UPDATE 1-TD Ameritrade Q1 profit falls even as assets soar
Jan 22 (Reuters) - TD Ameritrade Holding Corp on Tuesday said quarterly net income fell 3.4 percent from a year earlier but beat analysts' expectations on record new assets from clients.
TD Amertrade, the biggest online broker by customer trading volume, reported profit of $147 million, or 27 cents a share, for its fiscal first quarter ended Dec. 31, 2012. The consensus estimate of 21 analysts compiled by Thomson Reuters I/B/E/S was 24 cents a share.
TD Ameritrade, which last month declared a special dividend of 50 cents a share, continued to struggle against low interest rates that have hurt its ability to book gains on clients' dormant cash.
Like other discount brokerages, it has been forced to waive money-market fees worth hundreds of millions of dollars annually to ensure that clients do not realize negative returns.
TD Ameritrade ended 2012 with $472.3 billion in client assets, up 7 percent from a year earlier. In the just-ended quarter the firm gathered $90 billion of what it calls interest rate-sensitive assets from clients. That positions it to book gains when interest rates begin to rise, company executives said.
TD Ameritrade remained more reliant on commissions and other investments from active traders than rivals such as Charles Schwab Corp and E*Trade Financial Corp. Its quarterly client activity rate, a measure of how many active accounts were trading, fell to 5.8 percent from 6.5 percent a year earlier but was up slightly from the fiscal fourth quarter.
Retail investors remain uncertain about the economy and markets, TD Ameritrade Chief Executive Fred Tomczyk said earlier this month, but average client trades in January have been rising. They have averaged 370,000 daily trades this month to date, up from 334,000 in the previous quarter, according to a presentation on the company's website.
Despite sluggish trading volume industry wide, the company in October said it expects fiscal 2013 earnings to generally beat analysts' expectations.
The brokerage has expanded into options trading and fee-based accounts to supplement its market-sensitive commission businesses. It gathered a record $15.6 billion in new client assets in the last three months of the year, up from about $10 billion in the year-earlier quarter.
Rival Charles Schwab Corp earlier this month also reported record asset gathering at the end of 2012.
Shares of TD Ameritrade are up 13.3 percent in the past 52 weeks, including reinvested dividends, and have ranged between $15.09 and $20.59. They closed Friday on the New York Stock Exchange at $18.45, up 1.4 percent. U.S. markets were closed the Martin Luther King Jr. U.S. holiday on Monday.