Schwab Improves Results but Misses Estimates; Citi Tops Expecations on Strong Sales

The advisor services unit sees strong year-over-year flows and asset improvement

Charles Schwab (center) listening to attendees at Schwab Impact 2012. Charles Schwab (center) listening to attendees at Schwab Impact 2012.

Charles Schwab & Co. (SCHW) said it had net income of $206 million, or $0.15 per share, versus 195 million, or $0.15, a year ago—missing analysts’ estimates by $0.01. Sales rose to nearly $1.3 billion from about $1.2 billion for an 8% improvement.

“During the first quarter we continued to win in the marketplace as we gathered $43.4 billion in net new assets, a 9% annualized organic growth rate, and 244,000 new brokerage accounts, up 2% year over year,” said CEO and President Walt Bettinger, in a press release.

“We also had $4.7 billion in net new enrollments in our retail advisory offers, up more than 70% year over year, as clients look to Schwab for help navigating opportunities in the market,” Bettinger said. According to the executive, client assets in advisory accounts totaled $135.9 billion as of March 31, including $15.6 billion managed in Schwab's Windhaven portfolios, up 15% and 51%, respectively, from a year ago.

In addition, the broker-dealer ended the quarter with $2.08 trillion in total client assets, up 14% from a year ago. The client base grew to 8.9 million active brokerage accounts, 888,000 banking accounts and 1.6 million corporate retirement plan participants—up 3%, 11% and 4%, respectively.

Assets in advisor-services accounts totalled about $895 billion, an improvement of 14% for the year and 7% for the quarter.

“During the first quarter, we launched Schwab ETF OneSource, providing clients with commission-free access to 105 ETFs from Schwab and five other leading providers,” the CEO said. “Our 15 proprietary ETFs, which are part of Schwab ETF OneSource, reached $10.9 billion at quarter-end, up 65% year over year.”

Net new money in advisory services accounts was up 16% for the year but down 37% from the prior quarter to $15.9 billion, while new money in investor accounts rose 9% for the year and but fell 30% for the quarter to $27.5 billion.

The overall net gain in new assets—after removing assets shifts tied to stock-market performance—was a sharp jump of 118% for the year but a fall of 14% from the prior quarter.

Citigroup Excels

Also on Monday, Citigroup (C) reported a first-quarter profit of $3.8 billion, or $1.23 a share, topping analysts’ estimates by $0.05, thanks to its ability to cut costs and unload troubled assets.

The bank also reported higher revenue of $20.5 billion vs. estimates of $20.2 billion, noting particular success in its investment-banking unit. After adjustments, the company reported a profit of $4 billion on revenue of $20.8 billion.

“Achieving consistent, high-quality earnings is one of my top priorities and these results are encouraging,” Michael L. Corbat, the bank’s CEO, said in a statement. “During the quarter, we benefited from seasonally strong results in our markets businesses, sustained momentum in investment banking, continued year-over-year growth in loans and deposits in Citicorp, and a more favorable credit environment.”

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