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What Led to the Rise in E*TRADE’s Net Revenues?

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A rise

E*TRADE Financial Corporation (ETFC) generated $2.36 billion in total net revenues in 2017, reflecting a 22% rise YoY (year-over-year). The company generated net interest income of $1.48 billion in 2017. In 2016, it generated $1.14 billion, which implies a rise of 29%. As the Federal Reserve increases interest rates in 2018, the company is expected to witness favorable momentum in its total net revenues, as its net interest income would increase.

E*TRADE’s fees and service charges rose from $268 million in 2016 to $369 million in 2017, implying a rise of 38%. The company witnessed a rise in other revenues from $41 million in 2016 to $43 million in 2017—a 5% increase.

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Commissions

E*TRADE witnessed a marginal decline in commissions from $442 million in 2016 to $441 million in 2017. The company’s commission revenues are affected by average commission per trade, daily average revenue trades or DARTs, as well as trading days. In comparison, peers (XLF) The Charles Schwab Corporation (SCHW) and Interactive Brokers Group (IBKR) generated commissions amounting to $600 million and $647 million, respectively, in 2017. However, TD Ameritrade Holding Corporation’s (AMTD) commission and transaction fees amounted to $1.38 billion in fiscal 2017.

E*TRADE saw a rise of 31% in DARTs in 2017 on a YoY basis, primarily due to OptionsHouse accounts as well as positive momentum in the markets. ETFC saw a decline in average commission per trade of 23% in 2017 on a YoY basis.

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