Charles Schwab Corp., the largest independent brokerage by client assets, reported second-quarter profit that beat the average analyst estimate as revenue from earned interest offset a drop in trading.
Net income was $205 million, or 17 cents a share, compared with $205 million, or 18 cents, a year earlier, the San Francisco company said Friday. Analysts estimated profit of 15 cents, according to the average in a Bloomberg News survey. The stock rose the most in more than two months.
"Higher asset management fees and higher net interest drove most of the upside," Alex Kramm, a New York analyst at UBS AG, wrote in a note after the release. "Results reiterate that Schwab has turned the corner after a challenging 2009" and first quarter.
Schwab has been weathering a near-zero interest rate environment since December 2008. About one-third of last year's revenue came from interest earned on cash in its bank and money market funds, while almost half was from fees for managing and administering assets.
Revenue from interest earned on cash and investments climbed 26%, to $382 million, the company said Friday, offsetting a 14% drop in sales from trading. Total revenue slipped 0.5%, to $1.08 billion. Net new customer assets declined $37.5 billion.
