Beating analysts' estimates, net income at Charles Schwab (SCHW) jumped 17% in the third quarter from a year ago to $376 million, or $0.28 per share, on revenues of about $1.6 billion, the company said early Thursday.
Schwab was able to lower costs and increase margins. Its pretax profit margin rose to 36.5% from 33.4% a year earlier. Net new assets were $30.8 billion in the period, representing 7% year-over-year growth in Schwab Advisor Services, the largest RIA custodian, of $17.1 billion but a 27% drop in Investor Services of $13.7 billion.
Overall client assets of $2.4 trillion were flat. About $1.3 trillion is held by clients in Investor Services accounts, with $1.1 trillion in Schwab Advisor Services accounts.
Total client assets in Schwab Intelligent Portfolios, the company's robo-advisor service, rose by $1.1 billion from Q2 to $4.1 billion as of Sept. 30. The company launched the retail version of its all-ETF digital advice platform in March 2015; the RIA version, Schwab Institutional Intelligent Portfolios, was launched in June of this year.
As for sales, asset management and administrative fees grew 2% from last year to $663 million, while net interest revenue expanded 11% to $635 million. Trading revenue jumped 9% to $228 million.
"Faced with economic uncertainty and the resulting market volatility, investors increasingly turned to our advice offerings throughout the quarter," said CEO Walt Bettinger, in a statement. "Approximately 36,000 accounts enrolled in one of our retail advisory solutions during the last three months, 57% more than the year-earlier period, and total accounts using these solutions reached 550,000, up 13% year-over-year."
The company ended the quarter with 9.7 million brokerage accounts, 1 million banking accounts and 1.5 million retirement plan participants, Bettinger reported, up 4%, 6% and 6%, respectively, from a year ago.
During the week of Aug. 24, client and prospect visits to Schwab's website increased 35% and 58%, respectively, from the prior week, he said. Total calls to Schwab representatives increased 26%.
Retirement News
On Wednesday, Schwab Retirement Plan Services, which serves about 1.3 million workers, announced it was rolling out advisor managed accounts for 401(k) plans.
