E-Trade Earnings Preview: Growth In Net Interest Revenues To Offset Decline In Trading Revenues In Q1

by Trefis Team
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E*Trade Financial (NASDAQ:ETFC) is scheduled to announce its Q1 fiscal 2016 earnings on Thursday, April 21. Trading activity for the brokerage remained suppressed in the first two months of 2016 compared to the previous year. Moreover, the net new brokerage accounts added in the quarter so far declined on a year-on-year basis due to the closure of 1,524 accounts in February 2016 and 1,440 accounts in January 2016, relating to the shutdown of its Hong Kong and Singapore operations. We believe that the downtrend in daily average revenue trades (DARTs) will persist in March, resulting in a lackluster quarter for transaction revenues. Conversely, although total interest earning assets at the brokerage stagnated at around $47 billion, we expect the Fed’s decision to hike interest rates to boost the net interest income earned by the brokerage firm in Q1 2016. Additionally, the company said that it expects its spread to be approximately 270 basis points in Q1.

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Notes:

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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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