logo
Plus   Neg
Share
Email

Charles Schwab Profit Down 20% - Update

Charles Schwab Corp. (SCHW) Monday reported a 20 percent decline in first-quarter profit, as the brokerage's bottom line was bruised by higher compensation and marketing expenses as well as revenue decline.

Nonetheless, Charles Schwab's earnings for the quarter were in line with analysts' expectations, while revenues trumped estimates.

Compensation and benefit expenses for the quarter rose 6 percent, while advertising and marketing costs increased 12 percent. Total expenses excluding interests for the quarter increased by 8 percent to $876 million.

Asset management fees for the quarter slipped 4 percent to $484 million, reflecting higher money market fund waivers. Many US brokerages have been waiving fees on money market funds due mainly to a near-zero interest rate environment since December 2008. For the first quarter, Charles Schwab waived $163 million in money market fund fees, compared to $112 million last year.

Total revenues dropped 1 percent to $1.19 billion from $1.21 billion last year. Seventeen Wall Street analysts had a consensus revenue estimate of $1.18 billion for the quarter.

Charles Schwab, which is one of the largest brokerages in the U.S. by client assets, said its third-quarter net income dropped to $195 million or $0.15 per share from $243 million or $0.20 per share last year. On average, 20 analysts polled by Thomson Reuters expected earnings of $0.15 per share for the quarter. Analysts' estimates typically exclude one-time items.

Charles Schwab client's daily average trades for the quarter were flat with last year at 318 thousand, while average revenue per trade improved 2 percent to $12.35.

Financial Chief Joe Martinetto said, "By carefully balancing our spending against environmental conditions, we are poised to deliver both expanded client service capabilities and improving revenues and earnings throughout 2012 if interest rates at least stabilize."

SCHW is currently trading at $13.66, down $0.19 or 1.37 percent, on a volume of 10.7 million shares on the NYSE.

by RTTNews Staff Writer

For comments and feedback: editorial@rttnews.com

Business News

Editors Pick
Member of Congress have reportedly been told President Donald Trump's administration has reached an agreement to put Chinese telecom giant ZTE Corp. back in business. Reports from the New York Times and Reuters said the deal brokered by the Commerce Department would require ZTE to pay a substantial... Delta Air Lines will resume non-stop flights between the U.S. and India next year, almost a decade after it exited the Indian market. The airline said Thursday that its decision to resume non-stop flights from the U.S. to India follows agreements between the U.S. and the governments of the United Arab Emirates and Qatar to address the issue of government subsidies provided to state-owned carriers. Mortgage rates continued their upward trend this week and hit a seven-year high, even as housing demand remained robust. According to data released Thursday by mortgage finance provider Freddie Mac, the 30-year fixed-rate mortgage rose to 4.66 percent in the week ending May 24, from 4.61 percent in the prior week and 3.95 percent a year ago. This is also the highest level since May 5, 2011.
RELATED NEWS
Trade SCHW now with 
Follow RTT