* Clients added record $11.5 billion in quarter
* Q2 EPS 30 cents vs Wall Street view 29 cents
* Revenue $718.2 million vs Street view $703.6 mln
* Shares down 2.5 percent, hit by S&P outlook on U.S.
(Adds details on commission revenue, client trading; updates
By Philipp Gollner
SAN FRANCISCO, April 18 TD Ameritrade Holding
Corp (AMTD.O) reported stronger-than-expected quarterly results
but its shares fell after Standard & Poor's cut the credit
outlook for the United States, potentially hurting the online
TD Ameritrade shares were down 2.5 percent at $21.55 in
afternoon trading amid a slump in U.S. stocks as S&P's action
added to worries about the global economy after China curbed
Stocks of online brokers are especially sensitive to
macroeconomic news because their clients may be
disproportionately affected, Sandler O'Neill analyst Richard
"They move more on market concerns because it could impact
their customers more than the average company out there," he
Shares of Charles Schwab Corp (SCHW.N), which had been up
8.8 percent year to date, were down 3.3 percent at $18, and
E*Trade Financial Corp (ETFC.O) was off 1.6 percent at $15.56.
Omaha, Nebraska-based TD Ameritrade said clients added a
net $11.5 billion in new funds in the quarter, an increase of
13 percent from a year earlier. Clients as a group made an
average of 439,158 trades per day, compared with 378,714 a year
Commission revenue rose nearly 16 percent from the first
quarter as trading picked up amid higher stock markets.
Chief Executive Officer Fred Tomczyk told analysts on a
conference call after the earnings announcement that trading in
April has been "range-bound."
"People are waiting to see one or more of the uncertainties
clear, between inflation in China and India and I'd say the
Middle East and the price of oil and what's going on in Japan,"
When some of those uncertainties are resolved, he added, "I
think trading will continue to be fairly healthy."
TD Ameritrade said net income increased 5.6 percent to
$171.7 million, or 30 cents per share, in the second quarter
that ended on March 31, from $162.6 million, or 27 cents per
share, a year earlier.
Analysts on average were expecting 29 cents per share,
according to Thomson Reuters I/B/E/S.
Revenue rose 13 percent to $718.2 million, beating Wall
Street estimates of $703.6 million. Total client assets stood
at about $412 billion, up 21 percent, the company said.
Like bigger rival Charles Schwab, which reported
better-than-expected results on Friday, TD Ameritrade benefited
from rising equities markets that boosted stock investing by
clients. U.S. stock markets rose about 5 percent in the
TD Ameritrade is 46 percent-owned by Canada's
Toronto-Dominion Bank (TD.TO), which said on Monday it expects
TD Ameritrade earnings to contribute C$57 million to
second-quarter profit for its wealth management segment.
TD Ameritrade shares were up more than 16 percent this year
before Monday's earnings report, compared with a 4.9 percent
increase in the Standard & Poor's 500 index .SPX.
NO ACQUISITION TARGETS IN SIGHT
Tomczyk said the company had no specific acquisition
targets on the horizon.
"We don't feel strategically compelled to do a deal right
now," he said. "It has to make strategic and financial sense,
and we certainly have the cash and the debt capacity to do
TD Ameritrade's last major acquisition was in June 2009,
when it bought online broker thinkorswim Group Inc for $600
million to target the growing options trading market.
MONEY MARKET FUND FEE WAIVERS TO CONTINUE
Tomczyk said in an interview following the earnings report
that TD Ameritrade continues to waive fees on money market
mutual funds to protect clients against negative returns amid
record-low interest rates. TD Ameritrade is waiving about $10
million per quarter in such fees, he said.
Charles Schwab said that last year it waived $433 million
in money market mutual fund fees, and it waived another $112
million in the first quarter.
"If you look at the economists' consensus, it's not going
to change for another year," and TD Ameritrade expects to keep
waiving the fees for as long as money market interest rates
remain at their current near-zero levels, Tomczyk said.
(Reporting by Philipp Gollner; Editing by Derek Caney, Lisa
Von Ahn and John Wallace)