Online brokerage firm,
E*TRADE Financial Corporation
) reported a decrease in its Daily Average Revenue Trades (DARTs)
for the month of Jul 2013. According to the monthly market
activity report for July, E*TRADE's DARTs were 140,898, down 2%
from Jun 2013. However, DARTs increased 10% on a year-over-year
Broker performance is generally measured through the DARTs that
represent the number of trades from which brokers can expect
commissions or fees. The fall in DARTs largely resulted from the
uncertain economic recovery and investors' reluctance to invest
in the equity markets.
At the end of the month under review, E*TRADE's total number of
accounts came in at approximately 4.6 million, of which about 3.0
million are brokerage accounts, 1.2 million are stock plan
accounts and 0.4 million are banking accounts.
For the reported month, E*TRADE's total brokerage accounts
included 25,030 gross new brokerage accounts. Moreover, E*TRADE's
net new brokerage assets were $0.6 million, plummeting from $0.7
billion in the prior month. Total brokerage accounts reflect the
company's ability to attract and retain customers who trade and
As of July-end, E*TRADE's customer security holdings were $159.1
billion, up 6% from the prior month. Moreover, E*TRADE's
brokerage-related cash surged 3.4% from the prior month and stood
at $36.8 billion, with customers being the net sellers of about
$0.9 billion in securities. Moreover, bank-related cash and
deposits for the company stood at $6.5 billion, unchanged from
the prior month.
As of Jun 30, 2013, DARTs were 150,000, up 1% sequentially. Net
new brokerage assets reported were $4.8 billion, up from $3.1
billion in the prior quarter. At the end of the quarter, E*TRADE
reported 4.6 million customer accounts, including 3.0 million
brokerage accounts. Net new brokerage accounts of 30,000 were in
line with the prior quarter.
Overall, credit quality was a mixed bag during the quarter. Net
charge-offs declined 26.5% sequentially to $50 million. Further,
allowance for loan losses dipped 0.9% sequentially to $451
For E*TRADE's entire loan portfolio, special mention
delinquencies decreased 14% sequentially, and total at-risk
delinquencies moved down 17% sequentially. However, provision for
loan losses increased 7% to $46 million on a sequential basis.
Last week, another brokerage firm,
TD Ameritrade Holding Corporation
) reported a 6% fall in average client trades compared with the
prior month in its Activity Report for the month of Jul 2013.
However, average client trades surged 12% on a year-over-year
basis to 373,000. For the month, TD Ameritrade reported $544.2
billion in total client assets, up 21% year over year and 4% from
the prior month.
Concurrently with the release of E*TRADE's report,
The Charles Schwab Corporation
) reported its monthly metrics for Jul 2013. The company reported
Daily Average Trades (DATs) of 498,900, down 4% from the prior
month while it rose 26% year over year.
Amid the challenging economy, increase in DARTs and new brokerage
accounts will be beneficial to the company. We remain concerned
about the sluggish macroeconomic environment, which might lead to
lower trading activities further. Moreover, fluctuating interest
rates are expected to continuously impact the company's
financials in the near term.
However, E*TRADE's initiatives to reduce balance sheet risk
appear to be promising, although they will put near-term pressure
on the net interest margin. The company's strong capital position
and decreasing delinquencies are impressive and will likely aid
it to navigate through the current cycle.
E*TRADE currently carries a Zacks Rank #2 (Buy). The better
performing stock in the same industry includes
GAIN Capital Holdings, Inc.
) with a Zacks Rank #1 (Strong Buy).
TD AMERITRADE (AMTD): Free Stock Analysis
E TRADE FINL CP (ETFC): Free Stock Analysis
GAIN CAP HLDGS (GCAP): Free Stock Analysis
SCHWAB(CHAS) (SCHW): Free Stock Analysis
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