Interactive Brokers Group, Inc.
) third-quarter 2013 earnings per share of 32 cents came in line
with the Zacks Consensus Estimate. Moreover, this compares
favorably with 26 cents earned in the year-ago quarter.
TD AMERITRADE (AMTD): Free Stock Analysis
E TRADE FINL CP (ETFC): Free Stock Analysis
INTERACTIVE BRK (IBKR): Free Stock Analysis
SCHWAB(CHAS) (SCHW): Free Stock Analysis
To read this article on Zacks.com click here.
Results were primarily driven by top-line growth and lower
operating expenses. Electronic Brokerage segment witnessed
continued improvement. Also, the Market Making improved
marginally based on cost containment.
Net income available to common shareholders was $16.5 million,
increasing 32.0% from $12.5 million in the year-ago period.
Performance in Detail
Interactive Brokers' net revenue in the reported quarter came in
at $326.3 million, up 2.4% year over year. Moreover, net revenue
was 1.7% higher than the Zacks Consensus Estimate of $321.0
The rise in revenues was primarily attributable to higher
commission and execution fees, interest income, other income and
lower interest expense. However, these were partly offset by
decrease in trading gains.
Interactive Brokers' net income before taxes in the reported
quarter rose 13.8% year over year to $196.4 million. Similarly,
pre-tax profit margin increased to 60% from 54% in the prior-year
Total non-interest expenses were $129.9 million, down 11.0% from
$146.0 million in the prior-year quarter. The decline was mainly
due to decrease in execution and clearing expenses as well as
employee compensation and benefits expenditure. However, these
were partially offset by rise in communications costs, general
and administrative expenses as well as occupancy, depreciation
and amortization costs.
Market Making: Net revenue fell 15.1% to $130.9 million from the
prior-year quarter. Similarly, pre-tax income decreased 3.0% year
over year to $87.5 million. However, pre-tax profit margin was
67%, up from 59% in the prior-year quarter.
Electronic Brokerage: Net revenue improved 16.2% year over year
to $194.7 million. Likewise, pre-tax income was $108.4 million,
increasing 34.2% from the year-ago quarter. Moreover, pre-tax
profit margin was 56%, up from 48% in the prior-year quarter.
Additionally, total daily average revenue trades (DARTs) for
cleared-only customers increased 15.5% year over year to 426,000.
As of Sep 30, 2013, cash and cash equivalents (including cash and
securities segregated for regulatory purposes) were $12.7
billion, up 1.6% from $12.5 billion as of Dec 31, 2012. Total
assets were $36.3 billion, up 9.3% from $33.2 billion as of Dec
Total equity came in at $5.1 billion compared with $4.8 billion
as of Dec 31, 2012.
Along with the earnings release, Interactive Brokers declared a
quarterly cash dividend of 10 cents per share. The dividend will
be paid on Dec 13 to shareholders of record as of Nov 29.
Performance of Other Investment Brokers
Among other investment brokers,
) earnings of 22 cents beat the Zacks Consensus Estimate of 20
cents. Better-than-expected results were driven by top-line
growth and a benefit from provision, partially offset by higher
Interactive Brokers' healthy balance sheet and strong financials
are expected to boost investors' confidence in the stock.
Further, the company's strong market position and technological
excellence will likely be tailwinds, going forward.
Moreover, Interactive Brokers' Market Making segment funds its
dividend payments. Though the segment showed some improvement in
the reported quarter, the company is skeptical about its ability
to consistently generate sufficient returns in the future.
Interactive Brokers currently holds a Zacks Rank #2 (Buy).
Among other major investment brokers,
) is scheduled to report its fiscal fourth-quarter 2013 results
on Oct 29 and
) is scheduled to report its third quarter 2013 results on Oct