TD Ameritrade Holding Corp. said on Tuesday its quarterly profit dipped as client trading levels fell and net interest revenue declined, but earnings topped expectations, helped by a reduction in expenses.
The Omaha, Nebraska-based brokerage earned $153.8-million (U.S.), or 28 cents a share, in its fiscal third quarter ended June 30. It earned $157.4-million, or 27 cents a share, in the year-earlier period.
Analysts, on average, expected 26 cents a share, according to Thomson Reuters I/B/E/S.
Revenue fell 2.6 per cent to $667.3-million versus expectations of $660.8-million.
“TD Ameritrade had a strong quarter despite lower trading volumes and a difficult interest rate environment,” Chief Financial Officer Bill Gerber said in a statement. “Expenses declined this quarter as we made good traction on process improvements and increased our focus on containing expenses.”
TD Ameritrade is the No. 1 U.S. discount broker by trading volume, and its results are often seen as a proxy for the mood of Main Street investors.
The company derives more than 40 per cent of annual revenue from trading fees and commissions.
The firm’s clients made an average of 355,449 trades a day versus 369,716 a day a year earlier.
The S&P 500 index fell 3 per cent in the quarter versus a 12 per cent rise in the previous quarter.
Commission and transaction fees dropped to $266.1-million from $281.6-million a year earlier.
Near-zero interest rates have also taken a toll on TD Ameritrade and other brokerages, compressing net interest margins. Net interest revenue fell to $118.4-million from $131.3-million a year earlier.
Operating expenses declined to $413.1-million from $422.2-million a year earlier and $454-million in the prior quarter.
Mr. Gerber said he expects the difficult environment to continue, but said the company would remain focused on expense management and allocating resources prudently to support the firm’s growth.