E*TRADE Financial Corp (NASDAQ: ETFC) stock fell over 2.4% on Jan 26th, 2018 (as of 12:23PM EST; Source: Google finance) on concerns of their bottom line. The group’s net income fell by $44 million or $0.16 per share to $129 million or $0.48 per share.
On the other hand, the group’s Net revenues rose $38 million to $637 million during the fourth quarter of 2017 on the back of higher growth in the balance sheet, better net interest margin and customer engagement overall. The group’s Net interest income rose $28 million to $419 million during the quarter as average interest-earning assets enhanced $2.5 billion and net interest margin expanded 7 basis points to 292 basis points. The group’s average reinvestment rate on securities is currently in the 250 to 270 basis point range.
The yield on third-party customer cash averaged 123 basis points, rising 119 basis points against pcp on the back of movements in short-term rates. The group forecasts this yield to rise to over 136 basis points post the December rate hike given the full benefit is reflected during Q1. Adjusted operating margin, enhanced over 100 bps to 43%.
Commission revenue rose 9% QOQ to $109 million boosted by a 15% rise in DARTs to $236,000, which offset a $0.35 decline in average commission per trade to a certain extent, which was $7.41 for the quarter. But Power E*TRADE is gaining traction.
The group is focusing on E*TRADE Corporate Services, implementing over $6 billion in new client plans during the year while enhanced pipeline to include $14 billion in plan assets. The group is growing their balance sheet by more than $14 billion, while launching and completing more than 1/3 of our $1 billion share buyback program.
For FY17, the revenue rose 22% to $2.4 billion, given the record-setting brokerage activity and balance sheet expansion. The group expanded their adjusted operating margin by 480 basis points over the same period. The group made an agreement to buy over 1 million retail brokerage accounts from Capital One for $170 million. ETFC stock surge dover 21.3% in the last three months.