E*Trade returns to profit

E*Trade returns to profit

Online brokerage E*Trade Financial has posted its first quarterly profit for three years, surprising analysts who had expected another loss and sending shares up seven per cent.

The firm - which was badly burned by the US mortgage crisis - posted second quarter net income of $35 million, or 12 cents a share, compared to a net loss of $143 million, or $2.16 a share, in Q2 2009.

Net revenue was actually down, at $534 million, compared to $621 million for the three months the previous year.

However, E*Trade only needed to set aside $166 million for loan losses, down from $405 million in Q2 2009 and $268 million in the last quarter. Net charge-offs were $225 million, down from $386.4 million the previous year.

Steven Freiberg, CEO, E*Trade, says: "The second quarter marked an important milestone for E*Trade as we reported our first quarterly profit in three years. Our results were supported by strength in our brokerage business, including growth in DARTs, new accounts, and margin receivables; continued improvement in loan performance trends; prudent expense management; and effective balance sheet strategies in an environment of declining interest rates."

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