Hargreaves’ £269m haul from interest on customers’ cash parked in its accounts
Hargreaves Lansdown has reaped a £269million reward from interest on customers’ cash parked in its investment accounts.
The sum – boosted by higher Bank of England interest rates – represented more than a third of the fund supermarket’s £735million revenue for the year to the end of June.
It helped Hargreaves report a 50 per cent rise in pre-tax profits to £403million. Shares rose 4.9 per cent, or 37.6p, to 802.6p.
The company looks after £134billion in savings and investments for 1.8m customers.
In the year to June 2022, its income from interest earned on cash parked in investment accounts totalled £50million, less than a tenth of its overall revenues.
Profits boom: Hargreaves Lansdown looks after £134bn in savings and investments for 1.8m customers
But a series of increases in the Bank of England interest rate since then meant that even after passing on 85 per cent of the benefit of hikes to clients, that sum rose more than fivefold to £269million.
The results also showed that market turbulence had pushed clients to shift some of their money towards savings and away from riskier investments.
Hargreaves’ Active Savings division – which provides a platform to access different savings rate and banks – saw inflows more than double to £3.2billion while 17,000 new clients opened accounts, up from 7,000 the previous year.
That took the total assets on the platform to £7.8billion across 175,000 accounts. A total of 67,000 net new clients were added across Hargreaves Lansdown.
Chief executive Dan Olley said the current economic climate was likely to remain similar over the coming year, continuing to drag on investor confidence.