Hargreaves’ £269m haul from interest on customers’ cash parked in its accounts
Hargreaves’ £269m withdrawal from interest on cash parked in customer accounts
Hargreaves Lansdown has collected a £269m fee from interest on cash parked in clients’ investment accounts.
The amount – boosted by higher Bank of England interest rates – represented more than a third of the fund supermarket’s £735m turnover in the year to the end of June.
That helped Hargreaves report a 50 per cent rise in pre-tax profits to £403m. The share rose by 4.9 percent or 37.6 p to 802.6 points.
The company takes care of £134 billion in savings and investments for 1.8 million customers.
In the year to June 2022, its interest income on cash parked in investment accounts was £50m, less than a tenth of its total income.
Profit boom: Hargreaves Lansdown looks after £134bn of savings and investments for 1.8m clients
But a series of Bank of England rate hikes since then meant that while 85 per cent of the benefit of the increases was passed on to customers, the sum more than quintupled to £269m.
The results also showed that the market turmoil had caused customers to shift some of their money into savings and out of riskier investments.
Hargreaves’ Active Savings division – which provides a platform for different levels of savings and access to banks – saw inflows more than double to £3.2bn, while 17,000 new customers opened accounts, up from 7,000 the previous year.
This brought the platform’s total assets to £7.8bn across 175,000 accounts. A total of 67,000 net new customers were added to Hargreaves Lansdown.
CEO Dan Olley said the current economic situation is likely to remain similar in the year ahead, which continues to drive investor confidence.