TD Ameritrade profit up; sounds more cheery tone
TD Ameritrade Holding Corp's
Client trading activity slipped 2 percent from a year earlier, but soared 17 percent from the previous quarter, as a better economic outlook and an upbeat stock market drew more individual or retail traders back to the market.
The company, which suffered through most of last year, sounded a more cheery tone than in previous quarters.
With the market environment continuing to improve, we are seeing improvement in retail engagement and sentiment, and we feel good about how we are positioned going forward, Fred Tomczyk, TD Ameritrade's chief executive, said in a statement.
The company earned $145.0 million, or 25 cents a share, in its fiscal first quarter, up from $136.2 million, or 23 cents, a year earlier.
Revenue climbed 5 percent to $656.2 million. Analysts on average expected the Omaha, Nebraska-based company to log $648.3 million in revenue, according to Thomson Reuters I/B/E/S.
Net new client assets jumped 11 percent to $9.7 billion, more robust growth than some analysts expected.
The big thing is the net new asset growth, and that's what's important to investors as (TD Ameritrade) diversifies away from just trading, said Richard Repetto, analyst at Sandler O'Neill. They had an excellent quarter.
Shares of the company, highly sensitive to changes in U.S. interest rate policy, slipped 3.6 percent in light premarket trading. The shares have risen 29 percent since the end of September as the economic outlook brightened.
The U.S. Federal Reserve has kept interest rates low for more than two years, hampering TD Ameritrade's ability to earn fees from money market funds. Analysts say such brokerages could sharply benefit if rates rise earlier than expected.
TD Ameritrade continued its share buyback plan, but at a slower pace likely due to the higher share price, repurchasing 3.2 million shares in the quarter. The company is authorized to repurchase 26.8 million additional shares.
Toronto-Dominion Bank, which has a 46 percent stake in TD Ameritrade, said the results would contribute C$48 million ($49 million) to its quarterly results.
(Reporting by Jonathan Spicer; Editing by Derek Caney)
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