(Reuters) - TD Ameritrade Holding Corp (>> TD Ameritrade Holding Corp.), the biggest discount brokerage by trade executions, reported on Tuesday a 3.7 percent rise in quarterly profit, driven by unexpectedly strong growth in trading.
The company's net income rose to $197 million, or 36 cents per share, for the fiscal third quarter ended June 30, from $190 million, or 34 cents per share, a year earlier.
Earnings per share met expectations of analysts surveyed by Thomson Reuters I/B/E/S.
"We were surprised at how strong trading was," Chief Executive Officer Fred Tomczyk said in a conference call with analysts. "And it continues with Greece and [headlines from] earnings season" so far this quarter.
Net revenue rose 4.1 percent to $794 million, while operating expenses rose 5 percent to $325 million.
The Omaha-based company reported net new assets of $11.7 billion, down from $13.4 billion a year earlier, representing an annualized growth rate of 7 percent.
Asset gathering for the year remains on pace to top 10 percent, the seventh consecutive year of double-digit growth, even though client assets typically fall in the third fiscal quarter that includes April tax payments, Tomczyk said.
The discount brokerage has historically relied on active trading by its clients, but like others in the securities industry has been emphasizing accounts that charge fees based on client account size. Fee-based accounts yield more reliable income than commission-based trading accounts that rise and fall with clients' interest in the markets.
Trading was, nevertheless, stronger than expected last quarter because active traders have been using options and futures to try to generate profit in a relatively dull market, Tomczyk said. Clients executed an average of 434,000 trades a day, up 8 percent from last year's third quarter.
Most retail investors are unlikely to spend more on investing in equities through the rest of the fiscal year, he added, though problems in Greece and headlines about corporate earnings have continued to generate stronger-than-expected trading thus far in July.
TD Ameritrade expects its full-year profit to be at the low end of its earlier forecasts because it does not expect interest rates to rise or the U.S. stock market to advance significantly by the end of its fiscal year in September.
TD Ameritrade shares were flat following earnings while those of rivals Charles Schwab Corp (>> Charles Schwab Corp) and E*Trade Financial Corp
(Reporting by Jed Horowitz in New York and Neha Dimri in Bengaluru; Editing by Sriraj Kalluvila and Meredith Mazzilli)
