HUB24 reports 30% drop in net inflows
The funds platform has described performance over the March quarter as “solid”, despite a $740 million drop in net inflows.
In its financial results for the three months ending 31 March 2023, HUB24 reported total funds under administration (FUA) of $76.9 billion, down 12.6 per cent from $68.3 billion in the previous corresponding period.
The improvement was underpinned by a 17 per cent increase in platform FUA from $51 billion to $59.4 billion and a mild 1 per cent increase in FUA across portfolio and administration services (PARS) to $17.5 billion.
The underlying growth came despite a sharp contraction in net inflows, down 28.6 per cent ($740 million) from $2.45 billion in the March quarter of the 2022 financial year to $1.87 billion.
Reflecting on its performance over the March quarter of 2023, HUB24 said it was pleased with “solid results” amid “continued uncertainty in the macroeconomic environment” and “ongoing market volatility affecting adviser and client sentiment”.
The group pointed to market share growth, with the company servicing approximately 5.85 per cent of the sector as at December 2022, up from 4.9 per cent as at December 2021.
“HUB24 continues to have the fastest growth rate as a percentage of FUA based on annual net inflows,” the group noted in an update to shareholders.
HUB24 also pointed to growth in its adviser network, up 9.2 per cent from 3,432 in the March quarter of 2022 to 3,748.
Looking ahead, HUB24 revealed plans to provide custodial platform administration and technology solutions for Equity Trustees Limited (EQT) and Australian Executor Trustees (AET) clients via a new Heads of Agreement with EQT.
The agreement reportedly covers staged large transitions totalling approximately $4 billion FUA indicatively over the next 18 months.
“Subject to detailed planning and final agreements being completed, the company will provide further updates,” the group noted.
Following the release of its latest financial results update, the group’s share price fell by 2 per cent before recovering and entering positive territory as at 1pm AEST on Tuesday, 18 April.
The group’s share price has grown 10 per cent over the past 12 months, supported by a sharp profitability improvement over the first half of the 2023 financial year (1H23).
Earlier this year, HUB24 posted an underlying net profit after tax (NPAT) of $26.6 million, up 87 per cent from $14.2 million in 1H22.
A 69 per cent surge in operating revenue ($137.7 million) was offset by a 69 per cent spike in operating expenses ($87.8 million).
As a result of the profitability improvement, earnings per share increased by 59 per cent to 18.9¢.
The boost in HUB24’s underlying earnings came despite a 13 per cent decline in net flows, from $6.7 billion in 1H22 to $5.8 billion.
Total FUA grew just 7 per cent to $73 billion, compared to 118 per cent growth in 1H22.
Platform FUA increased 12 per cent to $55.8 billion, offset by a 6 per cent contraction in PARS FUA to $17.2 billion.
Three-quarters of net inflows came via existing licensee and adviser relationships, followed by new adviser relationships (22 per cent), and new licensee relationships (3 per cent).
“We are in a unique position to build on our success by leveraging our group capabilities and strong relationships to grow market share, capitalise on emerging opportunities and continue to create value for our customers and shareholders,” HUB24 CEO and managing director Andrew Alcock said in February.
AUTHOR
Charbel Kadib
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