Financial services provider Charles Schwab Corp. (SCHW) reported Monday a 16 percent increase in second-quarter profit with strong revenue growth, despite lower client trades in a challenging environment. Going ahead, the company expects to deliver solid revenue and earnings performance despite, economic and market choppiness.
The provider of securities brokerage, banking, and related financial services said its second-quarter net income increased to $238 million or $0.20 per share from $205 million or $0.17 per share last year.
Adjusted net income, which excluded class action litigation and regulatory reserve charges, increased 18 percent to $242 million from $205 million a year ago.
On average, 19 analysts polled by Thomson Reuters expected earnings of $0.20 per share for the quarter. Analysts' estimates typically exclude one-time items.
Total net revenues grew 10 percent to $1.19 billion from $1.08 billion in the previous year, but missed Wall Street analysts' consensus estimate of $1.20 billion. Sequentially, revenues edged down 1 percent.
Asset management and administration fees climbed 15 percent and net interest revenue rose 18 percent. Meanwhile, trading revenue dropped 12 percent.
Chief Financial officer Joe Martinetto stated that the second quarter was marked by lower interest rates, volatile equity markets, and the beginning of a seasonal summer slowdown in client trading. However, the company could stay on track with its financial expectations, with ongoing success with clients.
Despite a challenging environment, net new assets totaled $15.4 billion for the second quarter, 10 percent higher than last year after adjusting for a large clearing outflow last year. Total client assets grew 22% to $1.66 trillion.
Clients' daily average trades totaled 397.1 thousand, down 9 percent from last year, with 13 percent drop in revenue trades and 5 percent decline in asset-based trades. Average revenue per revenue trade edged up 1 percent to $12.23.
Chief Executive Officer Walt Bettinger commented, "Although the economic recovery is progressing slower than hoped, clients remain solidly engaged with their investments, as cash holdings at Schwab have declined to pre-crisis levels. While trading activity is relatively soft, our diverse suite of investment products and services is propelling our ongoing growth, as clients increasingly opt to enroll in our advisory solutions."
Looking ahead, Charles Schwab said its diversified revenue streams and expense discipline make it possible for it deliver solid revenue and earnings performance.
SCHW is currently trading at $15.09, up $0.08 or 0.53 percent.
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