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Schwab's quarterly profit jumps 60 percent

The largest online and discount brokerage firm in the United States reports a 60 percent rise in fourth quarter profits, beating analysts expectations.

Charles Schwab, the largest online and discount brokerage firm in the United States, today reported a 60 percent rise in fourth quarter profits, beating analysts expectations.

The San Francisco-based company said it earned $170 million, or 20 cents per share, on revenues of $1.1 billion. A consensus of analysts polled by First Call/Thomson Financial expected Schwab to earn 19 cents per share for the fourth quarter. The company netted $106 million, or 12 cents per share, on revenues of $789 million for the year-ago period.

"Our customers brought a record $33 billion in net new assets to the firm during the fourth quarter, which pushed net new assets for the year to $107 billion, up 35 percent from last year," said chairman and co-chief executive Charles Schwab whose name the company bears.

The company added that its customers' daily average revenue trades hit 234,000 during December 1999, surpassing the previous record set last April by 13 percent. The daily average revenue trades for the year increased 68 percent over the 1998 level.

"This increase in activity helped trading-related revenues reach new highs for 1999--commission revenues grew by 42 percent to $1.9 billion, and principal transaction revenues rose by 75 percent to $500 million," Schwab said.

The company said it continued to attract and retain customer assets but invested heavily in technology and marketing to retain existing customers and to reach new ones.

"Even with these increased investments, the revenue growth we experienced last year enabled the company to achieve a 14.9 percent after-tax profit margin for 1999, well above the levels we've achieved in recent years," Schwab said.

The company said that customers opened a total of 1.5 million new accounts during the year, bringing the total to 6.6 million active accounts by the end of 1999.

"Over the past twelve months the securities markets have experienced major swings in returns and trading volumes, and the competition in financial services continues to intensify," Schwab said.

Just last week, the company acquired U.S. Trust in a deal worth about $2.9 billion, hoping to attract high net individuals while keeping those who may jump to asset-management firms as their treasure chest grows.

For 1999, Schwab reported net income of $589 million, or 70 cents per share, on revenues of $3.9 billion. In comparison, the reported net income for 1998 was $348 million, or 42 cents per share, on revenues of $2.7 billion.

Shares of Schwab, however, dipped 1.88, or more than 4 percent, to 39.13 in early afternoon trading. The stock has hit a high of 77.5 and a low of 26.94 during the past 52 weeks.