Analyzing Interactive Brokers Group’s Total Net Revenue



Marginal fall

Interactive Brokers Group (IBKR) posted net revenue of $1.18 billion in the first three quarters of 2017, compared with $1.20 billion in the same period of the prior year, reflecting higher interest expenses and lower trading gains due to fewer trades. However, Interactive Brokers’ commissions and interest income showed positive momentum, boosting its total net revenue.

While Interactive Brokers has a last-12-month return on invested capital of 2.1%, peers (XLF) Financial Engines (FNGN), Raymond James Financial (RJF), and LPL Financial Holdings (LPLA) have returns of 7.0%, 2.3%, and 8.8%, respectively.

What led to the rise in commissions and net interest income?

Interactive Brokers’ commissions rose to $477 million in the first three quarters of 2017 from $462 million in the same period of the prior year thanks to higher average commission rates, trading volumes, and customer accounts. The company’s net interest income rose 23% due to higher average customer margin and credit loans and higher interest rates. Its interest expenses rose to $147 million from $57 million.

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