E*Trade's ( ET) third-quarter earnings surged 35% from a year ago, thanks to a sharply higher level of trading volume among customers of its online brokerage.

The New York-based financial company earned $107.5 million, or 28 cents a share, in the quarter, compared with $79.3 million, or 21 cents a share, a year ago. Total revenue rose 26% to $422.8 million, reflecting a 38% jump in commissions to $117.2 million and a 32% rise in net interest income to $217 million.

Analysts surveyed by Thomson First Call were expecting earnings of 27 cents a share on revenue of $406.2 million. The company said it expects to earn 25 cents to 30 cents a share in the fourth quarter, compared with the analyst consensus of 28 cents a share.

E*Trade's operating margin rose to 35.7% from 33.3% as more clients made more trades. Daily revenue trades averaged 125,534 in the quarter, up 29% from a year ago. On a gross basis, the company added 223,900 retail accounts in the quarter, consisting of 155,300 trading accounts and 68,500 deposit and lending accounts. On a net basis, retail accounts grew by 86%, or 48,728.

The profitability of E*Trade's banking operation also rose, with the net interest spread rising 10 basis points year over year to 2.23%.

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