Brokerage and investment manager Charles Schwab Corp. (SCHW) reported Monday a profit for the first quarter that edged up from last year, reflecting improved revenues and growth in new brokerage accounts. Meanwhile, the results were negatively impacted by lower trading revenues. Earnings per share remained flat and missed analysts' expectations by a penny, while quarterly revenues topped their estimates by a whisker.
"The investments we've made in our clients over the past several years are powering strong business momentum. During the first quarter we continued to win in the marketplace as we gathered $43.4 billion in net new assets, a 9% annualized organic growth rate, and 244,000 new brokerage accounts, up 2% year-over-year," President and CEO Walt Bettinger said.
The San Francisco, California-based company reported net income of $198 million or $0.15 per share for the first quarter, compared to $195 million or $0.15 per share in the prior-year quarter.
On average, 23 analysts polled by Thomson Reuters expected the company to post earnings of $0.16 per share for the first quarter. Analysts' estimates typically exclude special items.
Total net revenues for the quarter grew 8 percent to $1.29 billion from $1.19 billion in the same quarter last year, and topped twenty Wall Street analysts' consensus estimate of $1.27 billion by a whisker.
Net interest revenue increased 8 percent to $469 million, as well as asset management and administration fees grew 14 percent to $552 million, while trading revenue declined 8 percent to $223 million from the prior-year quarter.
Clients' daily average revenue trades decreased 6 percent from last year, while average revenue per revenue trade remained flat with last year. New brokerage accounts at the end of the first quarter increased 2 percent to 244,000 from last year.
The company reported 25.7 percent pre-tax profit margin and 9 percent return on equity for the quarter, compared to 26.3 percent pre-tax profit margin and a 10 percent return on equity last year.
"We ended the quarter with a record $2.08 trillion in total client assets, up 14%, and our client base grew to 8.9 million active brokerage accounts, 888,000 banking accounts and 1.6 million corporate retirement plan participants, up 3%, 11% and 4%, respectively," Bettinger added.
Looking ahead to fiscal 2013, the company continues to expect earnings per share in the mid-$0.70's and at least a 30 percent pre-tax profit margin based on the company's diversified revenue streams and ongoing expense discipline.
"With solid profitability and a healthy balance sheet that includes nearly $10 billion of stockholders' equity, we remain well positioned to support our growing businesses," CFO Joe Martinetto noted.
In Monday's regular trading session, SCHW is currently trading at $17.09, down $0.19 or 1.10% on a volume of 1.40 million shares. The stock has been moving in a range of $11.64 to $18.34 in the past 52 weeks.
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