TD Ameritrade's growth slows as market hits new highs

OMAHA, Neb. — The stock market has scaled new heights, but that meant that online brokerage TD Ameritrade saw a decline in trading activity in the first three months of the year.

Executives at the Omaha, Nebraska-based company know that market volatility like last fall's gyrations tends to lead to more trading, while activity slows in climbing markets.

TD Ameritrade CEO Tim Hockey noted that the period from January through March represented one of the best quarters in years for U.S. stocks.

"At the same time, reaction to the market correction at the end of 2018, and worries about a slowing global economy, tempered some investor engagement," Hockey said.

TD Ameritrade on Wednesday reported handling an average of 860,369 trades per day during the first three months of this year. That's down from last year's 943,058 and the 927,849 trades in the last three months of 2018.

"So far this quarter in April, trades are still fairly tepid, but we're starting to see some green shoots," Hockey said.

CFRA analyst Cathy Seifert said she was encouraged by the cost cutting TD Ameritrade did to compensate for the slower trading, but she was concerned about the lack of revenue growth.

TD Ameritrade's fiscal second-quarter profit of $499 million, or 89 cents per share, was better than last year's $271 million, or 48 cents per share, partly because the company's asset-based revenue grew.

But the revenue TD Ameritrade generates from fees on the assets it holds for investors isn't growing as fast as expected because the Federal Reserve has slowed the pace of rate increases.

The online brokerage's total revenue grew 2% to $1.45 billion in the period. Analysts expected $1.46 billion.

Earnings, when adjusted for amortization costs, were 93 cents per share. That matched the forecast from the analysts surveyed by Zacks Investment Research.

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Elements of this story were generated by Automated Insights (http://automatedinsights.com/ap) using data from Zacks Investment Research. Access a Zacks stock report on AMTD at https://www.zacks.com/ap/AMTD

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