TD Ameritrade offsets lower commissions to beat expectations
By JOSH FUNK
Jul. 18, 2017
OMAHA, Neb. (AP) — Online brokerage TD Ameritrade Holding Corp.'s profits declined 2 percent as it adjusted to lower trading commissions, but higher trading activity and growth in client assets helped offset that.
The Omaha, Nebraska-based company said Tuesday that it generated $231 million in net income, or 44 cents per share, in its fiscal third quarter. That's down from $240 million, or 45 cents per share, a year ago.
The results beat the 41 cents per share that the analysts surveyed by Zacks Investment Research expected, on average.
TD Ameritrade said its trading revenue slipped 3 percent to $335 million in the first full quarter since it cut its trading commission to $6.95 from $9.95 in response to competitors.
But total revenue grew 11 percent to $931 million because of strong asset-based revenue and healthy account growth. Wall Street had expected $899.5 million revenue.
"Investors remained broadly engaged, with strong trading volumes despite persistent low market volatility," CEO Tim Hockey said.
TD Ameritrade is preparing to complete its acquisition of rival broker Scottrade in the fall. That deal will significantly expand the number of trades the company handles and boost its network of branch offices for advisers.
Raymond James analyst Patrick O'Shaughnessy said the Scottrade deal may provide a bigger boost than previously expected because of the three interest rate increases the Federal Reserve has implemented since the acquisition was announced last October.
TD Ameritrade shares gained 1.6 percent, or 72 cents, to sell for $45.50 Tuesday.
TD Ameritrade shares have increased nearly 3 percent since the beginning of the year. The stock has climbed 53 percent in the last 12 months.
Elements of this story were generated by Automated Insights (http://automatedinsights.com/ap) using data from Zacks Investment Research. Access a Zacks stock report on AMTD at https://www.zacks.com/ap/AMTD
Keywords: TD Ameritrade, Earnings Report