TD Ameritrade Profit Rises on Higher Market Volatility


Discount brokerage TD Ameritrade posted a 56 percent rise in quarterly profit Tuesday, beating Wall Street estimates, as client assets grew and stock market volatility led to increased trading activity among clients.

Net income for the fiscal fourth quarter ended Sept. 30 rose to $200.4 million, or 33 cents per share, from $128.1 million, or 21 cents per share, a year earlier.

Analysts were expecting 31 cents per share, according to Reuters Estimates.

The brokerage said it expects to earn between $1.15 and $1.39 per share for fiscal 2008.

It expects annual 2008 revenue of $2.3 billion, Chief Financial Officer William Gerber said on a conference call.

About 63 percent of this revenue will be asset-based, Gerber said, up from 23 percent in 2003.

In recent quarters, the brokerage has focused on driving revenue from growth in long-term client assets rather than traditional transaction revenues earned from trading and commission fees.

Deutsche Bank analysts Matthew Fischer and Mike Mayo said in a note to clients they remain cautious about the company's 2008 outlook because "qualified accounts remain flat and we are not yet convinced that TD Ameritrade will be able to gain share in the long-term investor space."

TD Ameritrade expects average client trades per day to increase by 2 percent in 2008, Chief Executive Officer Joe Moglia said on the call.

During October, client trades averaged 326,000 per day, he added.

Net Revenue Beats

Fourth-quarter net revenue rose 17 percent to $575.2 million from $488.7 million, beating analysts' average forecast of $557.2 million, according to Reuters Estimates.

Trading revenue, including commissions and transaction fees, rose to $225.8 million from $164.7 million. Net interest revenue fell to $143.6 million from $195.8 million.

"Market volatility led to increased client activity, including our largest trading day ever with 505,000 trades," Moglia said in a statement.

Average client trades per day rose 36 percent to 278,000 from the year-ago quarter.

Client assets totaled $302.7 billion and TD Ameritrade added 127,000 new accounts during the quarter.

Separately, Toronto Dominion Bank said Tuesday it expects TD Ameritrade's fourth-quarter earnings to add C$75 million (US$77.22 million) toward fourth-quarter net income in its wealth management segment.

Canada's TD Bank has a 40 percent stake in the brokerage.