UPDATE 1-Schwab sees more pressure from low U.S. rates

* Near-zero U.S. interest rates squeezing asset managers

* Sees pressure for more money market fee waivers in Q4

* ‘Modest decreases’ in NIM next year also expected

NEW YORK, Oct 27 (BestGrowthStock) – Brokerage Charles Schwab Corp
(SCHW.N: ) said it expects low U.S. interest rates to lead to
more fee waivers in the current quarter and lower net interest
margins (NIM) next year.

The key federal funds rate — the rate on overnight loans
between banks — has remained near zero for about two years as
the nation struggles to recover from recession. That has put
pressure on asset managers like Schwab, which rely on
interest-based revenue and management fees.

“We are definitely impacted by the low rate environment on
a couple of different fronts,” Chief Financial Officer Joe
Martinetto said on Wednesday.

The company expects pressure for more fee waivers on money
market funds in the fourth quarter, Martinetto said in a
quarterly business update. San Francisco-based Schwab waived
$93 million in fees in the third quarter, down from $113
million in the second quarter.

If rates remain flat next year, as economists increasingly
expect, Martinetto said the brokerage anticipates “modest
decreases” in its NIM — the spread between earnings on
securities loans and the cost of getting the funds.

Schwab said it expects its NIM to remain between 1.8
percent and 1.9 percent in the fourth quarter, and “a gradual
trending down” toward 1.75 percent in the fourth quarter of

Schwab shares were up 0.8 percent at $15.17 in afternoon
trade in New York.
(Reporting by Jonathan Spicer; editing by John Wallace)

UPDATE 1-Schwab sees more pressure from low U.S. rates