million, up 12% on last year despite, on average, the FTSE All Share being down versus the comparative period by 18%. Revenue, was in part, driven by strong stockbroking revenues from continued elevated share dealing volumes. Although down on the peak levels seen earlier this year share dealing volumes across the quarter remained high and averaged 980,000 deals per month.

Assets under administration

Average AUA (£billion)3 months to 30 September 20202 months to 30 June 20204 months to 30 April 20203 months to 31 December 20193 months to 30 September 2019
Funds52.451.149.454.654.6
Shares37.635.832.535.434.6
Cash13.513.613.211.311.1
HL Funds7.98.08.29.29.3
Active Savings2.22.21.91.51.2
Double count1(7.8)(7.9)(8.1)(9.1)(9.2)
Total105.8102.897.1102.9101.6
AUA (£billion)As at 30 September 2020As at 30          June 2020As at 30          April 2020As at 31 December 2019As at 30 September 2019
Funds52.851.747.955.954.2
Shares38.236.432.536.534.9
Cash13.513.614.111.111.3
HL Funds7.88.07.79.49.2
Active Savings2.32.22.11.61.3
Double count1(7.7)(7.9)(7.6)(9.3)(9.1)
Total106.9104.096.7105.2101.8

All HL Funds are held in Vantage or the Portfolio Management Service (PMS) and are included in the Funds category of the table, with the exception of a small balance held off platform by third parties. To avoid double counting, the amount held in Vantage or PMS has been deducted.

AUA (£billion)3 months to 30 September 20202 months to 30 June 20204 months to 30 April 20203 months to 31 December 20193 months to 30 September 2019
Opening AUA104.096.7105.2101.899.3
Net new business10.81.44.00.61.7
Market movements2.15.9(12.4)2.80.8
Founder transfer2(0.1)
Closing AUA106.9104.096.7105.2101.8

Net new business in the 3 months to 30 September 2019 includes £0.9bn of flows acquired from J.P. Morgan and Baillie Gifford direct back books

Net new business excludes the withdrawal of £110 million of Hargreaves Lansdown plc placing proceeds during the period that were held by a founder.

Chris Hill, Hargreaves Lansdown Chief Executive Officer, commented:

 “Today we report a good start to our financial year, with growth in clients, assets and revenue. These results are against the ongoing backdrop of market uncertainty and highlight the resilience of our business model and client proposition. We are confident that the strategy we have invested in, with our focus on the needs of UK investors and savers and delivering the highest level of client service, means that we continue to be well positioned to deliver continued attractive long-term growth.”

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