Charles Schwab issued its spring business update on Monday and highlighted a series of financial strategies that helped the bank report earnings beyond Wall Street’s first quarter expectations.
Amid challenging economic conditions, Schwab said applying key initiatives throughout the first quarter including scale and efficiency, personalized investment and client segmentation helped the bank take on 1.2 million new brokerage clients to reach 33.6 million.
CHARLES SCHWAB IS GOING TO DOWNSIZE THE BANK: R.C. WHALEN
Looking ahead, the bank said net interest margins could drastically increase by fourth quarter 2023, while deposit rates are expected to track in-line with prior cycles and attentive capital and liquidity management will maintain the company’s flexibility to support long-term growth.
Schwab said its priorities for the rest of the year will include continued business growth through their client-first strategy, long-term revenue growth through a variety of sources, and thoughtful expense management to enable sustainable performance.
Over the first quarter, the bank reported net income of $1.60 billion, or 83 cents a share, up 14% from $1.40 billion, or 67 cents a share from last year.
Excluding nonrecurring items, adjusted earnings per share of 93 cents topped the FactSet consensus of 90 cents, while revenue jumped 9.5% to reach $5.12 billion, just below the FactSet consensus of $5.14 billion. Meanwhile, total interest-earnings assets dropped 20.2% to $504.60 billion.
Despite an upbeat report and guidance, the bank will put its buyback program on-hold as the crisis in the financial sector plays out.
CHARLES SCHWAB NETS $53B IN ASSETS, SECOND HIGHEST MARCH IN HISTORY
Charles Schwab CFO Peter Crawford said Monday, "Maintaining the capital and liquidity required to support Schwab’s long-term growth remains our primary balance sheet objective, we increased our quarterly common dividend by 14% to $.25 per share and returned capital via common and preferred stock repurchases."
BANK OF AMERICA CLIENTS WITHDRAW $2.3B FROM US SECURITIES
"Even with the accelerated capital return during the first two months of the quarter, our Tier 1 Leverage Ratio finished at 7.1%," he added. "In light of recent events within the U.S. banking sector, and the resulting regulatory uncertainty, we have decided to pause our active buyback program."
