TD Ameritrade posts record Q1, boosted by E*Trade transfers
17 January 2008 | 4063 views | 0
US online brokerage TD Ameritrade says net income rose a record 65% in its fiscal first quarter, boosted by higher trading volumes and new accounts transferred from troubled rival E*Trade.
TD Ameritrade says its net income rose to $240.8 million net income in the three months ending 31 December 2007, compared to $145.6 million in the year ago period. Its first quarter revenue increased to $642 million from $535.2 million last year.
The broker says it had record average client trades per day of 322,000 during the period, up 35% from a year ago. It also reported higher fee-based balances of approximately $58 billion, an increase of 30%.
TD Ameritrade CEO Joe Moglia told Reuters reporters that new business transferred to the firm by former E*Trade clients accounted for 25% of new assets in the first quarter.
Moglia said the firm saw "$2.3 billion in inflows" from customers who abandoned New York-based E*Trade. The average size of accounts transferred was $250,000, he said.
Both TD Ameritrade and rival discount broker Schwab have profited from customer defections at E*Trade, where investors pulled out $6 billion in November following a bankruptcy warning. TD Ameritrade offered as much as $300 to investors that transfer an account from a rival firm.
However earlier this month E*Trade - which got a $2.5 billion cash infusion from hedge-fund manager Citadel Investment Group in November - said it has seen a "turnaround momentum with regard to customer behaviour", and said 87,000 gross new accounts were opened in December.