Shortly after the close of the US trading session, Electronic brokerage firm Interactive Brokers LLC (NASDAQ:IBKR) disclosed its financial results for Q4 2018, revealing that its metrics managed to improve year-on-year, though earnings took a hit stemming from the exchange rate volatility.
The company’s net revenues for Q4 2018 amounted to $492 million, lower by five percent compared with $515 million in the same period last year. Income before tax totaled $309 million, down 15 percent year-over-year from $364 million in Q4 2017.
The drop in net revenue was primarily due to an $18 million reversal on the company’s currency diversification strategy, which swung from a $6 million gain in Q4 2017 to a $12 million loss in 2018. However, the revenue figure benefited from strong growth in net interest income, which jumped 19 percent year-on-year, as did commissions and execution fees.
Interactive Brokers, which went public a decade ago, has been trying to tap the brokerage market, which has a relatively steady source of revenue.
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Trump’s Tax Overhaul
Delving further into financial metrics, Interactive Brokers reported diluted gain per share (EPS) on a comprehensive basis at $0.57 for the quarter ended December 31, 2018, reflecting an improvement year-over-year from a loss of $0.02 per share during Q4 2017.
Interactive Brokers said that the sweeping changes to US tax law knocked about $84 million off its profits in 2017, which were largely related to its tax-deferred assets, which had to be recalibrated to reflect the lower corporate rate.
The listed brokerage company were among the global firms that reported a hit to its earnings from the US corporate tax rate cut, which came into effect at the start of 2018 after being signed into law the year prior.
While some financial institutions reported 2017 earnings hits stemming from the new tax law, they see rich benefits over the long-term, including effective tax rates that are even lower than the new 21 percent corporate rate.