Hargreaves Lansdown plc (LON: HL) released a trading update today concerning its performance in the Q1 that concluded on September 30, 2023. The company reported net new business of £0.6 billion during this period. There was a slight dip from the £0.7 billion recorded in Q1 2023. This decrease is in line with the general trend of moderated flows observed across the market.

An interesting trend observed was the growing popularity of cash savings over risk-based investments. Hargreaves Lansdown’s Active Savings platform continued to perform well, emerging as the primary driver of net flows.

Client growth was still on the positive side, with a net gain of 8,000 clients during the quarter. Though this was a drop from the 17,000 new clients acquired in Q1 2023. The growth was primarily seen in the SIPP (Self-Invested Personal Pension) and Active Savings accounts. Despite the changing market conditions, client retention remained strong at 91.7%, compared to 92.2% in the previous fiscal year, while asset retention was at 89.0%, down from 90.4% in FY2023. This was attributed to the muted macroeconomic backdrop and the necessity for various client segments to make cash withdrawals.

Hargreaves Lansdown Q1 2023 Performance Highlights!

The share dealing volumes averaged 634,000 per month during the quarter, a decrease from 700,000 recorded in Q1 2023, in line with broader market trends.

The company reported that client cash balances at the end of the quarter were £12.4 billion. It constitutes 9.2% of the total Assets Under Administration (AUA). These levels were impacted by heightened cash withdrawals and an increased movement of funds into Active Savings. This was particularly during July and August, with a subsequent stabilization in September.

Hargreaves Lansdown’s total revenue for the quarter reached £183.8 million, up from £162.9 million in Q1 2023. This growth was attributed to the net interest margin. This was more than offset the revenue impact of the reduction in share dealing volumes.

Dan Olley, Chief Executive Officer of Hargreaves Lansdown, noted that despite the challenging macroeconomic environment and its effects on investor confidence and client behavior, the company continued to experience net client growth and positive net new business.

Clients increasingly favored cash-based investments over risk-based ones, with the Active Savings platform providing easy access to a range of banking partners, Money Market Funds, and short-dated bonds. Combined with informative and relevant content, Hargreaves Lansdown aims to offer clients a wide array of solutions to meet their saving and investment needs.

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