Schwab Earnings Rise 110 Percent
SAN FRANCISCO (AP) _ Charles Schwab Corp. posted a 110 percent jump in first-quarter profits Thursday, slightly beating Wall Street expectations, but profit-takers drove down the company’s stock price.
Schwab’s earnings totaled $143 million, or 34 cents a share, beating analysts’ estimates by a penny. The financial services firm earned $68 million, or 16 cents a share, in the first quarter last year.
Schwab had told investors to expect stronger growth, and its stock price had risen by more than 70 percent in the month before the results. In trading Thursday, Schwab closed off $14.25, or 10 percent, at $124 a share on the New York Stock Exchange.
The San Francisco-based company credited record trading volume, both at Schwab and in the markets in general, boosted by online trading by individual investors. Schwab now has 2.5 million active online accounts with $219 billion in assets.
``If you look at these numbers, that sucking sound you’re hearing is more assets being gathered by Schwab,″ said Michael Freudenstein, an analyst with J.P. Morgan in New York. ``Nobody’s out there cold-calling clients. People are bringing them their assets.″
With 298 branch offices as well as an Internet trading operation that can easily handle more volume with only minimal additional expenses, Schwab is taking customers away from Wall Street firms that haven’t adapted to e-commerce, he added.
For Schwab, the e-strategy is paying off.
The company raked in revenues of $952 million for the quarter ended March 31, up from $604 million the year before. This quarter’s revenue and net income were the highest in Schwab history, the company said.
``During the past three months our customers brought a record $28 billion in net new assets to the firm and opened 388,000 new accounts,″ chairman and co-CEO Charles R. Schwab said. ``After reaching the $500 billion milestone during January, we ended the quarter with $542 billion in customer assets held in 5.9 million active accounts.″
And those individual investors make a lot of trades _ 160,000 during the quarter, which is 90 percent more than a year ago. That doubled profits from stock transactions, and commissions rose by 59 percent, the company said.