April 23 Discount brokerage E*Trade Financial
Corp's quarterly profit more than doubled, helped by a
drop in provision for loan losses and a surge in trading
The company's net income rose to $97 million, or 33 cents
per share, in the first quarter ended March 31, from $35
million, or 12 cents per share, a year earlier.
That handily beat analysts' average forecast of 23 cents per
share, according to Thomson Reuters I/B/E/S.
The company's net revenue rose 13 percent to $475 million,
also beating the analysts' average estimate of $454.6 million.
E*Trade, which was on the brink of failure during the
financial crisis due to its bank's subprime mortgage portfolio,
set aside $4 million to cover loan losses, well below the $43
million it set aside a year earlier.
"Overall positive investor sentiment elevated brokerage
activity to its highest level in nearly five years, which aided
our record net new brokerage assets and brokerage account
retention," Chief Executive Paul Idzik said in a statement.
Daily average trades hit 198,000 in the quarter, the highest
level in almost five years. The company's average commission
fell 6 percent to $10.64 per trade.
New brokerage accounts rose about 5 percent to 3.07 million.
Investors' growing enthusiasm for investing also helped TD
Ameritrade Holding Corp. The biggest U.S. discount
broker said on Wednesday that its clients made an average of
492,000 daily trades in the quarter, a firm record.
Last week, discount broker Charles Schwab Corp
reported a higher-than-expected quarterly profit due to a rise
in trading commissions and fees for managing client assets.
E*Trade's total headcount, including consultants, rose 7
percent to 3,144 people in the quarter.
Wells Fargo raised its rating on the company's stock to
"outperform" from "market perform" before the results were
released on Wednesday, saying E*Trade was likely to continue
using capital at its bank to pay down debt and thus eliminate
its high interest payments.
In the first quarter, regulators allowed E*Trade's bank to
lend the company $75 million. The firm also sold $800 million of
subprime home mortgage loans and booked $76 million on the sale
of its market-making business during the quarter.
E*Trade's Tier One leverage ratio, a key measure of its
capital strength that is closely watched by investors, rose to 7
percent from 6 percent a year earlier.
The New York-based company's shares, which have more than
doubled in past 12 months, closed at $21.50 on the Nasdaq.
(Reporting By Neha Dimri in Bangalore; Editing by Simon