Oct 16 (Reuters) - Trading platform Interactive Brokers IBKR.O reported a rise in third-quarter profit on Thursday, as its interest income benefited from higher average customer margin loans and credit balances.
U.S. brokerages have been actively lending money to clients for trading and earning interest on idle client cash by investing it in short-term instruments.
The Fed's September rate cut is also expected to pressure brokers' net interest income — the difference between interest earned on assets and interest paid on liabilities — starting in the fourth quarter.
But further rate cuts would increase margin trading volumes, boosting commission revenues.
Net interest income rose 21% to $967 million for the quarter, owing to higher average customer margin loans and credit balances.
Commission revenue surged 23% to $537 million, driven by a 67% jump in customer stock trading volumes in the three months ended September 30.
Daily average revenue trades, or DARTs, which represent the average trades per day generating commissions or fees, rose 34% in the quarter to 3.62 million from a year ago.
Customer accounts rose 32% to 4.13 million in the third quarter.
The Greenwich, Connecticut-based company allows customers to buy and sell stocks, options, futures, cryptocurrencies, bonds, mutual funds, ETFs and precious metals.
Interactive Brokers partners with third-party cryptocurrency service providers who handle the actual buying, selling and safekeeping of digital assets.
The trading platform replaced Walgreens Boots Alliance WBA.O in the equities benchmark S&P 500 .SPX in August.
The automated electronic broker reported a profit of $1.31 billion, or 59 cents per share, for the third quarter, compared to $909 million, or 42 cents per share, a year ago.
(Reporting by Anuj T in Bengaluru; Editing by Alan Barona)
((anuj.t@thomsonreuters.com))