Interactive Brokers Group Inc.’s (IBKR) Electronic Brokerage segment has recorded a modest improvement in its July 2011 performance data. The segment under review clears and settles trades globally for both individual and institutional clients.
Total customer accounts for the month of July were 177,700, up 1% from 175,600 in June 2011 and 21% from 147,100 in July 2010. Similarly, the total customer Daily Average Revenue Trades (DARTs) stood at 416,000, up 4% from the prior month and 14% from the prior-year month.
On an annualized basis, Interactive reported Cleared Average DART per customer account of 546,000, up from 536,000 recorded in the previous month but down from 564,000 registered in the comparable year-ago month.
Interactive’s total options contract fell 1% from the prior month but grew 14% from the year-ago month to 22,067 in July 2011. Similarly, the company’s futures contract also declined from 7,746 in June 2011 but increased from 6,703 in July 2010 to 7,148 in the month under review.
Interactive also provided period-end statistics for customer equity, customer credit balances, and customer margin loan balances. For the period ended July 2011, customer equity stood at $26.1 billion, up 2% from June 2011 end and 49% from July 2010 end.
However, the Electronic Brokerage segment reported customer credit balances of $17.0 billion for July end, down from $17.5 billion at June 2011 end but up from $12.0 billion at July 2010 end. Similarly, customer margin loan balances of $8.8 billion in the reported month reflected a 5% drop from $9.3 billion recorded at June 2011 end but a 96% hike from $4.5 billion registered at July 2010 end.
Though fundamentals remain strong with a liquid balance sheet, sturdy capital base and high barriers to entry, we remain concerned about Market Making segment’s ability to consistently generate sufficient return to fund dividend payment. Also, there are concerns looming over Interactive’s dependence on IBG LLC and its wide international exposure.
Interactive Brokers currently retains a Zacks # 3 Rank (a short-term ‘Hold’ rating). However, one of its peers Knight Capital Group Inc. (KCG) retains a Zacks # 4 Rank (a short-term ‘Sell’ rating).
