Online and discount brokerage Charles Schwab reported Q2 results that beat the consensus estimate by a penny. Trading volumes were up strongly year over year due to a surge from active traders, but a steep decline in commission prices reduced total trading revenue. Asset management fees and net interest drove revenue growth. Once again, Schwab lost accounts. Key points:
(all comparisons are year over year unless stated otherwise)
- EPS of $0.14 beat consensus by a penny.
- Revenue of $1.087 billion up 5.2%, beat consensus of $1.07 billion.
- Asset management and admin fees were $552 million, up 6.8%.
- Trading revenue (commissions) were $187 million, down 28%.
- Net interest revenue was $297 million, up 33%.
- Net income of $186 million up 65%.
- Client assets of $1.106 trillion up 11%.
- Net new client assets of $11.2 billion.
- 13,600 employees, down from 16,300.
- 176,500 daily average "revenue" trades, up from 142,200.
- Active trader daily average revenue trades were 101,800 versus 72,500.
- Average commission per revenue trade was $16.28, down from $30.06.
- 7.2 million active client accounts, down from 7.5 million (and 7.3 million last quarter). Note: Schwab only provides rounded numbers for total client accounts (not just online).
SCH chart below.
Full disclosure: at the time of writing I'm short SCH.