Schwab Earnings Drop 20%, Meet Expectations

by Christopher Freeburn | April 16, 2012 2:09 pm

Schwab Earnings Drop 20%, Meet Expectations

Rising compensation and lower asset management fees contributed to a 20% decline in first-quarter profits[1] at Charles Schwab (NYSE:SCHW[2]). According to Reuters, despite the falloff, the quarterly results were in line with Wall Street analysts’ predictions.

Schwab reported a profit of $195 million for the quarter, down from $243 million for the same period last year. Earnings per share declined from 20 cents in 2011 to 15 cents this year. The company also reported revenues down 1% to $1.19 billion.

Reuters noted that analysts had forecast earnings per share of 15 cents and quarterly revenue of $1.18 billion.

Schwab said operating expenses jumped 8% to $876 million for the quarter, while compensation and benefits charges rose 6% to $465 million.

Customers conducted an average of 318,400 trades through Schwab every day during the first quarter, unchanged from 2011, though the company made an additional 2% on each trade compared to last year.

Schwab said it received $484 million in asset management service fees during the quarter, down 4% from last year. Reuters noted that the company — along with other financial services firms — had declined to collect fees on money market funds over the past several years since the low rate of return on such funds would result in customer losses if fees were imposed.

Schwab waived $163 million in such fees during the quarter, up from $112 million in waived fees a year ago.

Shares of Charles Schwab were down slightly in early afternoon trading, off around 0.6%, or 9 cents, to $13.78.

Endnotes:
  1. decline in first-quarter profits: http://www.reuters.com/article/2012/04/16/charlesschwab-idUSL2E8FG2NT20120416
  2. SCHW: http://studio-5.financialcontent.com/investplace/quote?Symbol=SCHW

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