Hargreaves Lansdown profits rise as savers turn to share trading during pandemic

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Shares in Hargreaves Lansdown rose almost 5% on Friday, after the U.K.’s biggest investment platform reported an increase in full-year earnings, driven by record levels of share trading and the addition of new clients during the pandemic.

The FTSE 100-listed company added a net 188,000 new customers during the 12 months ended Jun. 30, bringing its total active clients to a record 1.4 million as savers looked for ways to manage their cash amid volatile markets.

New business increased by 5% to £7.7 billion during the period, while assets under management also rose 5% to £104 billion. Pretax profit for the year rose 24% to £378.3 million, including the sale of the group’s fund information website Funds Library. Total revenues increased 15% to £550.9 million.

Hargreaves Lansdown also joined the rare club of companies raising their dividends, increasing its full-year shareholder payout for the year by 31% to 54.9p.

Read: Pandemic ‘wrecks’ FTSE 100 dividend outlook for 2020, as U.K. payouts fall to lowest levels since 2014

The stock was trading 4.52% higher at 1,907 pence at 11:30 GMT.

Hargreaves Lansdown Chief Executive Chris Hill said that, going forward, the investment platform planned to target younger savers and investors to maintain growth momentum. “We are already seeing an evolution of our service supporting clients from younger ages and across broader investment and savings options. As we continue to evolve our proposition to reflect changing client needs, that trend will continue to grow in importance,” he said in a statement.

To meet their needs, the company has “significantly” invested in its mobile and digital experience, and boosted its investing with educational content to support people new to investing.

Analysts at Liberum said that, on the outlook, the company remains “appropriately cautious” given the environment. “We see this guidance as supportive of our expectations, and note the wide range in the Shares business reflects the uncertainties associated with future levels of trading activity. We expect the presentation to focus on the scalability of the platform and the upside from its client centric growth strategy, which we continue to see as amongst the most attractive in the industry,” the analysts wrote in a note to clients.

Like other platforms, Hargreaves charges clients a fee each based on how much money they invest. Hargreaves said that it had lost about £2.6 million in revenue as a result of waiving its platform fees on the Woodford Equity Income fund and the Woodford Income Focus fund.

Read:Neil Woodford’s re-emergence would be ‘galling’ for investors

Independent investment manager Neil Woodford’s flagship fund collapsed in 2019 after a liquidity squeeze. Up until its suspension, the fund appeared on Hargreaves Lansdown’s Wealth 50 ‘best buy’ list.

Hill said the company had a responsibility to play a key part in setting industry standards, stating “As such it was essential that we learnt from the experience surrounding the Woodford issue last year.”

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