January 18, 2012

Q4 Earnings: Schwab Meets Expectations, Reports Weakening Sales and New Assets

Net new assets in advisor-services accounts decline 13% to $9.2 billion vs. Q3 and 44% from a year ago.

Charles Schwab speaking with CNBC's Maria Bartiromo at Schwab Impact in 2011. Charles Schwab speaking with CNBC's Maria Bartiromo at Schwab Impact in 2011.

Charles Schwab (SCHW) said Wednesday that its net income in the fourth quarter of 2011 grew 37% vs. the year-ago period, meeting analysts’ expectations. The company’s sales, though, dropped 1% year over year to $1.113 billion as total net new assets for the period fell 18% year over year to $21.5 billion.

Net new assets in advisor-services accounts totaled $9.2 billion in the fourth quarter, a drop of 13% from the previous quarter and a decline of 44% from the year-ago period. (In the fourth quarter of 2010, inflows of $1.5 billion were added through the acquisition of Windhaven.)  

Schwab’s financial performance is not immune to the challenges posed by the current economic environment, which led to sequential declines in all of our major revenue lines in the fourth quarter, yet the company’s pre-tax profit margin still exceeded 22% for the quarter and 29% for full-year 2011,” said President and CEO Walt Bettinger in a press release.

Assets in advisor-services accounts stood at $679 billion in the most-recent period, a 4% year-over-year gain and a 6% jump from the third quarter.

The number of net new brokerage accounts was 203,000 in the fourth quarter, this represented a 60% decline sequentially and a 10% annual drop; in the third quarter of 2011, some 315,000 new accounts were picked up via the optionsXpress Holdings purchase.

“We ended 2011 with solid client metrics–net new assets totaled $10.5 billion in December, the highest of the year excluding significant one-time flows, and core net new assets totaled an industry-leading $82.3 billion for the year, up from $78.1 billion in 2010,” explained Bettinger in a statement.

“We remain convinced that pursuing the strategy and operating priorities already in place at Schwab represents the best path forward–we believe this will produce a superior service experience for clients and outsized improvement in earnings for stockholders as market conditions turn,” he added.

See AdvisorOne's Q4 earnings calendar for the financial sector.

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