Investment services firm Charles Schwab Corp. (SCHW), on Monday, reported an increase in profit for the first quarter that also topped Wall Street estimates. Total revenue was up 10% year-over-year and exceeded $5 billion for the fourth consecutive quarter. The company said the combination of top-line growth, coupled with disciplined expense management, yielded a pre-tax margin of 41.2%, or 45.8% adjusted, for the quarter.
Charles Schwab noted that Bank deposits shrank by 11% versus the prior year-end as clients realigned their allocations across its selection of transaction and investment cash solutions. During the first quarter, clients opened over 1 million new brokerage accounts and entrusted Charles Schwab with $132 billion of core net new assets – including over $53 billion in March alone. While Investor Services gathered approximately $60 billion during the period, the Advisor Services segment posted a record first quarter with over $71 billion in net flows. The company said these near-record inflows across both primary businesses represented an annualized organic growth rate north of 7% and helped push total client assets to $7.58 trillion at quarter-end.
First-quarter net income available to stockholders increased to $1.53 billion from $1.28 billion, prior year. Earnings per share was $0.83 compared to $0.67. Adjusted net income was $1.78 billion, up 12%. Adjusted earnings per share was $0.93 compared to $0.77. On average, 17 analysts polled by Thomson Reuters expected the company to report profit per share of $0.90, for the quarter. Analysts’ estimates typically exclude special items.
First quarter total net revenues increased to $5.12 billion from $4.67 billion, prior year. Analysts on average had estimated $5.15 billion in revenue. GAAP expenses rose 6% from a year ago to $3.0 billion. Exclusive of items, adjusted total expenses rose 7%.
In light of recent events within the U.S. banking sector, and the resulting regulatory uncertainty, the company has decided to pause its active buyback program.
“Maintaining the capital and liquidity required to support Schwab’s long-term growth remains our primary balance sheet objective,” CFO Peter Crawford stated.
Shares of Charles Schwab are up 1% in pre-market trade on Monday.
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