Brexit’s Impact On E-Trade: Delay In Rate Hike Could Hurt Results

The U.K.’s decision to exit the European Union will likely have profound effects on the U.S., impacting its economic fundamentals adversely. Moreover, it could potentially prompt the Federal Reserve to delay further interest rate hikes. Futures traders assign a minimal chance of a rate hike in July or September, and just a moderate chance of a hike by year-end.

These potential developments could have a substantial impact on the financial services sector in the U.S. Lower yields would suppress the net interest income of brokerages such as E-Trade. Interest earning asset balances, in turn, may be negatively affected due to the higher opportunity cost of holding money in financial institutions. As a result, there could be a 15% downside to our price estimate for E-Trade if rate hikes are significantly delayed.

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?
• How did E-Trade’s EBITDA Decline Outpace Revenue Decline In 2015?
• How Is E-Trade Expected To Grow In The Next Five 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

View Interactive Institutional Research (Powered by Trefis):

Global Large Cap | U.S. Mid & Small Cap | European Large & Mid Cap

More Trefis Research