TD Ameritrade's (AMTD) May Client Trades Improve Y/Y

Omaha, NE-based online brokerage firm TD Ameritrade Holding Corporation (TO:TD) came up with average client trades per day of 445,000 in its activity report for May 2016. The reported figure declined 5% from the prior month while increasing 4% from the prior-year period.

Broker performance is generally measured through monthly average client trades per day. This represents the number of trades from which brokers earn commissions or fees.

As of May 31, 2016, TD Ameritrade reported $727.8 billion in total client assets, up 1% from the prior month and 2% year over year. Average fee-based balances were $161.5 billion, almost stable with both the prior month and the prior-year period. Average spread-based balance of $105.7 billion remained almost stable with the prior month but increased 11% year over year.

Rise in Quarterly Performance

During fiscal second-quarter 2016 (ended Mar 31), average client trades per day increased 6.9% year over year to 509,120. At the end of the quarter, net new client assets totaled $14.1 billion, down 13.5% year over year. However, total client assets came at $711.2 billion, up 2.3% year over year.

While average spread-based balance was $105.8 billion, increasing 12.2% year over year, average fee-based investment balance edged down 1.3% to $153.1 billion.

TD Ameritrade Poised for Growth

Innovations in online trading, long-term investment in products and services, delivery of advanced customer service and creative marketing and sales are TD Ameritrade’s key strategies for boosting its trading and investing business. Further, we believe the company will benefit from the renewed interest of retail investors in the equity market.

Further, the company’s association with The Toronto-Dominion Bank (TO:TD) provides an opportunity to cross sell its products. This is expected to significantly drive organic growth.

Amid a volatile operating environment, TD Ameritrade witnessed a continuous rise in organic client assets, which bode well for the future. However, we remain cautious as a continuous rise in expenses, margin pressure and stringent regulations may weigh on the company’s financials in the upcoming quarters.

At present, TD Ameritrade carries a Zacks Rank #4 (Sell).

Among other investment brokers, Interactive Brokers Group, Inc.’s (NASDAQ:IBKR) Electronic Brokerage segment reported total client Daily Average Revenue Trades of 641,000 for May 2016, reflecting an improvement of 4% from May 2015 while decreasing 3% from Apr 2016. Total customer accounts were 352,600, up 15% from the prior-year month and 1% from the preceding month.

The Charles Schwab Corporation (NYSE:SCHW) is expected to report its monthly metrics later this week.

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