E-Trade Q3 Earnings To Grow On The Back Of Interest Earning Assets

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ETFC: E*TRADE Financial logo
ETFC
E*TRADE Financial

E*Trade Financial (NASDAQ:ETFC) is scheduled to announce its Q3 2016 earnings on Thursday, October 20. ((E*TRADE Financial Corporation Announces Third Quarter 2016 Earnings Conference Call, E*Trade Investor Relations, October 2016)). The brokerage’s revenues are likely to increase marginally, driven an increase in interest earning assets and offset somewhat by a decrease in trading commissions. The table below outlines expectations and key metrics for the brokerage.

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Interest earning assets, which generate a significant portion of the brokerage’s revenue, have continued to grow phenomenally over the year. The possibility of an interest rate hike in early 2017 has led to a 7% year on year increase in interest earning assets for the quarter to date period. We expect them to increase further, thereby driving the brokerage’s revenue from the segment.

E-Trade saw a massive increase in the net new brokerage accounts in the quarter to date period, owing to the closure of 14,604 accounts in the same period last year. However, excluding the effects of the closures, the brokerage would have actually seen a decline in net new brokerage accounts. With the recent launch of Adaptive Portfolio, the brokerage is expected attract more customers over time.

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