Schwab 3Q net income up 77 percent

[October 18, 2011]  DES MOINES, Iowa (AP) -- Discount broker Charles Schwab Corp. said Monday its third-quarter net income rose 77 percent as more investors turned to the company's advisory services amid increased market volatility and stock trading increased.

The San Francisco-based company posted net income of $220 million, or 18 cents per share, compared with $124 million, or 10 cents per share, a year ago. The year-ago profit was $218 million excluding certain charges.

Revenue rose 11 percent to $1.18 billion from $1.06 billion a year earlier.

The results missed the estimates expected by analysts surveyed by FactSet. They expected earnings per share of 19 cents and revenue of $1.19 billion.

Shares of Charles Schwab fell 81 cents, or 6.4 percent, to close at $11.94 Monday. They've traded between $10.56 and $19.69 in the past 52 weeks.

Client assets grew 7 percent to $1.58 trillion, which includes $655.4 billion in the investor services segment of the business, which was up 2 percent from a year ago, and $640.1 billion in adviser services, up 5 percent. Other institutional services assets grew 30 percent to $280.9 billion.

Clients opened 191,000 new brokerage accounts during the period, up 14 percent. The company ended the quarter with 8.5 million active brokerage accounts, 769,000 banking accounts and 1.46 million retirement plan participants.

CEO Walt Bettinger said the business environment weakened further in the third quarter, but clients stayed with their long-term investing plans.

"Their cash holdings at Schwab remained close to pre-crisis levels, and they were consistently net purchasers of securities," he said. "Our full-service capabilities were in demand during the recent quarter as enrollments in our advisory solutions continued at a strong pace."

Net interest revenue jumped nearly 14 percent to $443 million from $387 million. That gain was largely the result of growth in interest-earnings assets. The average rate earned on those assets was 1.82 percent in the latest quarter, slightly below the 1.89 average in the year-ago quarter.

Net trading revenue grew to $248 million from $182 million.

Expenses fell to $821 million from $864 million.

Bettinger said effective expense discipline will be key to the company's near-term profitability as economic conditions remain challenging.

[Associated Press; By DAVID PITT]

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