Charles Schwab (SCHW) shares were stronger early Monday after the financial advisory firm said first-quarter results came in ahead of expectations as stock markets recovered from a correction in December even amid political and economic uncertainties.
Net revenue rose 14% to $2.72 billion, topping the Capital IQ consensus $2.67 billion. Diluted earnings increased to $0.69 a share from $0.55, better than analysts’ expectations for $0.65 a share on a normalized basis and $0.66 on a GAAP standard. The stock was up 1.5% shortly after the opening bell.
“The equity markets gathered momentum during the quarter, with the S&P 500 rising 21% from the December correction and posting its best first quarter since 1998,” said Walt Bettinger, chief executive of Charles Schwab.
“At the same time, investors faced a mixed geopolitical and economic landscape, including international trade negotiations, the evolving Brexit debate, and a potential slowing in Fed rate hikes,” he said. “While we believe that this environment impacted investor sentiment and activity, demand for help and support from Schwab remained strong.”
Bettinger said client account openings have topped 100,000 for 28 straight months and total client assets were up 8% year-on-year to reach $3.59 trillion, a record, by the end of March.
Net interest revenue jumped 33% to $1.7 billion, also a record high, “due to higher interest-earning assets stemming from the transfer of sweep money market funds to bank and broker-dealer sweep as well as client cash allocations,” said Peter Crawford, Charles Schwab’s chief financial officer.
Asset management and administraion fees fell 11% to $755 million from lower money market fund revenue as the company executed on sweep transfers. Trading revenue declined 8% to $185 million on a slower pace of client trading activity, according to Crawford.