Back to top

Analyst Blog

This page is temporarily not available.  Please check later as it should be available shortly. If you have any questions, please email customer support at support@zacks.com or call 800-767-3771 ext.  9339.

Charles Schwab Corporation’s (SCHW - Analyst Report) third-quarter 2013 earnings per share of 22 cents beat the Zacks Consensus Estimate of 20 cents. Moreover, this was above 19 cents earned in the year-ago quarter.

Better-than-expected results were driven by top-line growth and a benefit from provision, partially offset by higher expenses. Further, improvements in total client assets as well as new brokerage accounts were the tailwinds.

Net income available to common shareholders in the third quarter totaled $290 million, up 17% year over year.

Performance in Detail

Net revenue was $1,373 million, up 15% from $1,196 million in the prior-year quarter. The increase was largely driven by a rise in asset management and administration fees (up 11%), net interest revenue (up 15%), trading revenues (up 10%) and other revenues (up 36%). Moreover, this was higher than the Zacks Consensus Estimate of $1,340 million.

As of Sep 30, 2013, Schwab’s average interest-earning assets rose nearly 22% year over year to $132.7 billion.

Total non-interest expense increased 9% year over year to $909 million. This was primarily due to a rise in compensation and benefit expenses as well as advertising and market development costs.

Further, provision for loan losses was a credit of $4 million, compared with a $10 million provision in the previous-year quarter.

Pre-tax profit margin improved to 33.8% in the reported quarter from 30.2% in the prior-year quarter.

Annualized return on equity (ROE) as of Sep 30, 2013, came in at 13%, up from 11% as of Sep 30, 2012.

Other Business Developments

As of Sep 30, 2013, Schwab had total client assets of $2.14 trillion (up 13% year over year). Net new assets – bought by new and existing clients – were $18.1 billion, compared with $20.4 billion reported in the year-ago quarter.

Further, Schwab added 223,000 new brokerage accounts in the third quarter. As of Sep 30, 2013, the company had a total of 9.01 million active brokerage accounts, 930,000 banking accounts and 1.3 million corporate retirement plan participants.

Our Viewpoint

While the focus on a low-cost capital structure will improve results in the coming quarters, Schwab’s financials will likely suffer due to decrease in both trading activities and interest rate yields. Nevertheless, we believe that synergies from the acquisitions and a stable capital position will boost the company’s financials to some extent.

Schwab currently carries a Zacks Rank #2 (Buy).

Among other investment brokers, JMP Group Inc. (JMP - Snapshot Report) and E*TRADE Financial Corporation (ETFC - Analyst Report) are expected to announce third-quarter results on Oct 21 and Oct 23, respectively, while TD Ameritrade Holding Corp. (AMTD - Analyst Report) will announce fiscal fourth-quarter results on Oct 29.

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

Learn more

Start for as little as $4.50 per trade.

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
ANI PHARMACE ANIP 25.07 +15.96%
BITAUTO HOLD BITA 35.21 +14.42%
E HOUSECHINA EJ 10.97 +9.05%
CANADIAN SOL CSIQ 26.96 +7.10%
KNIGHTSBRIDG VLCCF 12.50 +5.75%