Hargreaves Lansdown faces slowdown in client growth amid rconomic challenges

Hargreaves Lansdown (LSE: HL), the digital wealth management giant, experienced a deceleration in its net client growth during the first quarter, reflecting ongoing macroeconomic challenges. The Bristol-based firm reported net new business of £600 million in the quarter ending September 30, a slight decline from the previous year’s £700 million, attributed to the moderated flows observed across the market.

Amid these challenges, the company welcomed 8,000 new clients, a notable decrease from the 17,000 recorded a year prior. This brought the total number of active clients to 1.8 million, maintaining a robust retention rate of 91.7%, albeit slightly down from 92.2% in the previous year.

Despite the slowdown, Hargreaves Lansdown’s revenue displayed resilience, growing by 13% year-on-year to £183.8 million from £162.9 million. This growth was propelled by an increase in net interest margin, which managed to offset the revenue impact of lower share dealing volumes, a trend noted in the previous year’s figures where revenue had grown by 15%.

CEO Dan Olley shared insights into the shifting investor sentiment, stating, “Clients are looking to invest more in cash than risk-based investments, benefiting from our active savings offer. We provide easy access to a range of banking partners, money market funds, and short-dated bonds. Combining this with informative content equips our clients with diverse solutions to meet their saving and investment needs.”

As of September 30, the company’s assets under administration saw a modest rise of 0.6% to £134.8 billion from £134.0 billion at the end of June. This increase was propelled by the net new business and a £200 million tailwind from market movements.

Investors, however, responded cautiously to the news, causing Hargreaves Lansdown shares to fall by 4.9% to 700.80 pence each on Thursday morning in London.