UPDATE 1-Discount broker Charles Schwab's profit beats estimates

Thursday, 16 Jan 2014 | 9:21 AM ET

Jan 16 (Reuters) - Discount broker Charles Schwab Corp reported a higher-than-expected quarterly profit as it earned more from trading commissions and fees for managing client assets.

Charles Schwab shares rose nearly 3 percent in premarket trading on Thursday.

Asset management and administration fees soared 13 percent to $608 million in the fourth quarter ended Dec. 31.

Trading revenue grew to $231 million from $202 million a year earlier.

Customer's daily trading volume, Schwab's traditional measure of client confidence and risk-taking, rose 8 percent to an average 487,800 trades per day.

Revenue jumped 18 percent to $1.43 billion.

The broker's strategy of selling a range of retirement and investments products has been adopted by big rivals such as UBS Wealth Americas and Wells Fargo Advisors.

The U.S. Federal Reserve, which has kept interest rates artificially low to boost spending, will begin tapering its $85 billion monthly bond buying program by $10 billion starting 2014, boosting net interest income at giant retail brokerages.

Schwab, which competes with bigger companies such as TD Ameritrade Holding Corp and E*TRADE Financial Corp , said expenses rose 8 percent to $937 million.

Net income available to common stockholders rose to $297 million, or 23 cents per share, from $189 million, or 15 cents per share, a year earlier.

Analysts on average expected earnings of 21 cents per share, according to Thomson Reuters I/B/E/S.

Schwab shares closed at $26.03 on the New York Stock Exchange on Wednesday.

The stock has jumped 13 percent since the company last reported results. The broader S&P 500 Financials Sector Index has gained 9 percent in past three months.

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