Online brokerage firm,
) reported a rise in its Daily Average Revenue Trades (DARTs) for
Oct 2013. According to the monthly market activity report for
October, E*TRADE's DARTs were 159,703, up 9% from Sep 2013.
Moreover, DARTs increased 29% on a year-over-year basis.
At the end of the reported month, E*TRADE's total number of
accounts came in at approximately 4.6 million, out of which about
3.0 million are brokerage accounts, 1.2 million are stock plan
accounts and 0.4 million banking accounts.
For the said month, E*TRADE's total brokerage accounts included
30,276 gross new brokerage accounts. Moreover, E*TRADE's net new
brokerage assets were $1.0 million, increasing 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 October-end, E*TRADE's customer security holdings were
$169.2 billion, up 3.9% from the prior month. The company's
brokerage-related cash rose 1% to $38.6 billion, with customers
being the net buyers of about $0.7 billion in securities.
Moreover, bank-related cash and deposits stood at $6.4 billion,
unchanged from the prior month.
For the quarter ended Sep 30, 2013, DARTs increased 13% year over
year to 145,000. Net new brokerage assets reported were $2.4
billion, up from $1.9 billion in the prior-year quarter. At the
quarter-end, E*TRADE reported 4.6 million customer accounts,
including 3.0 million brokerage accounts. However, net new
brokerage accounts of 13,111 were lower than 18,247 accounts in
the prior-year quarter.
Overall, credit quality was a mixed bag in the quarter. Net
charge-offs declined 42% sequentially to $29 million. Provision
for loan losses decreased 18.9% to $37.4 million on a sequential
basis. However, allowance for loan losses inched up 1.8%
sequentially to $459 million.
Performance of Other Brokerage Firms
Earlier this week,
) reported an 8% rise in average client trades per day in its
Activity Report for Oct 2013. Further, the U.S. trades increased
27% on a year-over-year basis.
Interactive Brokers Group, Inc.
) Electronic Brokerage segment witnessed a rise in brokerage
metrics for Oct 2013. The segment clears and settles trade
globally for both individual and institutional clients. Total
customer DARTs improved 32% from Oct 2012 and 7% from Sep 2013 to
510,000. Further, total customer accounts climbed 13% from the
prior-year month and 1% from the prior month to 234,000 in the
We appreciate E*TRADE's initiatives to reduce balance sheet
risks, though these will likely put near-term pressure on net
interest margin. The company's strong capital position, rise in
customer assets and improvement in DARTs are impressive as well.
Moreover, a fall in expenses reflects the company's success at
cost containment. Further, E*TRADE's decision to focus on
core operations and exit the market making business is expected
to improve profitability.
On the flip side, a challenged economy, decline in the top line
and market volatility remain concerns.
E*TRADE currently carries a Zacks Rank #3 (Hold). A better
performing stock in the same sector is
Ladenburg Thalmann Financial Services Inc.
), which has a Zacks Rank #1 (Strong Buy).
TD AMERITRADE (AMTD): Free Stock Analysis
E TRADE FINL CP (ETFC): Free Stock Analysis
INTERACTIVE BRK (IBKR): Free Stock Analysis
LADENBURG THALM (LTS): Free Stock Analysis
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