How Is E*TRADE Building a Long-Term Asset Base?

Robert Karr

Fri, Aug 21, 2015, 11:06 PM

E*TRADE Targets Higher Growth after Weak 2Q15 Earnings

Assets gathering

E*TRADE (ETFC) has expanded its operations backed by strong activity in the retirement season. The company ended the quarter with $302 billion in total customer assets compared to $299 billion at the end of the prior quarter and $281 billion a year ago. The retirement assets have grown by more than 50% in the past three years and represent about 33% of total net new brokerage assets over the past two years.

E*TRADE also continues to see stability in managed assets, which ended the quarter at $3.2 billion. E*TRADE is positioning itself as an integrated platform for long-term financial planning. The increase in assets related to financial planning, retirement, and long-term investment solutions is a healthy sign for sustainable business and earnings.

New brokerage accounts

E*TRADE ended the quarter with 3.2 million brokerage accounts. This is compared to 39,000 net new brokerage accounts in the prior quarter and 33,000 in 2Q14. For the first quarter, the brokerage account attrition rate was 8.7% annualized. This was lower than 8.8% in the previous quarter.

In the June quarter, E*TRADE’s customers were net buyers of ~$0.3 billion worth of securities. Its customers added $0.9 billion in net new brokerage assets.

Here’s how a few of the firm’s peers in the brokerage industry fared in terms of net profits in the last 12 months: