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TD Ameritrade: Its Fiscal 3Q17 Beats in Earnings and Revenue

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Part 5
TD Ameritrade: Its Fiscal 3Q17 Beats in Earnings and Revenue PART 5 OF 8

TD Ameritrade: What Led to Rise in These Expenses?

Employee compensation expenses

In fiscal 3Q17, TD Ameritrade Holding (AMTD) incurred employee compensation and benefits-related expenses of $234.0 million compared to $209.0 million in fiscal 3Q16, reflecting a rise of 12.0%. The rise was due to an increase in incentive-based compensation. However, the company also increased its number of employees from 5,872 in fiscal 3Q16 to 6,454 in fiscal 3Q17, which also contributed to the rise in those expenses.

TD Ameritrade: What Led to Rise in These Expenses?

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From fiscal 1Q17 through fiscal 3Q17, TD Ameritrade incurred employee compensation and benefits-related expenses of $677.0 million. From fiscal 1Q16 through fiscal 3Q16, those expenses were $617.0 million.

Clearing and execution expenses

TD Ameritrade has also witnessed a rise in its clearing and execution expenses, from $35.0 million in fiscal 3Q16 to $38.0 million in fiscal 3Q17, reflecting a rise of 9.0%. The increase was due to the rise in trading volumes in 3Q17.

Return on invested capital

TD Ameritrade has delivered a return of 3.0% on invested capital as of June 30, 2017. Other brokerage giants (XLF) have delivered the following returns on invested capital as of the same date:

  • Charles Schwab (SCHW): 2.8%
  • E*Trade Financial (ETFC): 2.2%
  • Interactive Brokers Group (IBKR): 3.1%
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