TD Ameritrade Holding Corp. reported a drop in net income for its fiscal first quarter, which ended Dec. 31, and cut its full-year outlook.
The Omaha online brokerage cited a slump in its return on equity.
Net income fell 23% from a year earlier, to $184.4 million, or 31 cents a share, TD Ameritrade said Tuesday. Revenue fell 4.6%, to $610.7 million. On average, analysts surveyed by Thomson Reuters had expected earnings of 31 cents on revenue of $619 million.
TD Ameritrade reduced its full-year earnings estimate to a range of 90 cents to $1.15 a share, from an October forecast of $1.10 to $1.42.
Bill Gerber, its chief financial officer, said its fundamentals and balance sheet remained strong, though the company sees no signs that the overall economic environment is improving "and may not for the balance of our fiscal year."
Fred Tomczyk, TD Ameritrade's chief executive officer, said that the quarter was one of the strongest in its history, "despite the difficult market environment," and that his company will continue to focus on its growth strategy.
The return on equity fell 17.8 percentage points, to 24.5%.
Average client trades per day increased 15%, to a record 357,000, while average commissions and transaction fees per trade fell 3.8%.
Client assets fell 22% from a year earlier and 16% from a quarter earlier, to $233.8 billion as of Dec. 31. Net new client assets dropped 14%, to $7.8 billion.
Even though their retail trading levels have remained high, online brokerages have been hurt by stock market declines and exposure to battered financial companies. Analysts expect a drop-off in trading volume to hurt earnings this fiscal year.
TD Ameritrade recently began developing an asset-gathering strategy, but client assets have dropped with the market. Last month the Federal Reserve Board cut its key interest rate to a range of 0% to 0.25%, from 1%. In the past TD Ameritrade has said a 25-basis-point rate cut hurts earnings by 2 cents a year.
This month it said it would use some of the cash it has been saving throughout the financial crisis to buy thinkorswim Group Inc., which would build up its options trading and investor-education abilities. The stock-and-cash deal, valued at $606 million when it was announced, is expected to close in six months.