Interactive Brokers (IBKR) Q3 2026: Net Interest Income Hits $1.15 Billion

Interactive Brokers (IBKR) reported third-quarter 2026 results on October 15, 2026, in an 8-K earnings release and an earnings call covering the quarter ended September 30. Net interest income rose to a record level while trading activity cooled, and pre-tax income reached a record [1][2]. Earlier coverage of the company focused on three questions: whether net interest income could hold the second quarter's $1.057 billion once special securities lending income faded, whether account growth could support commissions, and whether the pre-tax margin could stay above 75% as trading slowed [3]. In the third quarter, net interest income rose to $1.154 billion, commissions fell to $602 million as the July and August data had signaled, and the adjusted pre-tax margin rose to 78% [1]. Taken together, profit now depends more on customer financing and cash balances and less on trading activity, but its reliance on balances, securities lending and interest rates has grown.

Interactive Brokers is a highly automated global broker. Its customers include individual investors, hedge funds, financial advisors and introducing brokers, who trade stocks, options, futures and currencies across many global markets from one account [4]. The company earns money in two main ways: commissions on customer trades, and net interest income from margin loans, customer cash and securities lending. Third-quarter net revenues were $1.914 billion, and net interest income made up 60.3% of that total, up from 55.7% in the second quarter [1][3].

Net interest income reaches a record as securities lending rises

Third-quarter net interest income was $1.154 billion, up 19% from a year earlier and 9.2% from the second quarter, driven mainly by growth in customer borrowing [1]. Average customer margin loans were $104.0 billion, up 7.7% from the second quarter, and the yield on those loans rose from 4.10% to 4.25%, so interest from margin loans was $126 million higher than in the second quarter [1][5]. Management said the main driver was the growth in the balances themselves, with a larger contribution than usual from non-US-dollar currencies [2].

The main concern after the second quarter was that "special" securities lending income from hot new listings would not last. Instead, all-in securities lending net interest rose from $343 million to $427 million, up 36% from a year earlier [1][6]. Management said both quarters included a few very popular hard-to-borrow names, and the timing and size of that income cannot be predicted [2]. Average customer cash balances grew 2.8%, but clients put more money to work in the market, so interest on segregated cash was about even with the prior quarter, while interest paid to customers rose by $72 million [1][2].

Most of the effect of the Federal Reserve's mid-September rate increase falls in the fourth quarter [2]. Using September 30 balances as its starting point, the company estimates that each 25 basis point change in the US rate would change annual net interest income by about $83 million [2]. Period-end margin loans were $105.2 billion, below $108.5 billion at the end of June, so the fourth quarter starts only slightly above the third-quarter average [1][7].

Expenses fall with commissions, lifting the pre-tax margin to 78%

Third-quarter commissions were $602 million, down 10.5% from the second quarter, roughly in line with the 11% decline in daily average revenue trades. In the short run, commissions are still driven by trading activity [1][3]. Customer accounts rose 7.5% from the second quarter to 5.58 million, but annualized trades per account fell from 207 to 168 [1]. Management said the slowdown was broad-based across customer groups, that some second-quarter activity was tied to IPOs, and that several IPOs planned for this quarter were delayed [2].

Expenses fell with trading volume and offset part of the decline in commissions. Non-interest expenses fell from $440 million in the second quarter to $418 million. Execution, clearing and distribution fees fell to $134 million, including $30 million of SEC regulatory fees that are passed through to customers. Compensation returned to $167 million, and customer bad debt was a $1 million recovery [1][2][3]. The adjusted pre-tax margin therefore rose from 77% to 78%, and GAAP pre-tax income reached a record $1.496 billion [1][8].

Revenue mix also helped the margin, because growth in net interest income adds almost no new expense. The new cost pressure is advertising. General and administrative expenses were $78 million, up 26% from a year earlier, and management said it will keep spending more on digital customer acquisition, although the new customers so far are higher in value but fewer in number [1][2].

Conclusion

The third-quarter results show that Interactive Brokers' growth engine shifted toward its balance sheet this quarter. Balance growth and securities lending income made up for slower trading, and expenses moved with trading volume, so more revenue turned into profit. Cash generation is strong enough to support a larger dividend: the company raised the quarterly dividend from $0.0875 to $0.15 per share and said it follows a guideline of paying 0.5% to 1% of market value [1][2]. Whether this holds depends on three things: whether securities lending income stays near its current level, whether margin loans grow again after the period-end decline, and whether trades per account recover as volatility rises around the midterm elections [2]. Fourth-quarter data will also show whether the adjusted pre-tax margin can stay above 77% as advertising spending increases.

Sources

[1] IBKR 8-K filed 2026-10-15 · 3Q26 earnings release (Exhibit 99.1), October 15, 2026, Interactive Brokers 8-K earnings release, https://www.sec.gov/Archives/edgar/data/1381197/000138119726000154/ibkr-ex99_1.htm [2] IBKR Q3 2026 earnings call 2026-10-15, October 15, 2026, Interactive Brokers third-quarter earnings call transcript, https://investors.interactivebrokers.com/en/general/about/investorRelations/quarterlyEarnings.php [3] IBKR 8-K filed 2026-07-21 · 2Q26 income statement, July 21, 2026, Interactive Brokers 8-K earnings release, https://www.businesswire.com/news/home/20260721157186/en/Interactive-Brokers-Group-Announces-2Q2026-Results/ [4] IBKR 10-K filed 2026-02-27 · business overview, February 27, 2026, Interactive Brokers 10-K annual report, https://www.sec.gov/Archives/edgar/data/1381197/000138119726000062/ [5] IBKR 8-K filed 2026-07-21 · 2Q26 net interest income table, July 21, 2026, Interactive Brokers 8-K earnings release, https://www.businesswire.com/news/home/20260721157186/en/Interactive-Brokers-Group-Announces-2Q2026-Results/ [6] IBKR 10-Q filed 2026-08-06 · 2Q26 securities lending, August 6, 2026, Interactive Brokers 10-Q quarterly report, https://www.sec.gov/Archives/edgar/data/1381197/000138119726000147/ [7] IBKR 8-K filed 2026-07-21 · 2Q26 business highlights and dividend, July 21, 2026, Interactive Brokers 8-K earnings release, https://www.businesswire.com/news/home/20260721157186/en/Interactive-Brokers-Group-Announces-2Q2026-Results/ [8] IBKR 10-Q filed 2026-08-06 · 2Q26 non-GAAP reconciliation, August 6, 2026, Interactive Brokers 10-Q quarterly report, https://www.sec.gov/Archives/edgar/data/1381197/000138119726000147/