Revenues up, net new assets up, custody business up. It's hard to find much that went wrong for the discount brokerage in the first quarter of the year.
TD Ameritrade Holding Corp. today reported increased quarterly revenue and profits, driven by higher assets and trading activity.
Net revenue was up 13% from a year ago, to $718 million. Operating income jumped 25% to $283 million from the first quarter of 2010.
Net income grew at a slower 5.7% rate, to $171.7 million, due to a larger income tax provision.
Net new assets for the quarter grew 13% to a record $11.5 billion.
Fred Tomczyk, chief executive, told InvestmentNews that asset growth in the firm's registered investment adviser custody business is about twice what the firm gets from its individual-investor business, with advisers contributing a "bit more" asset growth this quarter.
"Our existing advisers continue to do very well," he said.
The discount brokerage is adding about 90 new RIA firms per quarter, Mr. Tomczyk said.
In total, the firm reported record client assets of approximately $412 billion, an increase of 21% from a year ago.
About a third of that is through advisers affiliated with TD Ameritrade Institutional, the custody unit.
The company does not separately report data from its custodial business.
TD Ameritrade also said it has reached a turning point in overcoming downward pressure on net-interest income — an important revenue line for securities firms.
Like other firms, TD Ameritrade earns a spread off clients' bank deposit balances. For the first time in more than three years, the interest rate the firm is getting from reinvesting those balances is the same or higher than its current rate, Mr. Tomczyk said, "so the net-interest margin compression is behind us."
That means growth in deposits should translate into an equally large growth in interest income.
Separately, last Friday, Fitch Ratings Ltd. upgraded TD Ameritrade's debt ratings to A-, from BBB+, based on the company's strong market and debt service position.
