E*Trade's Earnings More Than Double
January 21 2016 - 5:00PM
Dow Jones News
E*Trade Financial Corp. said its fourth-quarter earnings more
than doubled, partly thanks to a smaller allowance for loan losses,
though the online broker logged a drop in daily average trades.
Online brokerage firms have struggled recently with low interest
rates, volatile markets and moderate trading activity. In the
fourth quarter, E*Trade's daily average revenue trades slid 13% to
147,000 from a year earlier.
E*Trade's results, which met expectations despite the lower
trading results, echoed those reported by rivals Charles Schwab
Corp. and TD Ameritrade Holding Corp. earlier this week.
E*Trade added 13,000 brokerage accounts in the quarter, bringing
its total to 3.2 million. But that growth slowed from the prior
quarter and the year earlier when it added 19,000 and 17,000
accounts, respectively.
Customers added a net $2.8 billion in brokerage assets in the
period, and the company ended the quarter with total customer
assets of $288 billion, up from $277 billion three months
earlier.
In all, the online brokerage firm reported a profit of $89
million, or 30 cents a share, up from $41 million, or 14 cents a
share, a year earlier. The year-earlier results included a $59
million pretax loss tied to the early extinguishment of debt.
Revenue slipped 1.5% to $454 million.
Analysts polled by Thomson Reuters expected a profit of 30 cents
a share on revenue of $454 million.
The company said its allowance for loan losses was $353 million,
versus $404 million a year earlier. That decrease resulted in a
benefit to provision for loan losses of $23 million.
E*Trade has moved to pay down debt and refinance in recent
years. Last year it said it would remove all wholesale funding
obligations from its balance sheet. As a result, its fourth quarter
included an elevated tax rate of 43%, largely tied to the effects
of the wholesale funding transaction.
Earlier in the week, Charles Schwab reported
stronger-than-expected earnings and revenue growth, even as trading
revenue declined. TD Ameritrade also logged a better-than-expected
profit, despite a drop in daily average trades.
E*Trade shares have declined about 18% so far this year.
Write to Lauren Pollock at lauren.pollock@wsj.com
(END) Dow Jones Newswires
January 21, 2016 16:45 ET (21:45 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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