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CEO Ian Gorham explained that investment firm Hargreaves Lansdown has benefited, at least in part, from the dubious schemes of the London banks. He boldly said that the company’s six month results “demonstrate that a reputable company can, even in this climate, add genuine benefit to the UK economy and public, whilst paying its taxes in full.”
The share price of Hargreaves Lansdown (LSE:HL.) rose 63.0 to 797.5 at midday, a jump of 8.6%, on the news that its first half revenue was up 24% and that pre-tax profit had increased by 30%., setting a new record high for the stock on the London exchange.
First half revenues came in at £140.3 million, operation profit was £92.1 million, with pre-tax profit at £93.7 million. Net business inflow was £1.65 billion, up from £1.16 billion year-on-year. EPS (diluted) increased by 3.7 pence from 11.3 to 15.0.
The record share price now gives Hargreaves a market capitalization of £3,785.06 million, driving it higher up the FTSE 100 ladder.
Perhaps more than the numbers, the story was better told in the report by the things that Mr. Gorham said, as he took the opportunity to be candid and to promote his firm to the fullest.
“Despite continued economic uncertainty in the UK, Hargreaves Lansdown has had the scale, financial strength and market presence to continue to improve its position. Clients appreciate our excellent value, service and informed comment. These results reflect our commitment to clients, the financial security of our business and our ability to provide ever more attractive ways of saving money and investing through a Hargreaves Lansdown account.”
“In turbulent times wise investors focus firstly on the security of their assets and trustworthy service. High retention of clients is achieved through first class service.”
Peter Hargreaves also took advantage of the opportunity to cite “public disillusionment with retail lenders . . . that has prompted many retail bank customers to move savings to investment managers. We are finding the flow of clients at unprecedented levels. People are opening accounts at a greater rate than ever in our history.”
He added that “Our clients don’t trust banks any more. But with us they see a FTSE 100 company with more than £100 million in the bank and a history of 30 years of unbroken profits.”
Holding nothing bank (Oops. Slip of the tongue, there.) back, he used the leverage of the moment to criticize the Funding for Lending plan.
“Basically, it is giving cheap money to banks in the hope they will lend to companies which they would not want to lend to on risk grounds in the first place. The good companies out there don’t need or want to borrow money. It is just another example of why governments should not try to interfere in economics. I used to think most politicians were useless, but recently I’ve changed my mind. All politicians are useless.”
Hargreaves thanked the company’s clients for their business, saying “We remain grateful and determined to continue to repay their confidence.”
I have underlined several words and phrases just in case some bankers and politicians read this article. They are words that bankers and politicians need to understand. I am reasonably certain that Gorham and Hargreaves would tell the banking establishment that confidence lost is not easily regained.
They would also probably like to say “Thanks for your cavalier attitudes that have sent so many customers our way. No need to worry. We will take good care of them and do what is in their best interest.”
