TD Ameritrade announced increased profits of $240 million, or a record $0.45 a share, on a 6% rise in net revenue to $838 million for its fiscal third quarter ended June 30; profits were helped by a onetime $33 million, or $0.06 a share, tax-liability adjustment. In 2015's third quarter, TD Ameritrade (AMTD) had net income of $197 million, or $0.36 a share, on net revenue of $794 million.
Executives also said in an interview that the firm was launching a digital advice platform in 2017, aimed at its many self-directed clients.
In his last analysts' earnings call as CEO, Fred Tomcyk noted that net new client assets were up 16% to $13.6 billion year over year. In a separate interview, Tomczyk said that 2016's second fiscal quarter was "soft for the RIA business," meaning TD Ameritrade Institutional, but "now it's back firing on all cylinders," suggesting as well that the Department of Labor's fiduciary rule will benefit advisors and TD Ameritrade's RIA business overall. Results in the quarter were helped by increased trading revenue and by Brexit trading, Tomczyk said, while he also lauded the company's expense management, which rose only 1%.
The company also announced record client assets of $736 billion, a 5% increase year over year, and record interest rate-sensitive assets of $113 billion, up 10% over 2015's third quarter; those assets represent 14.6% of total client assets at the company.
When asked how the company was managing those $113 billion in assets, Tomczyk said "you have to be disciplined in your asset management liability — you can make little bets at the margin" noting that duration in those assets "went down slightly in the quarter, which is fine from our perspective. Stay disciplined. It is what it is."
Tim Hockey, the president of TD Ameritrade who will soon replace Tomczyk as CEO, said in a prepared statement that the results "reflected mixed investor sentiment. Long-term investors expressed some reticence to move new money, while traders increased their equity exposure. Both segments were opportunistic, using events like the historic Brexit vote, to lean into the market decline."
Hockey said "we expect these bouts of volatility to continue, underscoring the importance of our client value proposition. So, we must continue to innovate and provide our clients with powerful tools."
