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UK’s Hargreaves Lansdown bets on increased savings to sustain growth
UK’s Hargreaves Lansdown bets on increased savings to sustain growth
By Khushi Mandowara
(Reuters) -Hargreaves Lansdown is betting on savers to fuel growth despite subdued investment and trading activity in the current financial year, the British investment platform said on Tuesday, after posting estimate-beating annual profit.
Wealth management platforms have been grappling with a slowdown in net new investments and dealing volumes, as macroeconomic and geopolitical uncertainties dent investor confidence.
Red-hot inflation and high interest rates have pushed consumers to spend less on riskier assets, and instead hold onto their cash by turning to saving products amid a cost-of-living crisis.
“Markets have been volatile and, with interest rates rising, savers have looked to make their cash work harder for them without always wanting to invest,” CEO Dan Olley said.
Hargreaves’ Active Savings portfolio, which provides clients with an online savings platform to access different interest rates and banks, saw inflows more than double to 3.2 billion pounds ($3.96 billion) in the 12-month period ended June 30, while new accounts jumped to 17,000 from 7,000 last year.
Last week, British online trading platform IG Group said its net interest income on client balances was boosted by rising interest rates and stability in the amount of cash maintained by clients in their accounts.
Shares in Hargreaves which earlier rose over 6%, reversed course to trade down about 1% by 0753 GMT.
The current challenging economic climate is likely to remain much the same for the coming financial year, Olley said.
“This will provide a continued tailwind for flows into Active Savings but a potential constraint on net new investment flows and dealing volumes.”
The Bristol-based company reported an annual profit before tax of 402.7 million pounds on revenue of 735.1 million pounds, both higher than a company-supplied consensus of 379.4 million pounds in profit on revenue of 716.5 million pounds.
Assets under administration rose 8% to 134 billion pounds during the year.
($1 = 0.8080 pounds)
(Reporting by Khushi Mandowara and Eva Mathews in Bengaluru; Editing by Sherry Jacob-Phillips and Christina Fincher)
Frequently Asked Questions about UK’s Hargreaves Lansdown bets on increased savings to sustain growth
1What is inflation?
Inflation is the rate at which the general level of prices for goods and services rises, eroding purchasing power. It is typically measured annually.
2What are interest rates?
Interest rates are the cost of borrowing money or the return on savings, expressed as a percentage of the principal amount over a specified period.
3What is wealth management?
Wealth management is a comprehensive service that combines financial planning, investment management, and other financial services to manage an individual's or family's wealth.
4What is an investment portfolio?
An investment portfolio is a collection of financial assets such as stocks, bonds, and cash equivalents, held by an individual or institution.
5What is a savings account?
A savings account is a deposit account held at a financial institution that provides a modest interest rate. It is used for saving money while keeping it accessible.
