Hargreaves profit jumps as stuck-at-home Brits turn to share trading

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August 7, 2020

British fund supermarket Hargreaves Lansdown reported a surge in full-year earnings as the coronavirus crisis fuelled record levels of share trading and lured thousands of new clients to its trading platform.

Its shares scaled an eight-month high with a 5% rise to be among the top blue-chip gainers by 0724 GMT.

UK asset managers racked up billions of pounds of losses in the first quarter as the stock market saw its biggest falls in a decade. They have recovered since along with share prices, while also benefiting from a surge in trading by individuals stuck at home in the lockdown.

Hargreaves weathered a tough 2019 when Neil Woodford’s flagship fund, which it had long championed, collapsed. On that issue it said: “It was essential that we learnt from the experience surrounding the Woodford issue last year”.

Its latest results show scant signs it is still being hit by the scandal.

“Post the (UK) general election result in December 2019 and into the COVID-19 period, dealing volumes increased to record levels on our platform at a time when the average AUA (assets under administration) was impacted by significant market falls,” Hargreaves said.

While Hargreaves’ total AUA climbed 5% to 104 billion pounds ($136 billion), this marked a slowdown from an 8% rise recorded a year earlier.

Hargreaves added a record 188,000 net new clients, bringing total active clients to more than 1.4 million and pushing net new business to a new high of 7.7 billion pounds.

Chief Executive Christopher Hill told Reuters on a call that the age group of the clients remained very broad.

“These are very uncertain times … One thing that COVID-19 has demonstrated to us all is a need for resilience … that’s how people are approaching their savings now,” Hill said.

Hargreaves posted a 24% jump in pretax profit to 378.3 million pounds for the 12 months ended June 30. It raised its final dividend to 26.3 pence per share, which together with the interim payout and a special distribution of 17.4p gave a total of 54.9p for the year, up 31%.

In contrast, asset manager Standard Life Aberdeen’s first-half profit tumbled 30% due to the impact of the pandemic and the withdrawal of assets by a large client.

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Hargreaves profit jumps as stuck-at-home Brits turn to share trading

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