Your Survival Guy recommends you separate your banking from your investments. Schwab’s stock is off nearly 40% YTD through Friday. It’s why I like Fidelity. Unlike Schwab, it isn’t a bank. And it’s a private, family-run business, which keeps the pressures of Wall Street earnings expectations at bay. The Wall Street Journal’s Justin Baer reports on Schwab’s latest earnings:
Charles Schwab is kicking off another bank-earnings week, posting higher first-quarter profit on gains in interest revenue and money-management fees.
The brokerage giant said Monday that its net income rose 14% to $1.6 billion, from $1.4 billion a year ago. Revenue climbed 10% from a year ago to $5.12 billion.
Adjusted per-share earnings beat the expectations of analysts polled by FactSet. Revenue only slightly missed expectations.
Here’s what else you need to know:
- Schwab benefited from a surge in new brokerage accounts and client assets, which swelled to $7.58 trillion, still down from a year ago but up from the previous quarter.
- Rising interest rates helped lift interest revenue on assets.
- But client deposits continued to shrink — by a lot. Deposits were about $326 billion at the end of the first quarter, down 11%, or $41 billion, from the previous quarter. That was also down 30%, or about $140 billion, from a year ago.
- Customers moved some of that cash into higher-yielding investments, though the pace of that shift had slowed by March.
Schwab’s finance chief Peter Crawford summed it up in a statement Monday: “Our first quarter revenue picture reflected the company’s sustained business momentum and the benefits of rising interest rates, partially offset by clients’ asset allocation decisions.”
Schwab shares rose about 2% in premarket trading, then reversed course, falling about 2% premarket later in the morning.
The stock has tumbled nearly 40% this year through Friday after the collapse of Silicon Valley Bank and Signature Bank sparked fears over the health of the U.S. banking industry.
Action Line: When you’re ready to discuss separating your banking from your investments, let’s talk.