ETrade happy with online broking buy
ETrade Australia is confident its July purchase of HSBC's online broking business will secure continuing growth in 2007, even if the local market doesn't perform well.
In a statement to the market, ETrade revealed a 27.4 percent jump in pre-tax profit for fiscal 2006 to AU$19.87 million, underpinned by a high flying Australian share market.
The company is expected to release its full 2005/06 preliminary results in the week commencing August 21.
Chief executive officer Brett Spork said customers picked up through the HSBC deal could protect ETrade if the share market falls.
"Your profit is simply a function of how many clients you have and how often they trade, times how much you charge them, less your fixed costs.
"So if you can grow one of these variable you can insulate yourself somewhat from falling markets," Spork said.
ETrade's AU$51.3 million purchase of HSBC Stockbroking became effective from July 1 this year.
About 72,000 new customer accounts were picked up in the deal -- 32,000 of them through HSBC's pre-existing alliance with St George Bank -- raising total accounts to over 320,000.
In its first month under ETrade's control, the HSBC business traded above expectations, Spork said.
Total trades executed by ETrade and HSBC/St George combined in July were 322,185, an increase of 37.1 per cent on July 2005.
Spork added enhancements made to ETrade's product offering, which lifted 2005/06 earnings margins as a percentage of revenue by 1.3 per cent, would also stimulate increases in trading.
Enhancements made last year included an overhaul of ETrade's Web site, a trading system conversion and the development of a new options trading service due to launch soon.
The Sydney based ETrade is 35 percent owned by ANZ Bank and also provides online broking to customers from ANZ, Bendigo Bank and 25 independent credit unions.
The HSBC purchase lifted it to outright second in the online trading ranks behind Commsec and ahead of IWL Ltd.
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