Hargreaves Lansdown profits down as inflows weaken

Hargreaves Lansdown (LSE: HL), the UK’s largest investment platform, reported an 8% decline in pre-tax profits to £183 million for the six months ending December 2023, as net new money inflows slowed sharply to £1 billion. HL shares sank over 7% in early trading on the news.

The profit decline came despite a 5% increase in revenues to £368 million, boosted by cash holdings on the platform. However, HL warned of an “uncertain economic environment” weighing on investor confidence in the coming year.

According to chief executive Dan Olley, who started last August, “outflows have increased reflecting both the market backdrop and our product mix.” While still expecting strong cash revenue margins, HL noted “muted” share dealing volumes.

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HL’s client growth also slowed to 20,000 additions in the first half, reaching 1.82 million customers. The 91.6% client retention rate likewise slipped. Assets under administration rose £8.2 billion to £142.2 billion, aided by a year-end rally.

Seeking to “reposition” itself, HL bolstered technology spending by 40% to £24 million and hired a new digital chief from Relx. With costs rising amid service frustrations, Olley conceded “…we have more to do to improve our service levels to meet our own high expectations and to evolve our digital journeys.”