E*Trade Financial posted a larger-than-expected first-quarter loss on late Thursday, as the online broker struggle to pare its ailing business amid the ongoing credit and mortgage crisis.

The New York-based firm recorded a loss $91.2 million, or 20 cents a share, compared to a profit of $169.4 million, or 39 cents a share, a year earlier. Net revenue fell to $316.2 million from $645 million a year ago.

According to Thomson Financial, analysts generally expected E*Trade to post a loss of 10 cents a share.

We are clearly facing a cyclical downturn in the economy and markets, and because we will be a simpler company after the disposition of certain non-core assets, we need to reduce our overall expense base, said Chairman and Chief Executive Donald Layton.

E-Trade shares gained 12 percent to $4.04 during after-hours trading on Thursday. The stock gained 8.7 percent to close at $3.62 during regular trading.

Total customer assets declined 11 percent from the fourth quarter to $168 billion, while the number of daily trades fell by 11 percent. Customer cash and deposits increased 4 percent to $35 billion.

The company added 60,000 new customers, and said it was the largest increase since the fourth quarter of 2005. Total new customer accounts rose by 62,000 to 4.8 million.

E-Trade blamed the losses on a cyclical downturn in the economy and market but Chief Executive Don Layton said he was optimistic about the results, according to the Associated Press.

The fourth quarter was quite poor for good reasons, and now the first quarter has ended with everything seemingly heading north in establishing the initial growth we're looking for, he said.

We're seeing customer metrics, new accounts, and business heading in the right direction.