TD Ameritrade Holding Corp.
) reported first-quarter fiscal 2014 earnings of 35 cents per
share, which beat the Zacks Consensus Estimate of 32 cents. The
reported figure was also higher than 27 cents earned in the
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Better-than-expected results came on the back of increased
revenues. The other positives were rise in both total client
assets as well as daily average client trades. However, higher
expenses were a headwind.
TD Ameritrade's net income for the said quarter was $192 million,
up 31% from the prior-year quarter.
Quarter in Detail
Net revenue rose 16% year over year to $752.0 million. This was
due to an increase in total asset-based revenues and
transaction-based revenues. However, net revenue also surpassed
the Zacks Consensus Estimate of $734.0 million.
Average client trades per day in the quarter increased 24% year
over year to 413,743. However, net new client assets were $14.5
billion, down 7% from the past year.
At the quarter-end, TD Ameritrade reported total client assets
worth $596.5 billion, up 24% year over year. Moreover, average
spread-based balance was $90.3 billion, up 14% from $79.3 billion
in the prior-year quarter. Average fee-based balance was $130.5
billion, up 31% year over year.
Net interest revenue was $127.0 million, up 9% year over year.
Operating income increased 27% from the year-earlier quarter to
$307 million. The rise was due to increased revenues, partly
offset by higher expenses. Net interest margin (NIM) was 1.45%,
down 13 basis points from 1.58% in the prior-year quarter.
Total operating expense rose 9% year over year to $445.0 million.
This was mainly due to increase in employee compensation and
benefits expenses, clearing and execution costs, depreciation and
amortization expenses as well as advertising expenses.
As of Dec 31, 2013, TD Ameritrade's cash and cash equivalents
were $1.3 billion, compared with $1.1 billion as of Sep 30, 2013.
Shareholders' equity was $4.5 billion versus $4.7 billion as of
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 TD Ameritrade's key strategies to boost
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
bode well going forward. However, a low interest rate environment
and stringent regulations pose as challenges.
At present, TD Ameritrade carries a Zacks Rank #2 (Buy).
Among other investment brokers,
E*TRADE Financial Corp.
Evercore Partners Inc.
) are scheduled to announce fourth-quarter results on Jan 23 and
Jan 29, respectively.