Interactive Brokers marks rise in pre-tax income in Q4 2019

Maria Nikolova

The results for the final quarter of 2019 were positively impacted by strong growth in net interest income, partially counterbalanced by lower commissions revenue.

Online trading major Interactive Brokers Group, Inc. (NASDAQ:IBKR) has just posted its financial results for the fourth quarter of 2019.

Net revenues for the final quarter of 2019 amounted to $500 million, up from $492 million a year earlier. Income before income taxes was $312 million in the final quarter f 2019, compared to income before income taxes of $309 million for the same period in 2018.

The results for the quarter were positively impacted by strong growth in net interest income, which increased $44 million, or 18%, from the year-ago quarter. This was partially counterbalanced by lower commissions revenue, which decreased $37 million, or 18%, from the year-ago quarter.

Across segments, let’s note that the electronic brokerage segment saw income before income taxes increase 1% to $314 million in the quarter to end-December 2019, compared to the same period last year. Net revenues decreased 1% to $486 million due to lower commissions revenue and other income, partially offset by higher net interest income.

Commissions revenue marked a drop of 18% from the year-ago quarter reflecting lower customer trading volume in options, futures and stocks. Net interest income increased 19% as average customer credit balances and securities lending balances increased from the year-ago quarter. Pretax profit margin was 65% for the final quarter of 2019, up from 63% in the same period a year earlier.

Customer accounts grew 15% to 690,000 and customer equity increased 36% from the year-ago quarter to $174.1 billion. Total DARTs for cleared and execution-only customers decreased 16% to 797,000 from the year-ago quarter. Cleared DARTs decreased 16% to 719,000 from the same period last year.

Regarding market making, this segment saw income before income taxes decrease 44% to $5 million in the quarter to end-December 2019, compared to the same period a year earlier, primarily due to lower net revenues from the remaining operations.

For the quarter ended December 31, 2019, Interactive Brokers recognized a mark-to-market loss of approximately $7 million on its strategic investment in Up Fintech Holding Limited (“Tiger Brokers”). For the twelve months ended December 31, 2019 the Group recognized a net mark-to-market gain of $9 million on this investment.

The Interactive Brokers Group, Inc. Board of Directors declared a quarterly cash dividend of $0.10 per share. This dividend is payable on March 13, 2020 to shareholders of record as of February 28, 2020.

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