Hargreaves Lansdown registers 20% Y/Y increase in revenue in H1 FY23
UK direct-to-investor investment and online trading firm Hargreaves Lansdown PLC (LON:HL) today posted its financial report for the six months to end-December 2023.
Revenue for the period increased 20% to £350.0 million (H1 2022: £291.1m), reflecting both an improvement to net interest margin following a period of historic low interest rates, and the level of cash held by clients in both their Investment and Savings accounts offsetting the impact of lower average asset values and lower stockbroking volumes resulting from negative market movements and low levels of investor confidence.
Revenue on Funds decreased by 11% to £117.9m (H1 2022: £133.2m) reflecting the 13% decrease in average AUA, with revenue margin broadly flat at 40bps. Funds AUA at the end of the period was £59.6 billion (31 December 2021: £69.0bn).
Revenue on Shares decreased by 31% to £70.2m (H1 2022: £101.8m) and the revenue margin of 30bps (H1 2022: 37bps) was at the low end of our expected range. This margin is primarily a result of the ratio of dealing volumes to AUA. In the period client driven deal volumes fell by 31% to 3.1 million (H1 2022: 4.5m), whereas the average Shares AUA has fallen by 13%. The drop in deal volumes reflects continued low levels of investor confidence, that were also seen in the second half of FY22.
Total deal volumes (including automated deals such as dividend reinvestment) decreased by 25% to 4.0 million (H1 2022: 5.3m) but were in line with the expectation of c32,000 deals per trading day. This peaked in September at 35,000 deals per trading day, largely as a result of the Government’s mini-budget, to a low in December of 27,000 given the seasonally quieter Christmas period.
Despite the more recent reduction in volumes, client driven trading is higher than levels seen prior to the pandemic.
On an underlying basis, profit before tax increased by 30% to £211.9 million (H1 2022: £163.5m). On a statutory basis profit before tax increased by 31% to £197.6 million (H1 2022: £151.2.0m).
Diluted EPS increased by 29% from 25.7 pence to 33.1 pence, in line with the Group’s increase in profits. The Group’s basic EPS was 33.2 pence, compared with 25.8 pence in H1 2022.
Underlying diluted EPS increased by 28% from 27.8 pence to 35.5 pence. The Group’s underlying basic EPS was 35.6 pence, compared with 27.9 pence in H1 2022.
In line with Group’s dividend policy and previous guidance, the Board has declared an increased interim dividend of 12.70 pence per share (H1 2022: 12.26 pence per share). The interim dividend will be paid on 31 March 2023 to all shareholders on the register at 3 March 2023.