Online brokerage firm
E*TRADE Financial Corporation
) reported a rise in its Daily Average Revenue Trades (DARTs) for
the month of May 2013. E*TRADE's DARTs were 162,940, up 15% from
Apr 2013, but down 3% on a year-over-year basis.
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Broker performance is generally assessed through DARTs, which
represent the number of trades from which brokers can expect
commissions or fees. The year-over-year decrease in DARTs was
mainly due to sluggish economic recovery and investors'
reluctance to invest in the equity markets.
At the end of the month, E*TRADE's total number of accounts was
about 4.6 million, of which about 3.0 million were brokerage
accounts, 1.2 million stock plan accounts and 0.4 million banking
Moreover, the company's total brokerage accounts for May included
32,157 gross new brokerage accounts and 15,648 net new brokerage
accounts. Additionally, E*TRADE's net new brokerage assets were
$1.0 billion, up from $0.5 million in the prior month. Total
brokerage accounts and net new brokerage accounts evince the
company's ability to attract and retain customers who trade and
As of May-end, E*TRADE's customer security holdings were $154.2
billion, up 2% from the prior month. Further, E*TRADE's
brokerage-related cash rose 5% from the prior month and stood at
$36.1 billion, with customers being net sellers of about $1
billion in securities. Moreover, bank-related cash and deposits
for the company remained flat, ending the month at $6.7 billion.
As of Mar 31, 2013, DARTs were 149,000, up 16% sequentially. Net
new brokerage assets reported were $3.1 billion, up from $2.3
billion in the prior quarter. At the end of the quarter, E*TRADE
reported 4.5 million customer accounts, including 2.9 million
brokerage accounts. Net new brokerage accounts were 30,000,
increasing from the prior-quarter level of 10,000.
Overall, credit quality improved during the quarter. E*TRADE's
provision for loan losses fell 42% to $43 million on a sequential
basis. Net charge-offs also declined 33% sequentially to $68
million. Further, allowance for loan losses fell 5.4%
sequentially to $455 million.
For E*TRADE's entire loan portfolio, on a sequential basis,
special mention delinquencies decreased 9% and total at-risk
delinquencies fell 8%.
Performance by Other Brokerage Firms
Earlier, in its Activity Report for the month of May,
TD Ameritrade Holding Corporation
) reported a 9% rise in average client trades compared with the
prior month. Moreover, average client trades rose 13% on a
year-over-year basis to 417,000. For the month, TD Ameritrade
reported $530.9 billion in total client assets, up 23% year over
year and 1% from the prior month.
Earlier this week, in its monthly market activity report for May,
The Charles Schwab Corporation
) reported Daily Average Trades (DATs) of 505,400. The DATs
increased 17% from the year-ago month and 8% from the prior
In the present recovering economy, rising DARTs and new brokerage
accounts will be beneficial to E*TRADE. However, the sluggish
macroeconomic environment could lead to reduced trading
activities, which is a cause of concern. Moreover, fluctuating
interest rates are expected to dent the company's financials in
the near term.
However, E*TRADE's initiatives to mitigate balance sheet risks
seem promising, in spite of the possible pressure on net interest
margin in the near future. The company's strong capital position
and decreasing delinquencies are impressive and will likely aid
it to navigate through the present economic environment.
E*TRADE currently carries a Zacks Rank #4 (Sell).
Ladenburg Thalmann Financial Services Inc.
) is a better performing stock in the same industry with a Zacks
Rank #1 (Strong Buy).