Charles Schwab (SCHW) announced second quarter earnings results that edged past analysts estimates last week. Schwab’s second-quarter net income was $324 million, which was up a healthy 27 percent from last year’s net income figure. Revenue came in at $1.48 billion, or 11 percent higher than the second quarter in 2013. Earnings per share were 23 cents per share. Analysts had been expected 22 cents per share on revenue of $1.47 billion. Pretax profit margins came in at 35.3%, up from 30.8% last year. That was Schwab’s best profit margin since 2008.
Most analysts were impressed with the results from Schwab. Expenses came in lower than expected and a jump in profitable margin lending was important as well. The online broker reported the highest level of client assets in its history at $2.4 trillion. That number was 17 percent higher than the same period a year ago. There has been a clear shift at Schwab to focusing on its full-service capabilities and advisory services. This shift has shown to be a solid strategy thanks to earnings results and the sharp rise in client assets at the company.
On the negative side, Charles Schwab did see a 10% drop in Daily Average Revenue Trades (but that is more of an industry wide issue) in the quarter. The stock market didn’t react strongly in either way from this report. Schwab shares have traded mostly flat since the report.
Click here for the full second quarter earnings release from Charles Schwab.