Interactive Brokers Records $548 Million Revenue for Q3 2020

Leading online trading solutions, Interactive Brokers LLC announced its third-quarterly revenue earnings of $548 million. The figure surpassed many analysts’ expectations. However, it failed to reach the estimated adjusted earnings for the firm, as a leading low-cost trading platform.

Interactive Broker’s revenue in the third quarter represents a 17% increase year-over-year. In Q3 2019, the US-based largest electronic broker by some specific metrics recorded a revenue of $466 million.  The current revenue also increased by $25 million from Q2 2020’s figure of $523 million.

Interactive Brokers’ Income Before Tax Is Up 16%

Before taxation, Interactive Brokers reported a 16% year-over-year increase in the total income of $334 million. Last year, the firm’s total income before tax was $281 million. The current gains also represent a 50% QoQ increase from $222 million in the previous quarter.

Nonetheless, Interactive Brokers experienced a drop in specific areas due to persistent revenue decrease from low-interest rates.  The adjusted profits of 304 million earned in the third quarter represent 53 cents per share. This figure is down 10% from $340 million in 2019. It also indicates a 7% drop from 57 cents per share.

Moreover, at $518 million, the adjusted net revenues dropped 1.3% from $525 million registered in the corresponding period of 2019.

Despite losses in adjusted net revenues and, Interactive Brokers news for the third quarter are still positive. The brokerage firm other segments performed better than last year, increasing by $76 million from 2019.

Higher Growth in Commission Revenue Drove Interactive Brokerage’s Gains

The company said that robust growth in commission revenue in Q3 2020 led to a 49% increase at $92 million.  In contrast to 2019, there have been higher trading volumes from an increased number of active traders globally.

Despite the increased trading activity, the lower net interest income offset the gains by dropping 33% to 96 million.  Interactive Brokers pointed to the Fed’s extreme monetary policies during the coronavirus-induced economic crisis as the main reason.

In particular, the mean interest rate dropped from 2.19% to 0.09% in the third quarter of 2019. This indicates assets return compression is higher than the growth recorded in the trader’s cash balances.

Besides Interactive Broker News from its electronic brokerage section, its Introducing Broker (IB) earnings n Q3 2020 gained $19 million. This is from its 7.7% stake in the NASQAD-listed online trading platform, Tiger Brokers.  Interactive Brokers made a float loss of $13 million from Tiger Brokers in Q3 2019.