Interactive Brokers reports loss in Q1’2015, as Swiss franc weighs on results

Greenwich-based Interactive Brokers Group, Inc. (NASDAQ:IBKR) has just reported its financial metrics for the first quarter of 2015, with the Swiss franc appreciation on January 15, 2015, eating heavily into the corporate income. There was little left of the rosy picture the broker painted in the final quarter of 2014, when the company enjoyed robust profits and revenues.

Q1’15 numbers

In the first three months of 2015, the company reported a loss before income taxes of $111 million. This dismal result compares with pre-tax income of $74.3 million recorded in the fourth quarter of 2014.

Net revenues in the first quarter of 2015 amounted to $172 million, down by 17.4% against the result recorded in the final quarter of 2014. The number is two times lower than a year ago when net revenues equaled $355 million.


Swiss franc impact

Interactive Brokers attributed the disappointing numbers to “Black Thursday” events. The company stated that due to the sudden move in the value of the Swiss franc after the action by the Swiss National Bank on January 15, 2015, several of its customers who held currency futures and spot positions suffered losses in excess of their deposits with the broker.

As a result, during the first quarter of 2015 losses net of hedging activity amounted to $121 million.

The company says it is actively pursuing collection of these debts.

Business Segments

Electronic Brokerage would have had a record quarter in terms of income, had it not been for the Swiss franc spike on January 15, 2015. Excluding the impact of this one-off item, segment income before taxes grew 27% to a record $172 million as compared to the year-ago quarter. Customer accounts rose 17% to 296,000 and customer equity surged 25% to $61.2 billion from the year-ago quarter.

Market Making segment income before income taxes fell by 59% year-on-year to $27 million, with persistent low volatility and high competition in this segment blamed for the result.

Interactive Brokers wishes to highlight the following metrics for the quarter:

  • 18% Electronic Brokerage pretax profit margin for this quarter, or 63% excluding the negative impact of the sudden move in the value of the Swiss franc.
  • 40% Market Making pretax profit margin for this quarter, down from 59% in the year-ago quarter.
  • Customer equity grew 25% from the year-ago quarter to $61.2 billion and customer debits increased by 20% to $17.3 billion.
  • Customer accounts increased 17% from the year-ago quarter to 296 thousand.
  • Total DARTs increased 11% from year-ago quarter to 648 thousand.
  • Brokerage segment equity was $3.1 billion. Total equity was $5.0 billion.

The official announcement can be read by clicking here.

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