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E-Trade's Net Income Nearly Triples; Outlook Is Raised

October 16, 2003|Josh Friedman | Times Staff Writer

Getting a boost from the new bull market on Wall Street, online brokerage and lender E-Trade Financial Corp. said Wednesday that its third-quarter profit nearly tripled from a year earlier.

The Menlo Park, Calif., firm earned net income of $61 million, or 17 cents a share, up from $21 million, or 6 cents.

Revenue-producing trades surged 49% from a year earlier and 13% from the second quarter, to an average of about 132,000 a day.

"It looks like retail investors are back, and we're confident they are going to be here for a little while -- you can never say forever," E-Trade President R. Jarrett Lilien said.

Lilien said he didn't see the trading increase as a sign of a "speculative top" in the market, a prospect raised by some analysts. E-Trade customers "are investing responsibly," he said.

Investors are selling stocks and taking profits about as often as they are buying, Lilien said. He characterized as modest customers' increase in the use of borrowed funds, or "margin," to buy stocks. Total E-Trade margin debt outstanding was up 43% on Sept. 30 from a year earlier.

Trading in generally speculative Bulletin Board stocks, relative to all trades, was up about 4% from a year earlier.

The market rebound has given E-Trade investors bigger portfolios to work with: Its brokerage client assets were up 61% from a year ago, to $60.3 billion.

The robust housing market and low interest rates also aided E-Trade's latest results as mortgage loan originations climbed 33% to $1.4 billion in the quarter.

E-Trade raised profit guidance for all of 2003 to 40 to 48 cents a share, compared with a previous range of 22 to 27 cents.

E-Trade's shares, up 129% year to date, rose 5 cents to close at $11.13 on the New York Stock Exchange before the company issued its earnings report.

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