July 23 (Reuters) - Discount brokerage firm E*Trade Financial Corp reported a quarterly profit that narrowly beat estimates due to lower costs and as the company set aside less money to cover bad loans.
E*Trade reported net income of $69 million, or 24 cents per share, in the second quarter ended June 30, compared with a net loss of $54 million, or 19 cents per share, a year earlier.
The company’s year-earlier quarter included a goodwill impairment charge of $142 million.
Analysts had expected a profit of 23 cents per share, according to Thomson Reuters I/B/E/S.
A 31 percent drop in operating costs more than offset a marginal decline in revenue, which fell to $438 million from $440 million.
The brokerage company, which was on the brink of failure during the financial crisis due to its bank’s subprime mortgage portfolio, set aside $12 million to cover bad loans, compared with $46 million a year earlier.
Daily average revenue trades (DARTs) rose to 155,194 from 149,670. E*Trade had 3.1 million brokerage accounts as of June 30, up 4.7 percent from a year earlier.
“Through the first half of the year we have already surpassed the previous year’s total for net new brokerage accounts, margin loan balances remained near record highs, and total customer assets have again reached all-time highs,” Chief Executive Paul Idzik said in a statement.
The company also reported an 11 percent rise in net operating interest income to $270 million.
Discount brokers thrive when the spread between short-term and long-term interest rates widen so that they can invest client cash at higher rates than they pay for the cash.
Rival TD Ameritrade Holding Corp said on Tuesday quarterly net income rose 3 percent, while Charles Schwab Corp last week reported a double-digit growth in second-quarter revenue and profit.
Shares of E*Trade closed at $21.27 on the Nasdaq on Wednesday. (Reporting By Sudarshan Varadhan; Editing by Sriraj Kalluvila)