BOSTON — Discount broker Charles Schwab Co. said Monday that its second-quarter profit rose 16 percent as growth in its advisory business for individual investors offset a decline in trading revenue.
The San Francisco-based company reported net income of $238 million, or 20 cents per share,
for the three months ended June 30. That was up from $205 million, or 17 cents per share, in the same period a year ago.
The results were slightly ahead of the 19 cents per share forecast by analysts surveyed by FactSet.
Revenue rose 10 percent to $1.19 billion from $1.08 billion.
Assets in accounts geared toward individual investors who receive investment advice from the company jumped 20 percent to $113 billion at the end of June. Adding assets managed by independent fee-based advisers who offer Schwab’s mutual funds and other investments to clients, Schwab’s total assets for which clients receive advisory services rose 17 percent to $811 billion.
Those gains helped lift Schwab’s asset management and administration revenue 15 percent, to $502 million, from $437 million in the year-ago period.
Net interest revenue jumped nearly 18 percent to $451 million from $383 million. That gain was largely the result of growth in interest-earnings assets. The average rate earned on those assets was 1.97 percent in the latest quarter, slightly below the 2.02 average in the year-ago quarter.
Schwab is among several asset managers that have been hurt by near-zero interest rates coming out of the recession. Because of the low rates, Schwab and other companies have temporarily extended fee waivers on their money-market mutual funds to ensure clients earn better returns. Waivers last quarter totaled $128 million, up from 13 percent from $113 million a year ago.
Trading revenue fell 12 percent, to $205 million from $233 million. Stock trading slumped during a spring pause in the more than two-year-old bull market. The Standard & Poor’s 500 index slipped 0.4 percent in the second quarter. Schwab said daily average trades by clients declined on a year-over-year basis in April (1 percent) and May (23 percent). In June, the figure was essentially flat, at an average 363,800 trades per day, compared with 364,400 in June 2010.
However, Schwab brokerage account total was 8.14 million at the end of June, up 3 percent from a year earlier. The company’s banking account total is up 18 percent, to 745,000.
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