TD Ameritrade Holding Corp.
) reported fiscal third-quarter 2013 (ended Jun 30, 2013)
earnings of 33 cents per share, beating the Zacks Consensus
Estimate of 31 cents. The results also surpassed the prior-year
quarter figure by a nickel.
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Better-than-expected results came on the back of higher revenues.
Further, an increase in both total client assets and daily
average client trades were the positives. However, a rise in
expenses was a headwind.
TD Ameritrade's net income for the said quarter was $184 million,
up 19% from $154 million in the prior-year quarter.
Quarter in Detail
Net revenue rose 9% year over year to $725 million. This was due
to an increase in total asset-based revenue, net interest revenue
and transaction-based revenues. Further, net revenue exceeded the
Zacks Consensus Estimate of $701.0 million.
Average client trades per day increased 12% year over year to
399,216. Net new client assets were $10.8 billion, up 11% from
$9.7 billion in the past year.
At the end of the quarter, TD Ameritrade reported total client
assets worth $523.5 billion, up 18% year over year. Moreover,
average spread-based balance was $84.7 billion, up 14% from $74.2
billion in the prior-year quarter. Average fee-based balance was
$118.1 billion, up 34% year over year.
Net interest revenue was $120.0 million, up 2% year over year.
Operating income climbed 17% year over year to $298 million. The
rise was due to increased revenues, partly offset by a rise in
expenses. Net interest margin (NIM) was 1.49%, down 24 basis
points from 1.73% in the prior-year quarter.
Total operating expense shot 3% year over year to $427.0 million.
The rise was mainly due to an increase in clearing and execution
costs, occupancy and equipment costs, advertising expenses as
well as depreciation and amortization expenses.
As of Jun 30, 2013, TD Ameritrade's leverage ratio was 0.8,
compared with 1.1 as of Jun 30, 2012. Cash and cash equivalents
were $1.0 billion, compared with $0.9 billion as of Jun 30, 2012.
Capital Deployment Update
Along with the earnings release, TD Ameritrade declared a
quarterly dividend of 9 cents per share on its common stock. The
dividend will be paid on Aug 15, 2013 to shareholders of record
as of Aug 1.
On Jul 1, 2013,
KCG Holdings, Inc.
) closed its merger with GETCO Holding Company LLC. Consequently,
TD Ameritrade expects to record a pre-tax gain on its investment
in KCG Holdings of approximately $54 million or $0.06 per share.
The company will record this gain in the fourth fiscal quarter,
ending Sep 30, 2013.
Innovations in online trading, long-term investment in products
and services, delivery of advanced customer service, creative as
well as cost-effective marketing and sales, along with prudent
expense management are the key factors behind TD Ameritrade's
strategy of boosting its trading and investing business.
Further, the company's association with
The Toronto-Dominion Bank
) provides an opportunity to cross-sell its products. This is
expected to be a significant growth driver for TD Ameritrade's
Amid a volatile operating environment, TD Ameritrade witnessed a
rise in both organic client assets and trading volumes, which
will benefit the company. However, a low interest rate
environment and stringent regulations will likely be dampeners.
TD Ameritrade currently carries a Zacks Rank #3 (Hold). Among
other companies in the financial sector,
E*TRADE Financial Corporation
) will announce second-quarter results on Jul 24.