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Hargreaves plans for RDR boost after 30% rise in profits

Ian Gorham 200
Ian Gorham

Hargreaves Lansdown has reported a 30 per cent jump in pre-tax profits to £93.7m in the six months to 31 December.

The profit increase was accompanied by a 30 per cent increase in assets under administration, which stood at £30.4bn at the end of 2012.

HL has also seen a 24 per cent year-on-year rise in revenues to £140.3m, from £112.9m for the final six months of 2011, while total business inflows rose 42 per cent to £1.65bn in the second half of 2012, compared to £1.16bn for the same period in 2011.

HL’s Financial Services Compensation Scheme levy has also risen by 140 per cent to £1.24m for the second half of 2012, this compares to a £516k levy for the second half of 2011. The group incurred a £4.8m FSCS levy for the financial year to June 30, 2012. HL chief executive Ian Gorham called for a review of the levy in 2011.

The firm added 21,000 new clients, a 31 per cent increase on the 16,000 attracted in the same period the year before. The firm has also announced an interim dividend rise of 24 per cent to 6.3 pence per share, up from 5.1p at the end of June.

Gorham says: “The first six months’ trading of the current financial year has seen continued growth of revenue, profits and assets, with all figures reaching record levels for the first half of the year.

“Stock markets were also helpful with the FTSE All Share rising 7 per cent in the six months to 31 December 2012. Our fund sales were at a significant favourable variance to the general UK market where retail fund sales remained subdued.”

HL has again moved to allay concerns about the impact of the FSA regulation of platforms.

It says: “Our planning for any potential changes as a result of the retail distribution review continues to ensure operational readiness well in advance of any potential foreseeable changes.

“Having fully modelled preferred pricing structures, we remain confident in our position that all foreseeable changes can be accommodated without a material effect to our profitability. As our results show, we continue to see no negative impact on our competitive position as a result of RDR or any other factor.”

HL estimates it currently has a 28 per cent share of the UK platform market, something it expects to increase as the impact of regulation continues to grow.

Gorham says: “We note that over 1,200 financial advisers left FSA authorisation in the 18 months to 31 December 2012, over 4 per cent of the entire industry.  We remain of the view that a general trend towards DIY investing is likely to be beneficial to our cause, as people discover the value and efficiency to be gained through self-directed activity.”

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