Interactive Brokers Group, Inc. (NASDAQ: IBKR) an automated global electronic broker and market maker, today reported diluted earnings per share on a comprehensive basis of $0.29 for the quarter ended June 30, 2014, compared to diluted earnings per share on a comprehensive basis of $0.14 for the same period in 2013.
On a non-comprehensive basis, which excludes the effect of changes in the U.S. dollar value of the Company’s non-U.S. subsidiaries, the Company reported diluted earnings per share on net income of $0.26 for the quarter ended June 30, 2014, compared to diluted earnings per share of $0.21 for the same period in 2013.
Net revenues were $309 million and income before income taxes was $174 million for this quarter, compared to net revenues of $284 million and income before income taxes of $134 million for the same period in 2013.
- The Interactive Brokers Group, Inc. Board of Directors declared a quarterly cash dividend of $0.10 per
- share. This dividend is payable on September 12, 2014 to shareholders of record as of August 29, 2014.
- Business Highlights 56% pretax profit margin for this quarter, up from 47% in the year-ago quarter and 42% average for prior year.
- 60% Electronic Brokerage pretax profit margin for this quarter, up from 58% in the year-ago quarter.
- Customer equity grew 44% from the year-ago quarter to $53.9 billion and customer debits increased by 38%, to $15.4 billion.
- Customer accounts grew 17% from the year-ago quarter to 262 thousand.
- Total DARTs increased 5% from the year-ago quarter to 529 thousand.
- Brokerage segment equity was $2.7 billion. Total equity was $5.3 billion
Electronic Brokerage
Electronic Brokerage segment income before income taxes increased 7%, to $131 million, in the quarter ended June 30, 2014 compared to the same period last year. Commissions and execution fees decreased 10% from the year-ago quarter, reflecting lower customer volumes in foreign exchange and futures. Volatility in this quarter was near historic lows, as measured by the CBOE Volatility Index.
Net interest income grew 32% from the year-ago quarter, to $77 million in this quarter. Pretax profit margin was 60% for this quarter, up from 58% in the same period last year.
Total DARTs for cleared and execution-only customers increased 5% to 529,000 from the year-ago quarter. Cleared DARTs were 484,000 in this quarter, 5% higher than the same period last year. Customer accounts grew 17% to 262,000 from the year-ago quarter. Customer equity increased 44%, to $53.9 billion, from the year-ago quarter. The size of an average customer account grew 23% to $206 thousand in equity per cleared customer account at the end of this quarter. Customer margin borrowings were 38% higher than at the same time last year, ending the quarter at $15.4 billion.
On July 14, 2014, Interactive Brokers began to publish daily financial information, including a summary of the money it segregates for its customers. This information can be found on the Interactive Brokers web site, www.interactivebrokers.com/finregdat.
Market Making
Market Making segment income before income taxes increased to $47 million, for the quarter ended June 30, 2014 from $8 million for the same period in 2013. Removing the effects of currency translation, the Market Making segment produced $31 million pretax income in this quarter, compared to $50 million for the same period last year. The decrease in market making profits, excluding currency translation effects, was driven by lower volatility, a lower actual to implied volatility ratio and lower trading volumes. Currency translation gains were $15 million in this quarter, compared to a $43 million loss in the year-ago quarter.
Effects of Foreign Currency Diversification
In connection with our currency strategy, we have determined to base our net worth in GLOBALs, a basket of 16 major currencies in which we hold our equity. In this quarter, our currency diversification program increased our comprehensive earnings by $26 million, as the U.S. dollar value of the GLOBAL increased by approximately 0.5%. The effects of currency diversification are reported as components of Market Making Trading Gains and (2) Other Comprehensive Income (“OCI”). In this quarter 58% of the GLOBAL effect was captured in Market Making Trading Gains in the Net Income section of the Statement of Comprehensive Income, with the remainder reported as OCI in the separate Comprehensive Income section of the Statement of Comprehensive Income.
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