Schwab: MF Fee Waivers Over
A press release entitled, "Schwab Reports Record Quarterly Net Income of $575 Million, up 27%," tells us, "The Charles Schwab Corporation announced today that its net income for the second quarter of 2017 was a record $575 million, up 2% from $564 million for the prior quarter, and up 27% from $452 million for the second quarter of 2016. Net income for the six months ended June 30, 2017 was $1.1 billion, up 32% from the year-earlier period." CFO Peter Crawford comments, "Our financial model, with multiple revenue streams, operating leverage, and an all-weather balance sheet, produced outstanding second quarter results, with records for revenue and pre-tax profit margin. Net interest revenue rose to a record $1.1 billion, up 32% from last year's second quarter, driven by higher short-term rates reflecting the Federal Reserve's March and June 2017 hikes. We achieved these results even as the longer end of the yield curve softened and growth in interest-earning assets slowed due to clients engaging further with the markets and investing more of their cash. Asset management and administration fees grew 12% year-over-year to a record $845 million, reflecting further improvement in net money fund revenue from rising rates and growing balances in advised solutions, equity and bond funds, and ETFs. By quarter-end, the yields on all proprietary money market fund portfolios were at or above their respective operating expense ratios, fully eliminating money fund fee waivers for the first time since the financial crisis.... Overall, our growing success with clients, the Fed's rate actions, and improving equity market valuations helped us end the second quarter a bit ahead of our 2017 baseline scenario, with total revenue up 17% year-over-year to $2.1 billion."
