Charles Schwab Corp. reported that customers shifted assets to cash toward the end of last year, but especially in December, when volatile stock prices spooked investors.
Last month, cash represented 12.8% of Schwab client assets, up 2 percentage points compared with a year earlier, the financial-services company reported Wednesday. Finance chief Peter Crawford said in prepared remarks the company saw a surge of cash allocations in the month.
Overall, Schwab reported its average interest-earning assets increased 20% to $268 billion in the fourth quarter compared with the year earlier, allowing the firm to generate net-interest revenues of $1.63 billion in the quarter, up 42%.
Asset management and administrative fees at the San Francisco-based company fell 13% in the quarter to $755 million, and was weaker than analyst expectations. Trading revenue rose to $206 million from $154 million.
Shares of Schwab, which offers individual brokerage accounts, retirement plans and banking accounts, rose 5.5% Wednesday to $46.70 a share.
Investors had been skeptical that stock market volatility would help the company grow its balance sheet, Goldman Sachs & Co. analyst Will Nance wrote in a research note.
Overall, the company booked $2.67 billion in net revenue in the fourth quarter, up 19% from the year earlier and more than the $2.64 billion analysts expected according to FactSet.
Profit rose to $935 million, or 65 cents a share, in the fourth quarter, from $597 million, or 41 a share, in the fourth quarter of 2017. Analysts polled by FactSet predicted 64 cents a share.
Clients opened 380,000 new brokerage accounts in the quarter, compared with 386,000 new accounts in the fourth quarter of 2017. Overall, the company ended last year with 11.6 million active brokerage accounts.
The company is scheduled to discuss the results at an investor day Feb. 5.
Write to Micah Maidenberg at [email protected]
- New Clients Boost Medco Profits
- Bioshock Infinite's pre-order bonuses: boosts, cash and lockpicks
- Stock Watch: New Clients Boost Webstakes
- Schwab Launches Initiative To Educate Online Traders
- Schwab Ousts CEO in Face of Sagging Profits
- Internet Brokers Add Services To Boost Bottom Line
- Charles Schwab Slashes Workforce
- Stock Watch: AOL Gains on Schwab Alliance
- Stock Watch: Bullish Report Boosts E*Trade
- Schwab Contract Powers BEA Systems