Interactive Brokers Group, Inc. (IBKR) stock fell over 4.4% on 17th July, 2019 (as of 4:03 pm GMT+2; Source: Google finance) after the company in the second quarter of FY 19 has reported the net revenues of $413 million and income before income taxes was $225 million this quarter, compared to net revenues of $445 million and income before income taxes of $271 million for the same period in 2018. The results for the second quarter of 2019 was hurt by lower commissions revenue, which declined 4%, from the year-ago quarter. The net interest margin widened to 1.66% from 1.61% in the second quarter of 2018. Federal Reserve held rates steady again in the second quarter after raising rates four times over the course of 2018.
Moreover, the electronic brokerage segment delivered 7% year-on-year rise in income before income taxes to $302 million in the quarter ended June 30, 2019. The segment saw net revenues increase 7% to $473 million driven by higher net interest and other income, which was partially offset by lower commissions revenue. Other income grew 3% on higher net mark-to-market gains on our U.S. government securities portfolio and higher fees earned from the Insured Bank Deposit Sweep Program. Pretax profit margin was 64% for the second quarter ended June 30, 2019, which remain unchanged from the same period last year.
Meanwhile, the average margin loan balances in the second quarter declined from a stronger borrowing demand the company observed in the market environment in the last year’s second quarter. However, the decline in balances was more than offset by higher benchmark Fed funds rates, resulting in margin interest income growth of 15%. Driven by higher customer cash balances and hikes in the Fed funds rate, our segregated cash interest income more than doubled over the prior year quarter.
Furthermore, the customer accounts rose 19% to 645,000 and customer equity increased 14% from the year-ago quarter to $153.1 billion. Total DARTs for cleared and execution-only customers increased 4% to 828,000 from the year-ago quarter. Cleared DARTs were 740,000, which is slightly higher than the same period last year. For the quarter ended June 30, 2019, Interactive Brokers had recognized a mark-to-market loss of approximately $74 million in its strategic investment in Up Fintech Holding Limited (“Tiger Brokers”), compared to a mark-to-market gain of $103 million recognized in the first quarter of 2019 after its initial public offering on March 20, 2019.
Additionally, IBKR has declared a quarterly cash dividend of $0.10 per share. This dividend is payable on September 13, 2019 to shareholders of record as of August 30, 2019.