Interactive Brokers Records Largest-Ever Quarterly Profit

Summary:
• Interactive Brokers has recorded the largest-ever quarterly profit and a 2/3 increase in its revenue during Q1 2023

Interactive Brokers has reported a 63% increase in its quarterly revenue. During Q1 2023, the American multinational brokerage firm reported a $1.04 billion revenue as compared to $645 million in Q4 2022. Interactive Brokers is the largest US broker in terms of the number of daily average revenue trades.

According to the details, the leading broker posted the highest-ever quarterly profit due to high-interest rates in the US. Apart from the interest rate income, IBKR’s investment in Tiger Trades also boosted profits. However, the commission revenue couldn’t increase a lot due to low stock trading volume and increased operating expenses.

IBKR’s Interest Revenue Surged By 126% YoY

The high interest rate environment has played a major role in the unprecedented profits. The interest revenue of Interactive Brokers remained at $637 million in Q1 2022. This was a 126% increase on a YoY basis. This upbeat in revenue can be attributed to the steep rate hikes by the US Federal Reserve in its efforts to fight inflation.

The brokerage firms’ income before tax also had a two-third increase on a YoY basis. It was a jump from $441 million to $720 million. This also resulted in an uptick in diluted earnings per share from $0.82 to $1.35. The offered products on the platform include stocks, bonds, EFPs, and Futures.

Interactive Broker’s Commission Revenue Upticked By 2%

There was also a slight increase in the commission revenue of Interactive Brokers. Despite the broker’s efforts to promote no-fee trading, there was a 2% increase in the commission revenue, which came at $357 million. This was also quite encouraging as the trading volume of the platform declined in Q1.

There was a 16% decrease in the daily average revenue trades (DARTs) in March 2023. The figure decreased from 2.12 million to 2.05 million on a monthly basis. In March, the number of active accounts on IBKR surged to 2.19 million. This was a 2% increase from February. During this time, IBKR reported 33,500 new users, which shows that its user base is still expanding despite a decline in stock trading volume.