Schwab’s profit spikes, stock price doesn’t

Wall Street still discounting discount brokerage (Photo: Bloomberg News)

Brokerage sees dramatic jump in income and net new accounts; Wall Street yawns

The Charles Schwab Corp. Ticker:(SCHW) had a net increase of 18,000 new accounts during the third quarter, which helped propel the discount-brokerage firm to a 77% increase in net income over the comparable period last year.
Net income for the three-months period through September reached $220 million, compared with $124 million for the year-earlier period, the company reported today.
The broker’s third-quarter revenue of $1.2 billion marked an 11% rise from the third quarter of 2010.
Total investor accounts reached 5.7 million during a quarter, up 2% from a year earlier. But the 18,000 net new accounts, not including internal transfers, represented a 64% increase over the comparable period last year.
“Given the weakened environment, we’ll respond appropriately on the expense side while remaining true to our long-term strategy,” Schwab chief executive Walt Bettinger said in the report.
“We recognize that effective expense discipline remains key to our ability to balance near-term profitability with investing in our clients to enhance their service experience and sustain our growth,” he added.

As of noon EST, Schwab shares were trading at $12.27, down 3.7% from the start of the day. That compares with a 1.3% drop by the S&P 500 at noon today.
Schwab’s stock price has fallen 24.6% from the start of the year, which compares with a 2.6% drop by the S&P 500 over the same period.