Schwab 2Q profit fell 31% on lower revenue, special charges

The Charles Schwab Corp. today reported a 31% decline in second-quarter earnings from the year-earlier period, citing low interest rates, restructuring charges and still-weak equities markets.
JUL 16, 2009
The Charles Schwab Corp. today reported a 31% decline in second-quarter earnings from the year-earlier period, citing low interest rates, restructuring charges and still-weak equities markets. The San Francisco-based company said active retail engagement during the quarter, generated by the first market-driven improvement in the Standard & Poor's 500 stock index since the third quarter of 2007, helped offset some of the problems. Schwab added $17 billion in net new assets and 197,000 new brokerage accounts during the quarter, although total client assets were down 12% from June 30, 2008. “As we enter the second half of 2009, the economic and market outlook remains challenging,” chief executive Walt Bettinger said in a statement. He noted that while broad equity indexes rose, they still ended the quarter 20% to 30% below their year-earlier levels. Meanwhile, government monetary policy continues to keep short-term interest rates at unprecedented, near-zero levels that eroded fees for margin accounts and money market funds. “Since both of these factors have a significant influence on the company's revenues, we remain focused on disciplined financial management,” Mr. Bettinger said. Schwab reported net income of $205 million, or 18 cents a share, down from $295 million, 26 cents a share, in the year-earlier quarter. Client assets in businesses for registered investment advisers fell 12%, to $505.4 billion, but were up 11% from the end of this year's first quarter. Net growth in assets in RIA accounts fell 47%, to $7.7 billion, a steeper drop than in Schwab's retail business. The results were in line with the forecasts of analysts.

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