E-Trade's Monthly Metrics Decline

Despite stronger results from other online brokerage companies in July, E-Trade Financial Corp. reported that average trading volume fell last month.

The New York-based company said Wednesday that trading declined 5.1% from a month earlier and 20% from a year earlier. Charles Schwab Corp. and TD Ameritrade reported separately last week that trading had declined slightly, but not at the same rate as E-Trade.

With the exception of May’s “flash crash,” analysts said trading volume declined over the past six months as stocks have slumped.

E-Trade said it added 4,536 U.S. brokerage accounts in July, bringing its customer base to 2.7 million. A year earlier, it added 7,005.

Total customer assets increased 12% from a year earlier to $152.1 billion, and they 5.8% from June.

Inflows to brokerage accounts totaled $500 million, up both on the month and year.

Despite the weaker monthly metrics, Matt Snowling, an analyst at FBR Capital Markets, said he still expects E-Trade to outperform.

"We continue to view E-Trade as a credit and capital turnaround story that should continue to gain momentum as its portfolio continues to season and earnings power grows," he wrote in a report Wednesday. "The company returned to profitability in [the second quarter] quicker than we had initially expected, and with the bank consistently having been able to generate capital for several
quarters, we expect E-Trade to transition from defense to offense by buying back debt and refocusing on its core brokerage business."

Last week, Schwab reported that it gained $6.2 billion of new assets from customers last month despite the fact daily average client trades declined 1% from a year earlier and were flat from June.

TD Ameritrade announced last week that it decided to repurchase up to 30 million shares. The Omaha, Neb., based online brokerage company, which is suddenly flush with cash, said it thinks it is "an attractive" way to use money in the current economic climate.