Swiss franc spike weighs on Interactive Brokers’ 2015 electronic brokerage income


Interactive Brokers Group, Inc. (NASDAQ:IBKR) on Tuesday reported its financial and operating metrics for the full 2015, with the Swiss franc spike taking its toll on the results of the Electronic Brokerage segment.

The company, which is one of the key participants in the US Forex market, said on January 15, 2015, due to the sudden, large move in the value of the Swiss franc that followed an unprecedented action by the Swiss National Bank, several of its customers who held currency futures and spot positions suffered losses in excess of their deposits with the broker. During 2015, Interactive Brokers incurred losses, net of hedging activity and debt collection efforts, of $119 million.

These events affected the Electronic Brokerage segment, where pre-tax income decreased 9%, to $536 million, in 2015. On the brighter side, net revenues increased 15% to $1.1 billion thanks to higher commissions revenue and net interest income. Excluding the impact of this unusual item, segment income before taxes grew to a record $655 million, marking an 11% increase over 2014. Customer accounts staged a rise of 18% to 331,000 and customer equity rose 19% to $67.4 billion compared to 2014.

Commissions and execution fees increased 13% in 2015, to $618 million and net interest income grew 24%, to $400 million. Pretax profit margin was 49% in 2015, down from 62% in 2014.

Total DARTs for cleared and execution-only customers increased 14% to 647,000 in 2015, compared to 566 thousand during 2014. Cleared DARTs were 589,000, up 14% year-on-year.

Market Making segment saw income before income taxes increase 14% year on year, to $130 million in 2015, reflecting higher market volatility and periods of active trading activity during 2015. Pretax profit margin increased to 44% in 2015 from 40% in 2014.

Below are Interactive Brokers’ Business Highlights for 2015:

  • 39% pretax profit margin for 2015.
  • 49% Electronic Brokerage pretax profit margin for 2015.
  • 44% Market Making pretax profit margin for 2015.
  • Customer equity grew 19% from 2014 to $67.4 billion.
  • Customer accounts increased 18% in 2015 to 331,000.
  • Total DARTs increased 14% from 2014 to 647,000.
  • Brokerage segment equity was $3.5 billion. Total equity was $5.3 billion.

You can view the full press release by Interactive Brokers by clicking here.

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Swiss franc spike weighs on Interactive Brokers' 2015 electronic brokerage income

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