Charles Schwab Corporation briefly discusses money market funds, bank deposit products and fee waivers in its latest quarterly earnings report. CFO Joe Martinetto says, "The company'​s average balance of interest-​bearing assets, which are primarily funded by client cash inflows, rose by $​14.​8 billion, or 34%, to $​58.​6 billion between 2008 and 2009. Over the near term, however, the net interest revenue generated by this growing asset base has been severely impacted by continued declines in the short-​term interest rate environment, even as the overnight Fed Funds rate has been at essentially zero since late 2008. As we'​ve been discussing for some time, with declining investment yields and essentially no room left to reduce liability costs, the resulting drop in our net interest spread has outweighed balance sheet growth, and net interest revenue declined by 28% in 2009." He continues, "`​Money market fund fee waivers caused by declining rates rose to $​110 million in the fourth quarter, bringing the full-​year total to $​224 million, which caused asset management fees to decline by 20%.... With no sign of higher short-​term rates on the horizon, we implemented a series of expense reduction measures in 2009 that enabled us to lower costs by 7%, which in turn helped the company achieve a 30.​4% pre-​tax profit margin and a 17% return on equity, right in line with our expectations for the year given the environment." See also, WSJ'​s "​Rates Cut Both Ways at Schwab".

Your Name:
Your Email:
Recipient Email(s):

Use a comma or a semicolon to separate

Please retype symbols from the image:

Optional Message

Daily Link Archive