The stock broker Hargreaves Lansdown (LON:HL.) today reported year end results highlighting continued growth. Profits before tax that climbed 21% to £265.8m while Assets Under Management rose by 28% supported by a 15% increase in net inflows to a record £6.9bn.
The number of active clients climbed by 118,000 to 954,000.
Hargreaves Lansdown has recently announced that it would not be paying a special dividend due to regulatory requirements and today confirmed total ordinary dividends for the year of 29.0p per share, a 20% increase on last year. Due to the scrapping of the special dividend, total dividends are down 15% from the year prior.
Disappointment surrounding the dividend sent the shares lower by over 2.5 per cent in early morning trading.
Reason for optimism
Despite the lower than expected dividends, the board was upbeat about the number of new clients and pointed towards onboarding activity as a reason to be optimistic.
“We have had a good year for gathering new clients and assets as a result of our relentless focus on the exceptional service we provide. Key to this has been understanding the needs of our clients and expanding our range of solutions and services to help them. There are considerable challenges for people in the current saving and investment environment but there are also opportunities, and Hargreaves Lansdown is ideally placed to help people make their investment decisions with confidence.”
Price War
Shares in Hargreaves Lansdown have been choppy this year as strong results are overshadowed by a potential price war as new entrants join the fund management market.
US Vanguard has piled the pressure on Hargreaves Lansdown as it entered the UK market earlier this year with low-cost funds offering an alternative to Hargreaves Lansdown at a cheaper rate.
Analysts have also suggested he rise of the robo-advisor is likely to impact Hargreaves Lansdown in the years to come.
Shares in Hargreaves Lansdown rebounded from the lows to trade at 1365p, up 0.1% at 11.20am in London.