E*Trade Financial ( ETFC ) saw impressive growth across key metrics in January. The brokerage saw a significant rise in trading volumes, both from the previous month (+15%) and year over year (+8%) during the month. The prior quarter's growth momentum, driven by increased market activity related to the aftermath of the U.S. presidential elections and the improvement in the U.S. economy, likely spilled over into the current quarter. Additionally, the acquisition of OptionsHouse in July continued to contribute to the increase in brokerage accounts and derivative trading volumes, with over 29% of trading volumes attributed to derivatives in comparison to 25% in January 2016.
Interest earning assets have continued their strong growth, in large part due to the expectation of further interest rate hikes this year. As E-Trade has a higher yield on its interest earning assets (2.7%) relative to most competitors, rate hikes should drive solid revenue growth for the company. With the likelihood of a series of hikes in 2017, we expect the growth in assets to continue.
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