Here's what E*Trade Financial had to say about asset growth, reliance on trading commissions, its new low-cost index funds, and the financial synergies between its bank and brokerage businesses:
On asset growth:
...assets in client investing accounts increased 23% in the quarter, compared to market appreciation of 9% as measured by the S & P 500.
...with a launch of our priority E-TRADE offering last March and the expansion of our relationship manager program, we are attracting customers with higher assets.
We did… a lot of advertising around our low-cost index funds… and you
saw obviously the rewards of that in terms of asset growth…
On the integration of E*Trade's brokerage and bank businesses:
Our average brokerage customer holds approximately $4,000 of cash in their account. Access to this cash as a source of deposit funding for the bank's balance sheet lowers our overall funding costs, driving a greater level of recurring net interest income. Through the sweep account we have increased the potential value of an average brokerage customer account by generating an incremental spread of about 300 to 400 basis points at the bank, or up to about $160 per year, compared to about $30 per year previously generated from fees on our money market funds.
On reliance on trading commissions:
The growth in revenue across our entire model continues to reduce our dependence on commission revenue which represents just 23% of total net revenue in the quarter.
(Quotes from the CCBN StreetEvents transcript.)
Full disclosure: at the time of writing I'm long ET, short SCH.