Interactive Brokers Group: Why Total Net Revenues Rose



Interest income

Interactive Brokers Group (IBKR) has witnessed a rise in the total net revenues from $345 million in 3Q16 to $426 million in 3Q17, reflecting positive momentum in interest income and other income. To arrive at total revenues, the company sums up interest income, trading gains, commissions, and other income. However, after the deduction of interest expenses from total revenues, the company calculates its total net revenues.

Interactive Brokers reported interest income of $243 million in 3Q17, compared to $157 million in 3Q16, reflecting a substantial rise YoY (year-over-year). The company witnessed a substantial fall in its trading gains from $38 million in 3Q16 to $11 million in 3Q17.

Interactive Brokers has a beta value of 1.03. However, its peers (XLF) like Morgan Stanley (MS), Goldman Sachs Group (GS), and CBOE Global Markets (CBOE) have beta values of 1.57, 1.48, and 0.21, respectively.

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Interactive Brokers saw a rise in commissions from $144 million in 3Q16 to $163 million in 3Q17. This rise represents positive momentum in customer accounts, the rise in trading volumes, and the rise in average commission per order.

Interactive Brokers witnessed a YoY rise of 34% in its net interest income in 3Q17. The company deducts interest expense from interest income to arrive at net interest income. It reported net interest income of $182 million in 3Q17. The YoY rise in net interest income reflects a rise in average customer margin loans.

Positive momentum in the benchmark interest rates and a rise in the average customer credit balance have also led to the YoY rise in the net interest income.


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