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Investing.com -- Interactive Brokers has reported third-quarter profit that beat Wall Street estimates as a surge net interest income as well as trading activity boosted revenue.
Shares of the trading platform were down more than 5% in premarket trading following the report.
For three months ended September 30, the company reported adjusted profit of $0.57 per share on revenue of $1.66 billion, topping analysts estimates for $0.53 and $1.52 billion, respectively.
Net interest income jumped 21% to $967 million on "stronger securities lending activity and higher average customer margin loans and customer credit balances," the company said.
Commission revenue increased 23% to $537 million, driven by a a 67% and 27% surge in trading volume of stocks and options, respectively.
The Connecticut-based automated electronic broker lets its clients purchase and sell a number of financial assets, including stocks, options, futures, bonds, precious metals and cryptocurrencies.
In a note, analysts at BMO Capital Markets said the company has displayed "strong growth momentum" that "shows no signs of slowing."
Like other U.S. brokerages, it has recently moved to lend more money to clients for trading and has been investing idle customer cash in short-term instruments to help boost interest returns.
Although a potential series of Federal Reserve interest rate cuts are seen weighing on the difference between what is earned on assets and paid out for liabilities, or net interest income, in the fourth quarter, such reductions could drive up trading volumes and commission reveneues.
(Scott Kanowsky and Reuters contributed reporting.)