Hargreaves assets drop 9% as it warns of second recession

Hargreaves Lansdown has reported a 9% drop in assets under administration, blaming markets falls and warning the prospect of a second recession is likely to lead to continued investor caution.

Assets held by the Bristol-based discount broker have dropped from £24.6 billion at the end of June to £22.3 billion at the end of September. Hargreaves said market falls accounted for the drop, pointing to the 14% slump in the FTSE All Share over the period.

Hargreaves chief executive Ian Gorham (pictured) said that clients and potential clients had been delaying investment decisions, arguing the trend was likely to persist due to the gloomy market conditions.

'Whilst uncertainty remains about sovereign debt and default and a possible second recession, it is increasingly likely the retail investor will feel they need more pounds in their pocket and may continue to defer new investment decisions,' he said.

Revenues have risen 27% to £57.2 million over the three months to the end of September, compared to £45.2 million over the same period last year. Net new business inflows also rose to £680 million, a 24% jump from the £550 million it reported over the same period in 2010.

Hargreaves also attracted 8,000 clients over the three months, taking its total client base to 388,000.

Gorham said the results were encouraging given the difficult market conditions. 'These positive results need to be seen in context, being delivered in a difficult period in stock markets,' he said. 'I believe that in spite of the current economic uncertainties the company remains well placed to continue to grow client numbers and assets.'