Hargreaves new client growth up 186% ahead of Royal Mail IPO

Hargreaves Lansdown has seen its net new client numbers increase by 20,000 to 528,000 to the end of September 2013, marking a 186 per cent jump from the same period in 2012.

In interim results published on the Stock Exchange this morning (15 October), the firm reports “exceptional activity” in the first quarter of its 2014 financial year, with “record levels” in quarterly revenue, total assets under administration and client numbers.

It reveals that the beginning of the second quarter, from 1 October, saw “unprecedented public interest” in the Royal Mail’s flotation, adding that public offerings of well-known companies have historically “substantially boosted our client numbers”.

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The rules of the offer prevents Hargreaves from immediately disclosing details of participation, but the firm states “it was immense”.

In addition to interest from existing clients, a large proportion of its Royal Mail investors were new clients, many of which were investing for the first time. Hargreaves says it expects to retain most as new investors and that net new clients gained will be reported in the next quarter.

Despite it being traditionally the quietest quarter of the year, Hargreaves saw revenue rise to a record performance for any quarter at £77.9m, which is 13 per cent up on the prior year.

Assets under administration reached £39.3bn as at 30 September 2013, an increase of £2.9bn over the quarter. Key drivers have been strong net new business of £1.26bn, improved investor confidence, the success of strategic initiatives and improved stock markets, the firm says.

On a cautionary note, the reduction of interest deposit rates continue to impact interest margin revenue and thus act as a headwind for revenue and profit, Hargreaves adds.

In the current quarter, Hargreaves says it will announce its new pricing structure for clients holding funds, saying its funds’ tariff will be “highly competitive and appeal to both the small and large investor”.

Ian Gorham, chief executive at Hargreaves Lansdown, said: “We remain delighted with the results of our tender to fund managers seeking market leading fund charges for clients.

“In the coming months we will be launching our iPad App and a number of other major new initiatives. We remain confident of growing the business further to the benefit of our clients and shareholders.

“As ever, future stock market levels and investor confidence will have a significant part to play during the remainder of our financial year.”