Schwab Trading Volume Down, 4Q Outlook Trimmed

SAN FRANCISCO (AP) — Charles Schwab Corp. said daily trading volume dropped 27 percent in November from a year ago, further eroding falling revenue that will cut into fourth-quarter profits, the retail brokerage said Monday.

Schwab said it expects its fourth-quarter earnings will fall 2 cents to 4 cents per share below its third-quarter profit, which came in at 17 cents per share. Analysts surveyed by Thomson Reuters expect fourth-quarter profit of 17 cents per share, on average.

Schwab Chief Financial Officer Joe Martinetto attributed the company's lower forecast to declining trading, low yields for Schwab's money-market mutual funds, and a normal seasonal increase in the company's marketing costs.

Near-zero interest rates have driven yields for many companies' money funds to historic lows, leading the funds' sponsors to temporarily waive management fees to ensure customers continue receiving modestly positive returns on their investments.

Martinetto said Schwab believes the waivers it provides for its money funds "could increase by approximately $30 million over the third quarter total of $78 million."

Schwab reported its clients' average daily trading volume was 297,100 in November, down 27 percent from the same month a year ago, and down 11 percent from October of this year.

However, net new and existing clients brought $6 billion in net new assets to Schwab in November, and the company's total client assets were valued at nearly $1.4 trillion at the end of the month. That figure is up 26 percent from November 2008, and up 4 percent from October.

Schwab remains "well-positioned to generate increased revenues as soon as interest rates stabilize," Martinetto said, citing client growth and continuing improvement in the economy and stock markets.

Shares of San Francisco-based Schwab fell 56 cents, or 3 percent, to $17.87 in morning trading.

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