Schwab said in a statement on Thursday its online customer base reached 1.8 million as of June 30, marking the growing usage of the Internet and computers by individual investors.

Online accounts made up 52 per cent of total trading volume in the second quarter for the firm, compared with 36 per cent during the same period a year ago. The growth in online trading helped push earnings for the second quarter up 19.2 per cent to $76.3 million, or 28 cents per diluted share, compared with $64 million, or 23 cents, during the same period last year and matching the First Call Corp consensus analyst forecast.

Revenue rose 20 per cent to a record $638.0 million. Schwab's shares closed up $1.69 at $36.81 in composite trading on the New York Stock Exchange. ``Certain things bode well forSchwab,'' said, analyst Christopher Reed with William Blair & Co. ``The new customer account openings and accounts growth was due in part to the January pricing action, the brand franchise, quality and reputation,'' he said.

Beginning January 15, Schwab launched a strategy to extend the electronic brokerage business to its entire customer base of 4.8 million active investors by offering all retail customers access to online investing with simplified pricing.

Schwab, which has been involved in electronic commerce since 1984, has become the biggest, but not the cheapest, online broker. In the first quarter, Schwab had 31.4 per cent of the online trading market, more than twice as much as its biggest competitor, E Trade, with 12.1 per cent, analysts said. Schwab has kept its starting price at $29.95 a trade despite a brewing online price war.

Analysts predict commissions for cost-effective online trades will sink to essentially zero over time for those firms willing to pay for order flow.``Scwab willnever be the lowest in terms of commission rates, but they have the breadth of product line that attracts a different line of customers,'' Reed said. ``The pricing has gotten very competitive in Internet trading and their business model calls for lowering the cost of operations in advance of inevitable pricing declines,'' he said, noting the action in January reflected this strategy.

Schwab said on Thursday its customers now buy and sell more than $2 billion worth of securities through its Internet Web site every week. Schwab said the 1.8 million online customers held accounts with more than $128 billion in assets at the end of the second quarter. It said it has installed Internet access at 211 of its 278 branches, and all of them should have access before the end of 1998.

``By staying focused on meeting the needs of investors, we experienced continued strength in our fundamentals,'' chairman Charles Schwab said in a statement.

He said the company opened 347,000 new accounts during the second quarter,up 20 per cent over a year ago. Customers brought $17.5 billion in net new assets to the firm during the second quarter, 46 per cent more than a year ago.

At the end of June, customer assets at Schwab totalled $428 billion, a 40 per cent increase from a year ago. Total active accounts were 5.3 million at the end of June vs. 4.4 million a year ago.

Schwab said that net interest income and mutual fund service fees both increased by more than 30 per cent, while record levels of customer trading activity during April helped achieve a 15 per cent increase in commission revenues as lower-priced Internet trading activity continued to grow.