Brokerage giant Charles Schwab announced mixed results for its Q3 report early Monday. SCHW stock jumped during trade.
The largest U.S. brokerage reported earnings down nearly 30% to 77 cents per share adjusted while revenue fell 16% to $4.6 billion. Analysts polled by FactSet expected earnings of 74 cents per share on $4.62 billion in revenue.
The Schwab release noted temporary higher funding costs, lower interest-earning assets and softer trading volumes were behind the revenue decline. The Westlake, Texas-based company's earnings declines accelerated for the second quarter in a row after four quarters of decelerating earnings growth.
The discount broker added $46 billion in core net new assets during the quarter, including $27 billion in September from converting TD Ameritrade client assets. Charles Schwab completed its $26 billion all-stock acquisition of TD Ameritrade in Oct. 2020. The company has converted about 80% of Ameritrade client assets and accounts, the company reported.
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Year-to-date, Charles Schwab attracted $248 billion in core net new assets from accounts originally opened at Schwab, with a 6% organic growth rate. As of Sept. 30, Schwab's client assets totaled $7.82 trillion across 34.5 million accounts.
Net interest revenue fell 24% to $2.2 billion, driven by client allocation decisions within the higher interest rate environment. Still, Charles Schwab noted that cash realignment activity decelerated further during the quarter, even despite a brief uptick in August and an increase in long-term interest rates.
Meanwhile, trading revenue fell 17% to $768 million for the quarter. Revenue from bank deposit account fees halved to $205 million.
Schwab Stock
Schwab stock rallied 4.6% Monday after jumping more than 6% in early trade. The stock initially slid nearly 1.5% in premarket action.
Shares tumbled about 35.5% so far this year and hit a 2023 low of 45 on March 10 following the spring bank panic. Schwab stock climbed back to 68.80 in mid-July after its Q2 earnings report, but has steadily declined in recent months.
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