Why E*TRADE’s Non-Interest Expenses Rose in 2Q17
Rise in non-interest expenses sequentially and year-over-year
E*TRADE (ETFC) posted a substantial rise in its total non-interest expenses in 2Q17 compared to 2Q16. In 2Q17, E*TRADE’s total non-interest expenses stood at $359.0 million compared to $295.0 million in 2Q16, reflecting an increase of ~21.7%.
This rise resulted from its increased compensation expenses and communications expenses in 2Q17 compared to 2Q16. Its 2Q17 expenses related to compensation and benefits totaled $133.0 million. In 2Q16, these expenses totaled $125.0 million, reflecting a rise of 6.4%.
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E*TRADE’s total non-interest expenses in 2Q17 rose compared to 1Q17. In 1Q17, these expenses stood at $342.0 million. On the other hand, its 2Q17 communications expenses stood at $36.0 million compared to $20.0 million in 2Q16, which reflects an 80% increase.
However, expenses related to advertising and market development also contributed to the rise in total non-interest expenses in 2Q17 compared to 2Q16. These expenses stood at $42.0 million compared to $30.0 million in 2Q16.
E*TRADE has diluted earnings per share (or EPS) of $1.93 on a trailing-12-month (or TTM) basis. Let’s look at the diluted EPS of other brokerage giants (XLF) on a TTM basis: