TD Ameritrade Holding Corp. posted a 26% drop in profits Tuesday as trading slowed and lower interest rates squeezed performance.
The online trading division of TD Bank Financial Group earned $136 million, or $0.23 per diluted share, for the quarter ended Dec. 31. That’s a drop from $184.4 million, or $0.31 per diluted share, one year earlier.
New gross client trading accounts came in well below record highs, falling 17% to approximately 180,000.
And historically low interest rates led TD Ameritrade to waive fees on some money market funds, eating into profits.
"We have taken a number of steps over the last year to mitigate the impact of the near-zero interest rate environment, all while continually delivering strong organic growth and business fundamentals," said Fred Tomczyk, president and chief executive officer.
Revenue rose 2.3% to $624.6 million as the company saw net new client assets increase 12% to $8.7 billion. Daily trading activity was also up 6%.
Earnings at the Omaha, Nebraska-based company where also undermined by costs related to the June purchase of thinkorswim Inc., a smaller option-based brokerage.
Recently refinanced debt combined with vigilant expense management strengthens the company’s earnings potential for the balance of the year, said Bill Gerber, executive vice president and chief financial officer.
TD Ameritrade shares were up slightly early Tuesday, trading around $18.33 on the Nasdaq.
TD expects it’s online brokerage to add $43 million to overall net income for its wealth management segment.
TD will report its first quarter results on March 4.
