) 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
Further, provision for loan losses was a credit of $4 million,
compared with a $10 million provision in the previous-year
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.
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.
) are expected to announce third-quarter results on Oct 21 and
Oct 23, respectively, while
) will announce fiscal fourth-quarter results on Oct 29.
TD AMERITRADE (AMTD): Free Stock Analysis
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JMP GROUP INC (JMP): Free Stock Analysis
SCHWAB(CHAS) (SCHW): Free Stock Analysis
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