Interactive Brokers reports Q1 earnings for 2014 – A return to form


Substantial increase in net revenues to $355 million demonstrates Interactive Brokers’ assured place as one of America’s most successful retail FX firms

Interactive Brokers Group, Inc. (NASDAQ GS: IBKR) yesterday reported its quarterly metrics for the first three months of 2014, depicting a very healthy start to the year for the company.

Diluted earnings per share were reported on a comprehensive basis of $0.35 for the quarter ended March 31, 2014, compared to diluted earnings per share on a comprehensive basis of $0.06 for the same period in 2013.

On a non-comprehensive basis, which excludes the effect of changes in the U.S. dollar value of the Company’s non-U.S. subsidiaries, the Company reported diluted earnings per share on net income of $0.34 for the quarter ended March 31, 2014, compared to diluted earnings per share of $0.14 for the same period in 2013.

Net revenues were $355 million and income before income taxes was $218 million for this quarter, compared to net revenues of $216 million and income before income taxes of $82 million for the same period in 2013.

The Interactive Brokers Group, Inc. Board of Directors declared a quarterly cash dividend of $0.10 per share. This dividend is payable on June 13, 2014 to shareholders of record as of May 30, 2014.

Business Highlights

61% pretax profit margin for this quarter, up from 38% in the year-ago quarter and 42% average for prior year.

60% Electronic Brokerage pretax profit margin for this quarter.

Customer equity grew 38% from the year-ago quarter to $49.0 billion and customer debits increased by 30%, to $14.4 billion.

Customer accounts grew 16% from the year-ago quarter to 252 thousand.

Total DARTs increased 25% from the year-ago quarter to 582 thousand.

Brokerage segment equity was $2.5 billion. Total equity was $5.2 billion.

Electronic Brokerage

Electronic Brokerage segment income before income taxes increased 21%, to $134 million, in the quarter ended March 31, 2014 compared to the same period last year. Commissions and execution fees increased 14% from the year-ago quarter, reflecting growth in customer accounts and higher average trading activity per customer. Net interest income grew 23% from the year-ago quarter, to $66 million in this quarter. Pretax profit margin was 60% for this quarter, up from 57% in the same period last year.

Total DARTs for cleared and execution-only customers increased 25% to 582,000 from the year-ago quarter. Cleared DARTs were 527,000 in this quarter, 25% higher than the same period last year.

Customer accounts grew 16% to 252,000 from the year-ago quarter. Customer equity increased 38%, to $49.0 billion, from the year-ago quarter. The size of an average customer account continued to grow to $195 thousand in equity per cleared customer account at the end of this quarter.

Customer margin borrowings were $3.3 billion higher than at the same time last year, ending the quarter at $14.4 billion.

Market Making

Market Making segment income before income taxes increased to $88 million, for the quarter ended March 31, 2014 from $29 million loss for the same period in 2013. Removing the effects of currency translation, the Market Making segment produced $67 million pretax income in this quarter, compared to $32 million for the same period last year. Increase in profit was driven by higher volatility as measured by the CBOE Volatility Index (VIX), a higher actual to implied volatility ratio and higher trading volumes.

Currency translation gain was $21 million in this quarter, compared to a $61 million loss in the year-ago quarter.

For more on the global Forex industry see the LeapRate-Dow Jones Forex Industry Report.

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Interactive Brokers reports Q1 earnings for 2014 - A return to form

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