Interactive Brokers
Interactive Brokers
One-line summary: Electronic broker whose earnings are geared to the rate regime through interest on customer credit balances (idle cash) and margin loans; the cleanest long-the-higher-for-longer brokerage expression, with a management-quantified per-25bp NII sensitivity.
What it is
A low-cost electronic brokerage serving active retail traders and institutions globally. Revenue is split between commissions and net interest income (NII) — interest earned on customer margin loans and on idle customer cash balances, less what it pays clients. Because IBKR is less sweep-reliant and more margin-lending-driven than schwab, its NII is geared to the level of rates more cleanly than to sweep-deposit dynamics.
Why it matters to stock-market
IBKR is the cleanest tradeable in the warsh-higher-for-longer-to-brokerage-nii-rerate chain: management has put a hard number on the rate sensitivity, so "no cuts / higher-for-longer" directly protects the NII run-rate. It also anchors the sibling "spread on other people's cash" basket (spread-on-other-peoples-cash) on the brokerage side.
Key facts
- Q1 2026 NII +17% YoY to $904M, "boosted by higher average margin loans and larger credit balances"; customer margin loans and customer credits (idle cash) each up ~35% YoY, accounts up 31%. From 2026-07-20-autoresearch-brokerage-bank-nii-rate-regime.
- Rate sensitivity (management-quantified): a 25bps Fed cut reduces annual NII by
$80M ($117M including other benchmark rates). From 2026-07-20-autoresearch-brokerage-bank-nii-rate-regime. (Sharpens the ~$108M-per-25bp figure the question page carried.) - "Sweet spot" framing: rates high enough to generate high interest income but not so high they discourage margin loans; a dramatic rate drop is the falsifier. From 2026-07-20-autoresearch-brokerage-bank-nii-rate-regime.
- Q2 2026: consensus adjusted EPS $0.58 (+13.7% YoY); reports in the same 2026-07-21 window as schwab. Stock ~+68.8% over 52 weeks, Strong Buy consensus. From 2026-07-20-autoresearch-brokerage-bank-nii-rate-regime.
Strengths (thesis-input perspective)
- Management-stated, quantified rate sensitivity — a hard datapoint for the rate-regime chain.
- Less sweep-reliant than SCHW, so cleaner exposure to the rate level rather than cash-sorting dynamics.
Weaknesses (thesis-input perspective)
- A surprise easing cycle is the direct falsifier (~$80–117M NII per 25bps).