The Charles Schwab Corp.’s (SCHW - Analyst Report) second-quarter 2016 earnings of 30 cents per share were in line with the Zacks Consensus Estimate. Also, it was up 20% from the prior-year quarter figure.
Schwab’s shares gained nearly 1% in early market trading, indicating investors’ optimism regarding continued top-line improvement. However, price reaction during the full trading session will provide a better idea about investors’ reaction.
Revenue growth, primarily driven by increase in equity market volatility, lower level of fee waivers and stable provisions acted as tailwinds. Also, there was a significant increase in total client assets and new brokerage accounts. However, higher expenses remained a concern.
Net income available to common shareholders totaled $406 million, up 23% year over year.
The Charles Schwab Corporation (SCHWÂ -Â Analyst Report) EPS BNRI & Surprise Percent – Last 5 Quarters | FindTheCompany
Revenue Improvement Supported Results
Net revenue was $1.83 billion, up 17% year over year, supported by asset management and administration fees (up 13%) and net interest revenue (up 30%). These were partly offset by lower trading revenues and other revenues. Moreover, the reported figure surpassed the Zacks Consensus Estimate of $1.80 billion.
Total non-interest expense rose 11% year over year to $1.11 billion. All expense components increased on a year-over-year basis.
Provision for loan losses was $2 million, in line with the year-ago quarter figure.
Fee waivers were $55 million, down 67% from the year-ago quarter.
Pre-tax profit margin improved to 39.4% from 36.2% recorded last year.
As of Jun 30, 2016, Schwab’s average interest-earning assets rose 21% year over year to $187.9 billion.
Annualized return on equity as of Jun 30, 2016, came in at 13%, up from 12% recorded a year ago.
Other Business Developments
As of Jun 30, 2016, Schwab had total client assets of $2.62 trillion (up 3% year over year). Net new assets – bought by new and existing clients – were $26.6 billion during the quarter.
