E*Trade Profit Rises 44%

EPS is a penny ahead of estimates.
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E*Trade Financial

(ET) - Get Report

reported a 44% gain in fourth-quarter earnings, led by higher revenue from trading commissions and the firm's banking operation.

In the quarter, the online financial services firm earned $129 million, or 32 cents a share, compared with $89.8 million, or 24 cents a share, in the year-ago period.

Excluding a one-time gain and merger-related charges, E*Trade earned 30 cents a share on an ongoing basis, which was 1 cent better than the Thomson Financial consensus estimate.

But revenue at E*Trade fell short of analysts' expectation, despite a 19% gain over the year-ago quarter. Net revenue totaled $478.8 million, compared with the analyst forecast of $484.7 million.

In the fourth quarter, E*Trade closed on its acquisitions of Harrisdirect and Brown & Co. Both deals closed ahead of schedule, and partial results from those brokerages were included in the just-concluded quarter.

Commissions from stock trades rose 18% to $135.7 million. Net interest income, which represents the money E*Trade makes from its online banking operation, rose 42%.

At one time, E*Trade was a pure-play online broker. But increasingly, the firm's online bank has become a bigger part of its bottom line.

Net interest income now represents 50% of the firm's net revenue.

Non-interest expenses were down 1% to $274.6 million.