E*Trade, which recently initiated a strategic review at the insistence of its biggest shareholder, hedge fund Citadel LLC, that could result in the sale of the company, returned to profitability this year after losing billions over a period of several years from bad mortgages in its banking unit.
The New York-based firm’s shares have lost more than half their value, closing at $8.36 on Monday, since hitting a 52-week high of $18.13 in February as markets have deteriorated, expectations for interest rate increases have been pushed further into the future, and many market watchers have expressed doubt that the firm will find a buyer.
“Our focus isn’t on the short term movements of the stock, it’s maximizing shareholder value,” said Matthew Audette, the firm’s Chief financial Officer, according to Reuters. Audette pointed out that delinquencies and provisions for losses on bad loans are down, which are the key indicators to future loan losses.
The lower loan losses helped E*Trade earn around $100 million in the first half of 2011, and Audette said that the firm was focused on building on that momentum. One way it plans to do so is by tapping into its existing client base to sell more products, which is where increasing its sales force comes in.
“Our customers broadly have around $200 billion of assets with us,” Audette said. “It’s about a 12% wallet share for our customer base, meaning $1.7 trillion to $1.8 trillion in assets, so we think that is a large opportunity as we double our sales force and highlight to them and educate them about our products and services.”
Key among those products are mutual fund and exchange-traded funds used in Individual Retirement Accounts (IRA) for self-directed investing for retirement.
Audette said E*Trade also aims to increase its 20% market share in the corporate services area—facilitating companies that offer restricted stock and options to other firms—as well as improving and attracting new clients to its online platform.
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