Interactive Brokers, a global electronic brokerage, and market maker, has set new financial records in the second quarter of 2018. The results, which were released on Tuesday, show the continued growth and momentum of the company.
The results, which beat Wall Street expectations, showed that client accounts and customer equity were at all-time highs. One year since the company surpassed the $100 billion mark in customer equity, the company ended the quarter with $134.7 billion - a 29 percent increase from the same period last year. In addition, the number of client accounts also grew to an all-time high by 27 percent, coming in at more than 542,000.
The broker also posted strong revenue and income figures, with both seeing double-digit year-on-year gains. Net revenues were $445 million, an increase of 13 percent from the same period in 2017. In the second quarter of 2018 income before income taxes was up almost 25 percent to $271 million, compared to 2017 which was $204 million.
Strong growth in net interest income had a positive impact for the Q2 results, which increased by $70 million from the same period last year. Higher commissions, which jumped by 16 percent or $25 million also helped boost the results.
The company also reported its diluted earnings per share on net income of $0.58 for the second quarter. This is compared to $0.32 for the same period. On comprehensive income, diluted earnings per share were $0.39 for the quarter, compared to $0.41 for the same period in 2017.
Market response
On Tuesday, Interactive Brokers' shares rose by 3.2 percent during the regular trading session. Then, following the release of the results, they increased a further 1.6 percent in after-hours trading.
Other highlights for the broker include a 61 percent pretax profit margin for the quarter. This is up from 53 percent from the second quarter of 2017. Electronic Brokerage pretax profit margin was 64 percent, up from 59 percent.
The positive results come in spite of a $21 million loss on the broker’s currency diversification strategy, compared to a $29 million gain in the same period in 2017.
The company’s goal is to be the largest broker in the world. As a result, the company is investing heavily in hiring its client services, software development and legal and Compliance departments. Furthermore, the company is looking to expand its hiring of employees in India for cost-saving purposes.
Future outlook
Looking to the future, Interactive Brokers believes its momentum will continue. In particular, the company stated in a conference call that the US Federal Reserve interest rate hike in June would continue to benefit net interest income in the quarters to come.
The broker also claimed that if there will be an unanticipated rate hike from the fed that is not already priced into the market, it will add $14 million to its net interest income.
