E*Trade Financial Corp said on Tuesday its loss in the first quarter deepened missing Wall Streets expectations and that it would have to raise new capital. Its were down 23 percent in after-hours trade.

The online brokerage, which has been hampered by its mortgage lending business, said regulators advised it to raise new capital for its bank and reduce the leverage of its holding company in the near term.

The company said improving its capital position would would involve public market issuance and/or private investors and would create significant dilution to current shareholders.

It is still waiting to hear from the U.S. government on its six-month old application for $800 million in relief funds.

E*Trade lost $232.7 million, or 41 cents per share, in the quarter ended March 31, compared to a loss of $91.2 million, or 20 cents per share, in the same period a year ago. Revenue was down 6 percent at $497.3 million.

On average, analysts expected the New York-based discount broker to earn 40 cents per share.

It was E*Trade's seventh-straight quarterly loss.

The company set aside $454.0 million for loan loss provisions in the quarter, down from $513 million in the previous quarter.

(Reporting by Jonathan Spicer, editing by Leslie Gevirtz)