Charles Schwab Q3 Profit Up 18%, Results Beat View

(RTTNews) - Brokerage and investment manager Charles Schwab Corp. (SCHW) on Tuesday reported an 18 percent increase in profit for the third quarter from last year, boosted by higher revenues and growth in new brokerage accounts. Both revenue and earnings per share beat analysts' expectations. Shares of the company are gaining more than 4 percent in the regular trading session.

Joe Martinetto, CFO of Charles Schwab said, "With our client investments running at appropriate levels, we were able to convert Schwab's strong revenue performance into a 33.8% pre-tax profit margin and $290 million of net income for the third quarter, our highest quarterly earnings since the peak year of 2008."

San Francisco, California-based Charles Schwab's net interest revenue for the quarter increased 15 percent from last year to $506 million.

Revenue from asset management and administration fees grew 11 percent from the year-ago period to $583 million. However, money market fund fee waivers rose 32 percent to $180 million. Trading revenue rose 10 percent to $224 million.

Clients' daily average revenue trades in the quarter rose 8 percent last year, while average revenue per revenue trade declined by $0.05 to $12.39. Charles Schwab ended the third quarter with $2.15 trillion in total client assets, up 13 percent year-over-year.

New brokerage accounts at the end of the third quarter increased 13 percent from the year-ago period to 223,000. The company's client base grew 3 percent to 9.01 million active brokerage accounts, while banking accounts increased 10 percent to 930,000.

Corporate retirement plan participants declined 16 percent to 1.30 million in keeping with the company's announced consolidation of plan recordkeeping technology platforms.

Charles Schwab's net income available to common stockholders for the third quarter rose to $282 million or $0.22 per share from $238 million or $0.19 per share in the year-ago period. On average, 20 analysts polled by Thomson Reuters expected the company to report earnings per share of $0.20 for the quarter. Analysts' estimates typically exclude one-time items.

Total net revenues for the quarter grew 15 percent to $1.37 billion from $1.20 billion in the same period last year. Analysts had a consensus revenue estimate of $1.34 billion for the quarter.

Charles Schwab noted that revenues reached their highest level in thirteen years despite the continued headwind created by an interest rate environment that remains at historic lows.

Total expenses excluding interest rose 9 percent from the same period last year to $909 million.

Looking ahead to fiscal 2013, Charles Schwab forecasts revenue growth will outpace its expenses by about 100 to 200 basis points, helping the company to achieve a pre-tax profit margin of at least 30 percent and earnings per share in the mid-$0.70s for the year. Analysts expect the company to report earnings of $0.74 per share for the year on revenues of $5.33 billion.

In Tuesday's regular session, SCHW is trading at $23.04, up $1.00 or 4.54 percent on a volume of 5.13 million shares.