Charles Schwab Corp (NYSE:SCHW) reported its second quarter earnings this morning, missing the market and sending shares falling. The stock fell as much as 3 percent after the report.
Charles Schwab’s Profits Decline
The online broker posted net profits of 18 cents per share of $256 million for the second quarter of the year. That’s compared to $275 million or 20 cents per share in the same quarter a year ago. The brokerage firm’s revenue did jump 4 percent to $1.34 billion during the second quarter, according to Reuters’ Aman Shah.
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Consensus estimates from analysts polled by Thomson Reuters indicate that the company was expected to report earnings per share of 19 cents on $1.32 billion in revenue.
Charles Schwab’s Expenses, Trading Revenue Rise
One area which hurt Charles Schwab Corp (NYSE:SCHW) the most was its expenses, which increased by approximately 9 percent, rising up $925 million during the quarter. The company did see its trading revenue rise by about 7 percent to $235 million. In the past, trading revenue made up approximately 60 percent of the company’s total revenue, although as of the second quarter, it made up just 18 percent of the company’s revenue.
Charles Schwab Corp (NYSE:SCHW) also pulled in only $22.6 billion worth of new assets during the second quarter, compared with $43 billion in the previous quarter. The company’s asset management fees jumped 15 percent to $572 million. Money market fund fee waivers increased 7.5 percent to $157 million during the quarter.
Interest rates remained low during the first quarter, so in order to keep client yields from turning negative, the company has been waiving its money market fund fees, reports The Wall Street Journal’s Ben Fox Rubin.
Charles Schwab Posted Strong Profits Last Quarter
In April, the company’s first quarter earnings that were in line with estimates. The company saw increased growth from new customers although trading activity was still causing concerns in the furst quarter.