Hargreaves Lansdown PLC (LSE:HL.) saw profits fall in the year to June as the challenging macroeconomic and geopolitical environment impacted new business inflows, but raised its guidance for revenue margin and underlying costs for the new year.
Net new business in the 12 months to 30 June 2022 totalled £5.5bn, a decline of 37% on the same period last year, the wealth management company said in its earnings statement.
Assets under administration fell 9% to £123.8bn, driven down by market turbulence, with the FTSE All Share index down 6.3%, the S&P 500 down 20.6% and the NASDAQ down 29.5% in the second half of the company’s financial year.
Active clients grew by 92,000 to 1.73mln.
The company noted that the rising interest rate environment has boosted the performance of its Active Savings service, where assets hit a record £4.6bn with over 114,000 client accounts.
The reduction in flows and client growth hit the bottom line, with profit before tax dropping 26% to £269.2mln in the year. Underlying PBT of £298mln was well ahead of the analyst consensus of £283mln.
The ordinary dividend was hiked by 3% to 39.7p.
Looking ahead, Hargreaves Lansdown said it expects the economic and geopolitical turbulence to continue in the period ahead.
“This will continue to impact key drivers of our business including asset levels and investor confidence,” said chief executive Chris Hill.
The company forecast revenue margin of between 44 and 47 basis points for the current year to end-June 2023, reflecting the higher revenue margin on cash resulting from higher interest rates, an improvement from the 42-44bps guidance it gave at its capital markets day in February.
Underlying cost growth guidance was also raised to 9.5-11.5% from 8%-9.5%, explaining this is on the back of lower than guided cost growth in 2022 “and will, in absolute terms, still be lower” than guidance in February.
The shares climbed 2.9% to 868.4p in early trading on Friday.