Charles Schwab Q3 profit beats estimates

Financial services firm The Charles Schwab Corp. (SCHW) reported a 49% jump in earnings for the third quarter helped by higher client cash sweep balances, an increase in clients trading activity and cumulative effect of the Federal Reserve rate normalization. The top and bottom line came in ahead of analysts’ expectations. Following this, shares inched up over 1% in the premarket session.

Net income for the quarter climbed by 49% to $923 million and earnings jumped by 55% to $0.65 per share. Net revenues grew by 19% to $2.58 billion, driven by its strengthened business momentum and a generally favorable economic environment.

Net interest revenue soared 41% on larger client cash sweep balances, as well as the cumulative effect of the Fed’s rate normalization. Trading revenue increased by 17% on higher clients trading activity.

However, asset management and administration fees decreased 6% due to lower money market fund revenue as a result of transfers to bank sweep, client asset allocation choices, and its 2017 fee reductions.

Clients opened 369,000 brokerage accounts in the third quarter, bringing its year-to-date new accounts to 1.2 million, which is the highest nine-month total in the company’s history. Charles Schwab generated $172.5 billion in core net new assets year-to-date, which is also surpassing all full-year totals prior to 2017.

Daily average trades reached 683,000, consistent with the second quarter and a third-quarter record. Assets receiving ongoing advice marked a new high of $1.85 trillion at September 30, 2018, up 15% from last year. Total client assets grew 12% year-over-year, ending the quarter at a record $3.56 trillion.

Shares of Charles Schwab ended Friday’s regular session up 1.83% at $49.01 on the NYSE. The stock has risen over 9% in the past year, while it has fallen more than 4% in the year so far.