Brokerage Charles Schwab's second-quarter profit falls on interest income dip

(Reuters) - Brokerage Charles Schwab's second-quarter profit fell 2%, hurt by higher interest paid on client deposits and its own borrowings.

WHY IT'S IMPORTANT

With the U.S. Federal Reserve holding onto interest rates, companies such as Charles Schwab have been paying higher interests on deposits.

Meanwhile, Charles Schwab raked in higher fees, which partially offset the drop in quarterly profit.

BY THE NUMBERS

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.

The company's asset management and administration fees, earned from managing mutual funds and exchange-traded funds, increased 18% to $1.38 billion. Charles Schwab's second-quarter net revenue rose 1% to $4.69 billion.

On an adjusted basis, the company posted a quarterly profit of $1.47 billion, or 73 cents per share, compared with $1.49 billion, or 75 cents per share, a year earlier.

MARKET REACTION

Charles Schwab's shares were down 6.5% at $70.23 in early trading.

(Reporting by Pritam Biswas in Bengaluru; Editing by Shreya Biswas)