(February 14 – 09:30 ET) – TD Waterhouse Group Inc. is reporting a 27% drop in first quarter earnings.

Cash earnings totalled $47.6 million for the first quarter ended January 31. Net income came in at $37.1 million down from $57 million a year ago. Cash earnings per share were 13¢, compared to 17¢ last year. After deducting goodwill, earnings per share slipped to 10¢ down from 15¢ last year.

Revenues dropped 9% year over year to $347 million from $360 million. Pretax operating margin (excluding goodwill and marketing) was down to 30% from 31% last quarter and 38% last year. Customer assets under administration increased just 3% from a year ago to $154 billion, and were down 3% from last quarter. Trades per day fell 21% from the first quarter of last year.

“We made progress against our goals this quarter in spite of challenging market conditions. While we saw an 18% decline in the Nasdaq composite and the Dow Jones industrial average was virtually unchanged from October 31 to January 31, TD Waterhouse finished the quarter with $154 billion in assets, down only 3% from October 31,” said CEO Steve McDonald. “The firm also reported 160,000 new accounts with an average cost per new account of $175, which we believe is the lowest in the industry and a traditional strength of TD Waterhouse,” he added.

The Wall Street Journal reports a shakeout among the online brokers may be coming soon. It says those likely to be sold include Ameritrade and Datek Online Holdings, with either E*Trade Group or TD Waterhouse Group as buyers. One analyst predicts that the U.S.’s 140 online brokers will ultimately fall to less than 10.

“Clearly, current market conditions are difficult for both our customers and our industry. If these conditions persist, it is likely that we will not achieve our goals for the fiscal year of 1.2 million new accounts and $40 billion in new customer assets,” McDonald said.
-IE Staff