Higher Yields Lead To a Profitable Q1 For E-Trade
E*Trade Financial (NASDAQ:ETFC) announced its Q1 fiscal 2016 earnings on Thursday, April 21st, reporting a 7% year-on-year (y-o-y) rise in net revenues to $472 million. In line with our expectations, daily average revenue trades (DARTs) fell 3% year on year (y-o-y) to 165,000 in the quarter, causing transaction-based revenues to decline. However, the fall in transaction revenues was more than offset by a surge in net interest income. Although average client balances on the company’s balance sheet fell marginally to $41 billion, a rise of 40 bps in the average yield helped by the December Fed rate hike, resulted in higher net interest income of $287 million (+15% y-o-y). The company expects the average yield to moderate in the on-going quarter (Q2) to around 2.6%.
In terms of the bottom-line, the company managed to cut down on its provision for loan losses and losses on the extinguishment of debt, leading to a 18% y-o-y decline in operating expenses. As a result, EBITDA doubled to $185 million, helping margins upwards by 18 percentage points to 39.2% in Q1.
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Have more questions about E-Trade Financial? See the links below:
- What’s E-Trade’s Revenue And EBITDA Breakdown In Terms Of Different Operating Segments?
- How Has E-Trade’s Revenue Composition Changed Over The Past 5 Years?
- By How Much Has E-Trade’s Revenue & EBITDA Grown In The Last Five Years?
- What Is E-Trade’s Fundamental Value Based On Expected 2016 Results?
- How did E-Trade’s EBITDA Decline Outpace Revenue Decline In 2015?
- How Is E-Trade Expected To Grow In The Next Five Years?
- How much will E-Trade’s Revenues Grow If Fed Hikes Rates To 4% By 2018?
- How Did E-Trade’s Segment Revenues Change Over The Last Five Years?
- How much will E-Trade’s Revenues Grow If Trade Volumes Increase By 25% In 2018?
- How Has E-Trade’s Return On Capital Trended In Recent Years?
- How Has E-Trade’s Net Interest Income Changed In Recent Years?
- How Have E-Trade’s Loan Receivables Changed In Recent Years?
- How Has The Riskiness Of E-Trade’s Family Loan Portfolio Changed In Recent Years?
- E-Trade Earnings Preview: Growth In Net Interest Revenues To Offset Decline In Trading Revenues In Q1
- How Have E-Trade’s Non-Performing And Delinquent Loans Trended Over The Past Few Years?
Notes:
1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for E-Trade
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