E-Trade’s Q2 DARTs drop, while net revenue continues to rise

E-Trade’s Q2 DARTs drop, while net revenue continues to rise

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E-Trade, a multi-asset brokerage brand of E-Trade Financial Corp. (NASDAQ:ETFC), released its second quarter report, which shows that its Daily Average Revenue Trades (DARTs) drop in numbers, while the net revenue rises in comparison to the Q1 2016.

According to the report, E-Trade’s net revenue rose both over the quarter and over the year. In Q2 of this year it was $474 million and increased from $472 million in the prior quarter and $429 million in the second quarter of 2015. They include commissions, fees and service charges, as well as other revenue. The average commission per trade was $10.82, up from $10.64in the prior quarter and down from $10.96 in the second quarter of 2015.

The net income in the quarter that ended on June 30, 2016, however, was $133 million, which is 13% lower than that in Q1. It must be noted, though, that in Q1 the company received  a $31 million income tax benefit related to the release of valuation allowances against certain state deferred tax assets. Similarly, in Q2 of 2015, when the net income was $292 million, E-Trade had received a $220 million income tax benefit related to the settlement of an IRS examination.

During Q2 2016 the DARTs of E-Trade dropped 8% from the previous quarter, to 152 000, but were 2% more than in the second quarter of last year. The number of brokerage accounts as of June 30, 2016 was 3.3 million – 23 000 mote than in the first quarter of 2016. In spite the continuing growth in numbers, it is slower than that of Q1 2016 when the new accounts were 45 000. This most likely can be attributed to the mixed performance throughout the quarter – in April the DARTs number rose, whereas in May it dropped.

E-Trade’s clients added $1.6 billion in net new brokerage assets and were net buyers of approximately $1.4 billion of securities. The margin receivables in Q2, 2016, dropped 3% from the previous quarter to $6.5 billion.

The total assets of E-Trade in the end of the second quarter were $49.2 billion, which is $1.3 billion more than in Q1 2016.

“The second quarter was positive from several perspectives as our core business performed steadily, and we continued to deploy capital to the benefit of our owners,” said Paul Idzik, Chief Executive Officer. “The quarter closed in a frenzy of market activity that impelled a single-day record of net buying as customers seized opportunities following sharp market declines.”

New York-based E-Trade Financial Corp., offers various financial services, online brokerage and banking services. It works primarily with retail clients through its 30 offices across the US.

The holding company has three subsidiaries – E-Trade Securities for securities products and services, including stocks, bonds mutual funds, options, and ETFs; E-Trade Capital Management for managed account solutions; and E-Trade Bank for bank products and services.

In June E-Trade Securities was fined $900 000 by the Financial Industry Regulatory Authority (FINRA) for inadequate handling of customer orders. 

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