Interactive Brokers Reports 2016 Financial Metrics, Profits Up 60% YoY

Shortly after the close of U.S. trading session, Interactive Brokers LLC (NASDAQ:IBKR) disclosed its financial results for 2016, which were positively affected by strong growth in net interest income, according to an official company press release.

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During the reported period, the amount of income before income taxes totalled $761 million, up 66 percent year-over-year (YoY) from $458 million that had been announced in 2015.

Finance Magnates recently covered the company’s December’s trading volumes which largely represented a steadier average, given a retreat in Volatility Volatility In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Traders In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Traders Read this Term MoM.

Delving further into financial metrics, Interactive Brokers reported diluted earnings per share (EPS) on a comprehensive basis at $1.25 for the year ended December 31, 2016, reflecting a 60 percent YoY increase from a profit of $0.78 per share during 2015.

These strong figures were positively influenced by growth in net interest income, which increased 24 percent from 2015, as well as the non-recurrence of unsecured customer losses caused by the SNB crisis in January 2015. However, trading gains dropped 39 percent YoY on lower market making trading volumes and decreases in volatility compared to the year earlier.

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The group also reported an advance across its electronic brokerage segment’s income, which rose to $756 million in 2016, up 41 percent YoY compared to 2015. Moreover, net revenues also saw a notable increase to $1,239 million in 2016, reflective of a gain of 12.9 percent YoY from just $1,097 million in the prior year. This figure was supported by higher net interest income and net gains on U.S. government securities portfolio, while partially shackled by slightly lower commissions and Execution Execution Execution is the process during which a client submits an order to the brokerage, which consequently executes it resulting in an open position in a given asset. The execution of the order occurs only when it is filled. There is typically a time delay between the placement of the order and the execution which is called latency.In the retail FX space, reliable brokers always strive to deliver best execution to their clients in order to maintain a solid business relationship with them. This is a co Execution is the process during which a client submits an order to the brokerage, which consequently executes it resulting in an open position in a given asset. The execution of the order occurs only when it is filled. There is typically a time delay between the placement of the order and the execution which is called latency.In the retail FX space, reliable brokers always strive to deliver best execution to their clients in order to maintain a solid business relationship with them. This is a co Read this Term fees revenue.

Business highlights, according to the company’s press release, included a pretax profit margin of 61 percent for the Electronic Brokerage division which was up from 49 percent in 2015. It also showed a 23 percent market making pretax profit margin during 2016, down from 44 percent over the last year. During 2016, customer equity grew 27 percent from 2015 to $85.5 billion, while customer debits increased 14 percent to $19.4 billion.

Finally, customer accounts increased 16 percent from the year ago to 385 thousand, while total daily average revenue trades (DARTs) jumped 2 percent YoY to 660,000. Relative to last year’s figures, IB reported a climb in brokerage segment equity which totaled $4.1 billion while total equity registered $5.8 billion during 2016.