Hargreaves Lansdown H1 Profit Declines, Revenue Down 3%

Hargreaves Lansdown plc (HL.L), on Tuesday, reported first-half profit before tax of £151.2 million compared to £188.4 million last year. On a per share basis, earnings declined 20% to 25.7p from 32.1p earned a year ago.

Underlying profit before tax was £163.5 million or 27.8p per share compared to £188.4 million or 32.1p per share in the prior year period.

Revenue for the period slipped 3% to £291.1 million from £299.5 million generated in the same period of last year.

The decline in H1 revenue reflects lower share dealing revenue as some of the more extreme trading volumes during Covid were not repeated and by lower interest on client money as the full impact of the emergency cuts to the base rate of interest were felt.

During the period, the company generated £2.3 billion of net new business, a level similar to the last pre-pandemic period which was itself impacted by adverse macroeconomic news.

Total Assets Under Administration or AUA increased by 4% to £141.2 billion as at 31 December 2021, driven by £2.3 billion of net new business plus positive stock market movements impacting asset values.

Looking ahead, the company expects underlying operating margins to improve from low 50s in FY23 to about 55%+ by FY26 on a sustainable basis. From FY23 onwards the company would operate with positive jaws – i.e. revenue growth exceeding underlying cost growth.

On a statutory basis, Hargreaves expects statutory operating margin to improve from mid-40s in FY23, rising to about 55% by FY26 on a sustainable basis. The company further noted that it would operate with positive jaws on a run rate basis as it exits FY23 onwards.

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