Brokerage and investment manager Charles Schwab Corp. (SCHW: Quote) on Tuesday reported a 10 percent increase in profit for the second quarter on higher revenues and growth in new brokerage accounts.
The results also include a gain related to the resolution of a vendor dispute. Earnings per share were flat with last year, but beat analysts' estimates.
The company's asset management and administration fees for the quarter declined 1 percent to $496 million, reflecting higher money market fund waivers.
Many U.S. brokerages have been waiving fees on money market funds due mainly to a near-zero interest rate environment since December 2008. Charles Schwab waived $146 million in money market fund fees in the latest quarter, compared to $128 million last year.
Net interest revenue rose 2 percent to $458 million, while trading revenue grew 7 percent to $219 million.
Clients' daily average revenue trades rose 10 percent from last year to $435 thousand, while average revenue per revenue trade declined 1 percent.
New brokerage accounts rose 8 percent in the quarter from the year-ago period to 221 thousand.
The company ended the quarter with 8.7 million active brokerage accounts, 822,000 banking accounts, and $1.80 trillion in total client assets. These were up 7, 10 and 9 percent, respectively, over June 2011.
Net new accounts for the quarter totaled about 40,000, down 2 percent year-over-year. As at the end of the second quarter, total accounts reached 6.1 million, up 2 percent year-over-year.
Charles Schwab said its second-quarter net income rose to $261 million from $238 million in the year-ago period. However, earnings per share remained flat with last year at $0.20, on higher number of weighted-average shares outstanding.
The latest quarter's results includes a gain of $44 million after-tax, relating to the earlier disclosed resolution of a vendor dispute.
On average, 22 analysts polled by Thomson Reuters expected the company to report earnings of $0.18 per share for the quarter. Analysts' estimates typically exclude one-time items.
Net revenues for the quarter rose 8 percent to $1.28 billion from $1.19 billion in the year-ago quarter and beat analysts' consensus estimate of $1.23 billion.
Provision for loan losses for the quarter was $4 million, up from $1 million in the same period last year.
Total expenses, excluding interest, for the quarter rose 6 percent to $851 million. Of this, compensation and benefits rose 4 percent from last year, while advertising and market development expenses increased 12 percent.
In Tuesday's regular session, SCHW is trading at $12.78, up $0.11 or 0.87 percent, on a volume of 1.98 million shares.
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by RTT Staff Writer
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