Hargreaves Lansdown, Britain’s biggest private client investment manager, has been winning customers from the banking sector, the group said yesterday as it reported a sharp rise in profits.
The Bristol-based company said that Vantage, its investment platform, had enjoyed a 13 per cent increase in customers during the past year and now had about 276,000.
Steve Lansdown, the co-founder and executive chairman, said that many of these customers had come from the banking sector. “I would hazard a guess that some have been discontented customers from the banks. This business is built on trust and confidence — and the retail banks have lost that from their customers.”
Mr Lansdown said that the firm had also benefited from problems in parts of the independent financial adviser community. “At times like this, some independent financial advisers go into their shell. But we have been in this business a long time and in the past have found that, if you keep your head above the parapet and keep talking to people, you will win market share.”
To maintain confidence among customers, the company had spent more on client communication and direct marketing, he said.
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He was speaking as Hargreaves Lansdown reported a 20 per cent rise in full-year pre-tax profits to £73.1 million, as turnover grew by 10 per cent to £132.8 million. Along with a special dividend of 2.807p per share, the final dividend of 4.229p per share brings the total for the year to 10.101p per share, up from 7.809p last time.
Mr Lansdown, who will remain on the board as an executive director despite stepping down as executive chairman, said that the increased payout was consistent with promises made three years ago when the company was floated. “At flotation, we promised that we would seek to pay out 60 per cent of our post-tax profits and this year, with the special dividend, it is 65 per cent,” he said.
The dividend increase means that Mr Lansdown will collect a total payout this year of £11 million. Peter Hargreaves, the co-founder and chief executive, will collect £15.4 million.
Despite the dividend increase, shares of Hargreaves Lansdown fell 2.3p to 245.7p after the company said that some revenues that it had enjoyed in the past would be materially reduced, notably the interest that it earned on cash balances.