Reports Comprehensive Earnings Per Share of
$1.19, Income before Taxes of $761 Million on $1,396 Million in Net
Revenues, and Earnings Per Share on Net Income of $1.25
Declares Quarterly Dividend of $0.10 Per
Share
Interactive Brokers Group, Inc. (NASDAQ GS: IBKR) an automated
global electronic broker and market maker, today reported diluted
earnings per share on a comprehensive basis of $1.19 for the year
ended December 31, 2016, compared to diluted earnings per share on
a comprehensive basis of $0.62 for 2015.
Excluding other comprehensive income, the Company reported
diluted earnings per share of $1.25 for the year ended December 31,
2016, compared to diluted earnings per share of $0.78 for 2015.
Net revenues were $1,396 million and income before income taxes
was $761 million for 2016, compared to net revenues of $1,189
million and income before income taxes of $458 million in 2015.
The results for the year were positively impacted by strong
growth in net interest income, which increased 24% from 2015, and
the non-recurrence of unsecured customer losses caused by the
sudden move in the value of the Swiss franc in January 2015.
Trading gains decreased 39% in 2016 on lower market making trading
volumes and decreases in volatility and in the actual-to-implied
volatility ratio compared to 2015.
In addition, the results for the year include a $65 million loss
on our currency diversification strategy, compared to a $269
million loss in 2015; and a $26 million net mark-to-market gain on
our U.S. government securities portfolio compared to a $33 million
net mark-to-market loss in 2015.
The Interactive Brokers Group, Inc. Board of Directors declared
a quarterly cash dividend of $0.10 per share. This dividend is
payable on March 14, 2017 to shareholders of record as of March 1,
2017.
Business Highlights
- 55% pretax profit margin for 2016.
- 61% Electronic Brokerage pretax profit
margin for 2016, up from 49% in 2015.
- 23% Market Making pretax profit margin
for 2016, down from 44% in 2015.
- Customer equity grew 27% from 2015 to
$85.5 billion and customer debits increased 14% to $19.4
billion.
- Customer accounts increased 16% from
2015 to 385 thousand.
- Total DARTs increased 2% from 2015 to
660 thousand.
- Brokerage segment equity was $4.1
billion. Total equity was $5.8 billion.
Segment Overview
Electronic Brokerage
Electronic Brokerage segment income before income taxes
increased 41%, to $756 million in 2016, compared to 2015, due to
higher net interest income and the non-recurrence of unsecured
customer losses caused by the sudden move in the value of the Swiss
franc in January 2015, as further described below. Net revenues
increased 13% to $1,239 million on higher net interest income and
net mark-to-market gains on our U.S. government securities
portfolio, partially offset by slightly lower commissions and
execution fees revenue.
Net interest income increased 25% from 2015. Other income
increased 62% over the same period, driven by net mark-to-market
gains on investments in U.S. government securities. Commissions and
execution fees revenue decreased 1% from 2015 on lower customer
volumes in options and stocks, which decreased 11% and 10%,
respectively, from 2015. Pretax profit margin was 61% in 2016, up
from 49% in 2015.
Customer accounts grew 16% to 385 thousand and customer equity
increased 27% over 2015 to $85.5 billion. Total DARTs1 for cleared
and execution-only customers increased 2% to 660 thousand from
2015. Cleared DARTs were 609 thousand, 3% higher than in 2015.
Market Making
Market Making segment income before income taxes decreased 66%
to $44 million in 2016, compared to 2015, due to lower trading
volumes and decreases in volatility and in the actual-to-implied
volatility ratio. Pretax profit margin decreased to 23% in 2016
from 44% in 2015.
Sudden Move in the Value of the Swiss Franc
On January 15, 2015, due to the sudden, large move in the value
of the Swiss franc that followed an unprecedented action by the
Swiss National Bank, which removed a previously instituted and
repeatedly reconfirmed cap of the exchange rate relative to the
Euro, several of our customers who held currency futures and spot
positions suffered losses in excess of their deposits with us. We
took immediate action to hedge our exposure to the foreign currency
receivables from these customers. During 2015, we incurred losses,
net of hedging activity and debt collection efforts, of $119
million. We continue to actively pursue collection of these debts.
The ultimate effect of this incident on our results will depend
upon the outcome of our debt collection efforts.
Effects of Foreign Currency Diversification
In connection with our currency diversification strategy, we
have determined to base our net worth in GLOBALs, a basket of 15
major currencies in which we hold our equity. In 2016, our currency
diversification strategy decreased our comprehensive earnings by
$65 million, as the U.S. dollar value of the GLOBAL decreased by
approximately 0.93%. The effects of the currency diversification
strategy are reported as components of (1) Other Income in the
Corporate segment and (2) Other Comprehensive Income (“OCI”).
_________________________________
1 Daily average revenue trades (DARTs) are based on customer
orders.
Conference Call Information:
Interactive Brokers Group will hold a conference call with
investors today, January 17, 2017, at 4:30 p.m. ET to discuss its
annual results. Investors who would like to listen to the
conference call live should dial 877-324-1965 (U.S. domestic) and
631-291-4512 (international). The number should be dialed
approximately ten minutes prior to the start of the conference
call. Ask for the “Interactive Brokers Conference Call.”
The conference call will also be accessible simultaneously, and
through replays, as an audio webcast through the Investor Relations
section of the Interactive Brokers web site,
www.interactivebrokers.com/ir.
About Interactive Brokers Group, Inc.:
Interactive Brokers Group affiliates provide automated trade
execution and custody of securities, commodities and foreign
exchange around the clock on over 120 markets in numerous countries
and currencies from a single IB Universal AccountSM to customers
worldwide. We service individual investors, hedge funds,
proprietary trading groups, financial advisors and introducing
brokers. Our four decades of focus on technology and automation has
enabled us to equip our customers with a uniquely
sophisticated platform to manage their investment portfolios
at extremely low cost relative to the financial services industry.
We strive to provide our customers with advantageous execution
prices and trading, risk and portfolio management tools, research
facilities and investment products, all at unusually low prices,
positioning them to achieve superior returns compared to our
competitors.
Cautionary Note Regarding Forward-Looking Statements:
The foregoing information contains certain forward-looking
statements that reflect the Company’s current views with respect to
certain current and future events and financial performance. These
forward-looking statements are and will be, as the case may be,
subject to many risks, uncertainties and factors relating to the
Company’s operations and business environment which may cause the
Company’s actual results to be materially different from any future
results, expressed or implied, in these forward-looking statements.
Any forward-looking statements in this release are based upon
information available to the company on the date of this release.
The company does not undertake to publicly update or revise its
forward-looking statements even if experience or future changes
make it clear that any statements expressed or implied therein will
not be realized. Additional information on risk factors that could
potentially affect the Company’s financial results may be found in
the Company’s filings with the Securities and Exchange
Commission.
INTERACTIVE BROKERS GROUP, INC. AND
SUBSIDIARIES
OPERATING DATA
TRADE VOLUMES:
(in 000's, except %)
Brokerage
Market Brokerage Non
Avg. Trades Making %
Cleared % Cleared % Total
% per U.S. Period
Trades Change
Trades Change
Trades Change
Trades Change
Trading Day 2014 64,530 206,759 18,055 289,344
1,155 2015 65,937 2% 242,846 17% 18,769 4% 327,553 13% 1,305 2016
64,038 -3% 259,932 7% 16,515 -12% 340,485 4% 1,354 4Q2015
16,985 60,848 4,863 82,696 1,313 4Q2016 15,253 -10% 63,074 4% 3,933
-19% 82,260 -1% 1,316 3Q2016 15,474 61,181 3,736 80,391
1,256 4Q2016 15,253 -1% 63,074 3% 3,933 5% 82,260 2% 1,316
CONTRACT AND SHARE VOLUMES:
(in 000's, except %)
TOTAL
Options % Futures* % Stocks
%
Period
(contracts) Change
(contracts) Change
(shares) Change 2014
631,265 123,048 153,613,174 2015 634,388 0% 140,668 14% 172,742,520
12% 2016 572,834 -10% 143,287 2% 155,439,227 -10% 4Q2015
156,125 33,436 35,150,818 4Q2016 141,695 -9% 34,173 2% 41,805,268
19% 3Q2016 138,767 32,521 38,515,753 4Q2016 141,695 2%
34,173 5% 41,805,268 9%
MARKET MAKING
Options % Futures* % Stocks
%
Period
(contracts) Change
(contracts) Change
(shares) Change 2014
344,741 15,668 12,025,822 2015 335,406 -3% 14,975 -4% 15,376,076
28% 2016 307,377 -8% 14,205 -5% 13,082,887 -15% 4Q2015
82,106 4,047 3,677,274 4Q2016 73,843 -10% 3,481 -14% 2,249,744 -39%
3Q2016 74,966 3,338 2,874,332 4Q2016 73,843 -1% 3,481 4%
2,249,744 -22%
BROKERAGE TOTAL
Options % Futures* % Stocks
%
Period
(contracts) Change
(contracts) Change
(shares) Change 2014
286,524 107,380 141,587,352 2015 298,982 4% 125,693 17% 157,366,444
11% 2016 265,457 -11% 129,082 3% 142,356,340 -10% 4Q2015
74,019 29,389 31,473,544 4Q2016 67,852 -8% 30,692 4% 39,555,524 26%
3Q2016 63,801 29,183 35,641,421 4Q2016 67,852 6% 30,692 5%
39,555,524 11% * Includes options on futures
INTERACTIVE BROKERS GROUP, INC. AND
SUBSIDIARIES
OPERATING DATA, CONTINUED
BROKERAGE CLEARED
Options % Futures*
% Stocks %
Period
(contracts)
Change
(contracts)
Change
(shares)
Change
2014 225,662 106,074 137,153,132 2015 244,356 8% 124,206 17%
153,443,988 12% 2016 227,413 -7% 128,021 3% 138,523,932 -10%
4Q2015 59,934 29,030 30,405,179 4Q2016 59,354 -1% 30,452 5%
38,598,113 27% 3Q2016 55,579 28,986 34,817,202 4Q2016 59,354
7% 30,452 5% 38,598,113 11% * Includes options on futures
BROKERAGE STATISTICS
(in 000's, except % and where noted) Year over
Year
4Q2016
4Q2015
%
Change
Total Accounts 385 331 16% Customer Equity (in billions)* $ 85.5 $
67.4 27% Cleared DARTs 591 582 2% Total Customer DARTs 640
641 0%
Cleared Customers (in $'s, except DART per
account) Commission per DART $ 4.01 $ 3.81 5% DART per Avg.
Account (Annualized) 394 447 -12% Net Revenue per Avg. Account
(Annualized) $ 3,205 $ 3,239 -1%
Consecutive Quarters
4Q2016
3Q2016
%
Change
Total Accounts 385 370 4% Customer Equity (in billions)* $ 85.5 $
82.7 3% Cleared DARTs 591 564 5% Total Customer DARTs 640
609 5%
Cleared Customers (in $'s, except DART per
account) Commission per DART $ 4.01 $ 3.91 3% DART per Avg.
Account (Annualized) 394 390 1% Net Revenue per Avg. Account
(Annualized) $ 3,205 $ 3,191 0% * Excludes non-customers.
INTERACTIVE BROKERS GROUP, INC. AND
SUBSIDIARIES
SEGMENT FINANCIAL INFORMATION
(UNAUDITED)
Three Months Twelve Months
Ended December 31, Ended December 31, 2016
2015 2016 2015
(in millions)
Electronic Brokerage Net revenues $ 294 $ 219 $ 1,239
$ 1,097 Non-interest expenses 126 106
483 561 Income before income
taxes $ 168 $ 113 $ 756 $ 536
Pre-tax profit margin 57 % 52 % 61 % 49 %
Market
Making Net revenues $ 45 $ 69 $ 190 $ 298 Non-interest expenses
33 42 146 168
Income before income taxes $ 12 $ 27 $
44 $ 130 Pre-tax profit margin 27 % 39 % 23 %
44 %
Corporate (1) Net revenues $ (146 ) $ (17
) $ (33 ) $ (206 ) Non-interest expenses 6 (4
) 6 2 Loss before income taxes $
(152 ) $ (13 ) $ (39 ) $ (208 )
Total Net
revenues $ 193 $ 271 $ 1,396 $ 1,189 Non-interest expenses
165 144 635 731
Income before income taxes $ 28 $ 127 $ 761
$ 458 Pre-tax profit margin 15 % 47 % 55 % 39
% (1) Corporate includes corporate related activities
as well as inter-segment eliminations and gains and losses on
positions held as part of our overall currency diversification
strategy.
INTERACTIVE BROKERS GROUP, INC. AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE
INCOME
(UNAUDITED)
Three Months
Twelve Months Ended December 31, Ended December
31, 2016 2015 2016 2015 (in
millions, except share and per share data) Revenues:
Trading gains $ 39 $ 53 $ 163 $ 269 Commissions and execution fees
150 144 612 617 Interest income 160 136 606 492 Other income (loss)
(134 ) (44 ) 94 (122 )
Total revenues 215 289 1,475 1,256 Interest expense
22 18 79 67
Total net revenues 193 271 1,396
1,189 Non-interest expenses: Execution
and clearing 61 54 244 231 Employee compensation and benefits 68 56
242 227 Occupancy, depreciation and amortization 13 11 51 44
Communications 7 6 30 25 General and administrative 16 16 62 58
Customer bad debt - 1 6
146 Total non-interest expenses 165
144 635 731
Income before income taxes 28 127 761 458 Income tax expense
7 6 62 43
Net income 21 121 699 415 Net income attributable to
noncontrolling interests 17 104
615 366 Net income available for common
stockholders $ 4 $ 17 $ 84 $ 49
Earnings per share: Basic $ 0.07 $ 0.26 $ 1.28
$ 0.80 Diluted $ 0.07 $ 0.25 $ 1.25 $
0.78 Weighted average common shares outstanding:
Basic 67,983,085 63,685,671 66,013,247 61,043,071 Diluted
68,967,280 64,951,936 67,299,413 62,509,796 Comprehensive
income: Net income available for common stockholders $ 4 $ 17 $ 84
$ 49 Other comprehensive income: Cumulative translation adjustment,
before income taxes (7 ) (5 ) (4 ) (10 ) Income taxes related to
items of other comprehensive income - -
- - Other comprehensive loss, net of tax
(7 ) (5 ) (4 ) (10 ) Comprehensive
income (loss) available for common stockholders $ (3 ) $ 12
$ 80 $ 39 Comprehensive income attributable to
noncontrolling interests:
Net income attributable to noncontrolling
interests
$ 17 $ 104 $ 615 $ 366
Other comprehensive loss - cumulative
translation adjustment
(40 ) (24 ) (21 ) (53 ) Comprehensive income
(loss) attributable to noncontrolling interests $ (23 ) $ 80
$ 594 $ 313
INTERACTIVE BROKERS GROUP, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
December 31,
2016
December 31,
2015
(in millions) Assets Cash and cash equivalents
$ 1,925 $ 1,601 Cash and securities - segregated for regulatory
purposes 24,017 21,309 Securities borrowed 3,629 3,924 Securities
purchased under agreements to resell 111 195 Financial instruments
owned, at fair value 4,037 3,420 Receivables from customers, net of
allowance for doubtful accounts 19,409 17,050 Receivables from
brokers, dealers and clearing organizations 1,040 692 Other assets
505 543
Total assets $ 54,673 $ 48,734
Liabilities and equity Liabilities
Short-term borrowings $ 74 $ - Securities loaned 4,293 2,894
Financial instruments sold but not yet purchased, at fair value
2,145 2,617 Other payables: Customers 41,731 37,084 Brokers,
dealers and clearing organizations 239 423 Other payables
371 372 42,341 37,879 Total liabilities
48,853 43,390
Equity Stockholders'
equity 974 863 Noncontrolling interests 4,846 4,481
Total equity 5,820 5,344
Total liabilities
and equity $ 54,673 $ 48,734
December
31, 2016 December 31, 2015 Ownership of IBG LLC
Membership Interests
Interests
%
Interests
%
IBG, Inc. 67,989,967 16.6% 63,991,705 15.7% Noncontrolling
interests (IBG Holdings LLC) 341,444,304 83.4% 343,040,504 84.3%
Total IBG LLC membership interests 409,434,271 100.0%
407,032,209 100.0%
INTERACTIVE BROKERS GROUP, INC. AND
SUBSIDIARIES
EARNINGS PER SHARE ON COMPREHENSIVE
INCOME
(UNAUDITED)
Three Months
Twelve Months Ended December 31, Ended December
31, 2016 2015 2016 2015 (in
millions, except share and per share data)
Comprehensive income (loss) available for common stockholders, net
of tax $ (3) $ 12 $ 80 $ 39 Comprehensive earnings (loss)
per share: Basic $ (0.05) $ 0.18 $ 1.21 $ 0.64 Diluted $ (0.05) $
0.18 $ 1.19 $ 0.62 Weighted average common shares
outstanding: Basic 67,983,085 63,685,671 66,013,247 61,043,071
Diluted 68,967,280 64,951,936 67,299,413 62,509,796
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For Interactive Brokers Group,
Inc.Investors:Nancy Stuebe,
203-618-4070orMedia:Kalen Holliday,
203-913-1369
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