TD Ameritrade Holding Corporation (AMTD - Free Report) reported its first-quarter fiscal 2017 (ending Dec 31) earnings of 41 cents per share, up 5% from the prior-year quarter. However, results were in line with the Zacks Consensus Estimate.
Shares of TD Ameritrade gained 1.7% following its earnings release. The share price movement reflected investors’ positive sentiments over the company’s profitability.
The quarter reflected higher revenues and elevated expenses. Persistent decline in net interest margin (NIM) added to the downside. Notably, the company recorded a rise in average client trades per day, indicating trading activity improvement.
The company’s net income for the quarter came in at $216 million, up 1.9% year over year.
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Higher Expenses Dominate Revenues
Net revenue for the quarter came in at $859 million, lagging the Zacks Consensus Estimate of $862 million. Yet, net revenues increased 5.8% year over year. The rise was chiefly due to higher transaction-based as well as asset-based revenues.
Total asset-based revenues for the quarter amounted to $490 million, up 3.6% year over year, driven by higher insured deposit account fees as well as investment product fees.
Commissions and transaction fees increased 8.2% from the prior-year quarter to $355 million. However, the quarter’s NIM was 1.32%, down 13 basis points year over year.
Total operating expenses climbed 7.9% year over year to $506 million. The growth was mainly stemmed by rise in a number of expenses, including employee compensation and benefits, professional services, clearing and execution costs, and other expenses.
Trading Activity Improved
Average client trades per day for the reported quarter increased 11% year over year to 487,000.
As of Dec 31, 2016, net new client assets totaled $18.7 billion, up 6.9% year over year. Total client assets came in at $797 billion, up 15% year over year.
Average spread-based balance was $117.7 billion, jumping 14.8% year over year and average fee-based investment balance was up 7.4%, to $170.4 billion.
Balance Sheet Position
