Brokerage Charles Schwab's Profit Dips On Weaker Interest Income

Charles Schwab's second-quarter profit fell by 2% as the brokerage paid out more interest on client deposits and its own borrowings, sending its shares down 7.1%, Reuters reported.

Charles Schwab recorded a rise in fees, which partially offset the hit to profit from the interest expenses. I Photo: Mike Mozart Flickr

With the US Federal Reserve maintaining higher interest rates, companies like Charles Schwab have been paying more interest on deposits. However, the company recorded a rise in fees, which partially offset the hit to profit from the interest expenses.

The Westlake, Texas-based company's total client assets rose 17% to $9.41 trillion in the three months ended June 30, compared with $8.02 trillion a year earlier. Charles Schwab's net interest revenue fell 6% to $2.16 billion.

Its asset management and administration fees, earned from managing mutual funds and exchange-traded funds (ETFs), increased 18% to $1.38 billion. Second-quarter net revenue rose 1% to $4.69 billion.