Hargreaves hit by savings product delay, weak cash-return outlook

By Simon Jessop

LONDON (Reuters) - Falling cash returns and a delay to a new savings product overshadowed a robust first-half profit rise at Britain's Hargreaves Lansdown (HRGV.L) on Wednesday, sending its shares lower.

While rising stock prices gave Hargreaves a boost in the six months to end-December, concern among retail investors about the market backdrop, including the impact of Britain's vote to leave the European Union, tempered investment flows.

Total assets hit a 70 billion pound ($87 billion) high, helped by strong demand to trade equities after the vote, but net business inflows fell 16 percent to 2.3 billion pounds.

"We saw a decline in confidence throughout the period to a low point in November 2016 before a partial recovery after the U.S. Presidential Election," Chief Executive Ian Gorham said.

A dip in the net revenue margin returned from cash, much of it on term deposit for pension savers, to 51 percent from 55 percent a year earlier, and an expectation that it could fall further also acted as a drag.

Hargreaves also said it would delay the launch of its "priority" HL Savings product until at least October 2017 to allow for more development work.

Shares in Hargreaves, which have consistently traded at a premium to the market, were down 2.5 percent at 0840 GMT, the biggest faller on Britain's FTSE 100 (.FTSE) index.

This was despite a 21 percent year-on-year gain in pretax profit to 131 million pounds, up from 108.1 million pounds a year earlier and beating a consensus analyst forecast of 125.1 million pounds.

Revenues rose 16 percent to 184.8 million pounds, beating analysts' forecast of 181.5 million pounds.

Calling the results "strong", Shore Capital analyst Paul McGinnis said he expected analysts to upgrade their expectations for the full year, but was "slightly disappointed" about the HL Savings delay.

(Editing by Mark Potter and Alexander Smith)