The Hargreaves Lansdown (LON:HL) trading update showed net new business in Q1, worth £0.70 billion, though that figure was below analysts’ forecast of £0.85 billion.
AUA or assets under administration rose to £122.70 billion as a result
The D2C investing giant attracted 17,000 new customers in the first quarter and now has 1.754 million clients and a retention rate of 92.20%.
High retention rates are important as customer acquisition costs, within financial services, are rising.
In terms of earnings, Hargreaves Lansdown generated revenues of £162.90 million, representing a 15% rise, when measured against the same period last year. What’s more, the firm’s margins for the financial year 2023 are now predicted to reach 49 to 52 basis points, up from the prior range of 44 to 47 basis points.
Hargreaves Lansdown CEO Chris Hill said of the update:
“The impact of the challenging macroeconomic and geopolitical backdrop on asset values, client confidence and propensity to invest has been seen across our industry. Against this backdrop we have delivered £0.7 billion of net new business and welcomed a further 17,000 net new clients in the quarter, reflecting both the diversified nature of our platform and also the trust clients place in us.”
He added that
“We are on track for both our new US Fund launch on 1st November and the pilot launch of our Augmented Advice proposition later this calendar year as we build delivery momentum against our strategic roadmap.”
What did the market think of the Hargreaves Lansdown (LON:HL) trading update?
Broker Shore Capital described the update on revenues and margins as significant but in line with what they had anticipated in a recent note on the stock. And therefore they were not making any substantial adjustments to their forecast or price targets.
They noted that the “new money growth” has come from cash depositors and savers and that these are traditionally low-margin areas for the business.
That fact has not been missed by investors and the Hargreaves Lansdown share price has traded lower by -6.15% since the update.
However, the fall may not be entirely attributable to the trading update, because as rival brokers Liberum point out, Hargreaves Lansdown has also found itself on the receiving end of a lawsuit, related to its involvement in the Woodford funds debacle, and the firm has also announced that the CEO, Chris Hill, will step down, and is to leave the business by the end of November 2023, or sooner, if a suitable replacement is found.
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