Platforms · Software · Providers · Markets
In the third quarter, Interactive Brokers' net interest income grew as customer balances expanded, lifting adjusted net revenue slightly above its second-quarter result despite a sequential decline in commission revenue. Adjusted net revenue was $1.87 billion and pretax income was $1.45 billion.
A year earlier, adjusted pretax margin stood at 79%; this quarter it was 78%. Diluted earnings came to $0.67 per share.
Client balances lift interest income
Average customer margin loans stood at $104.0 billion, 47% above the $70.8 billion average a year earlier. Customer credit balances averaged $176.6 billion, an annual rise of 25%. Those larger balances supported interest income as yields weakened: net interest margin was 1.99%, down from 2.16% a year earlier. The annualised margin-loan yield fell to 4.25% from 4.60%, and the yield on segregated cash and securities declined to 3.40% from 3.81%.
Trading volumes retreat from Q2
Daily average revenue trades, or DARTs, reached 4.27 million, 18% higher year on year but 11% lower than in the second quarter. Commission revenue consequently moved down from $673 million in Q2 to $602 million. Futures volume rose 13% year on year, while stock and options volumes fell 24% and 1%. Average commission per cleared commissionable order was $2.59, a 4% decline.
Execution, clearing and distribution expenses rose 46% to $134 million. The increase largely reflected $30 million more in regulatory fees after a higher SEC Section 31 transaction fee rate; the broker passes those charges on to customers. As Finance Magnates reported, the board raised the quarterly dividend from $0.0875 to $0.15 per share. At September's close, customer accounts totalled 5.58 million and customer equity was $964.7 billion. The dividend is payable on December 14 to shareholders recorded on December 1.
| Measure | Reported figure |
|---|---|
| Adjusted net revenue | $1.87 billion |
| Pretax income; diluted earnings | $1.45 billion; $0.67 per share |
| Adjusted pretax margin | 78%, versus 79% a year earlier |
| Average customer margin loans | $104.0 billion; up 47% from $70.8 billion |
| Average customer credit balances | $176.6 billion; up 25% |
| Net interest margin | 1.99%, versus 2.16% |
| Margin-loan yield; segregated cash and securities yield | 4.25%, versus 4.60%; 3.40%, versus 3.81% |
| Average DARTs | 4.27 million; up 18% year on year, down 11% from Q2 |
| Commission revenue | $602 million, compared with $673 million in Q2 |
| Year-on-year customer volumes | Futures up 13%; stocks down 24%; options down 1% |
| Commission per cleared commissionable order | $2.59, down 4% |
| Execution, clearing and distribution expenses | $134 million, up 46%; regulatory fees increased by $30 million |
| Customer accounts and equity at September's close | 5.58 million, up 35%; $964.7 billion, up 27% |
| Quarterly dividend | $0.15 per share, up 71% from $0.0875 |
| Dividend dates | Payable December 14; record date December 1 |
What this means on the desk
The results put balance growth and yield compression alongside trading activity in the same quarter. Finance and risk teams should check how their reporting separates interest income from customer margin-loan and credit balances, and whether yield measures reconcile across segregated cash and securities. The figures do not specify the systems or reporting processes Interactive Brokers uses.
Operations teams handling transaction charges can check how the higher SEC Section 31 rate is represented in fee calculations, customer statements and reconciliation workflows, given the stated pass-through to customers. They can also ask whether changes in trading volumes and average commission per cleared commissionable order flow through consistently to commission reporting. Finance teams can confirm that the dividend amount and its December 1 record date and December 14 payment date are reflected consistently in relevant corporate-action and cash processes.
