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Investors Business Daily
Investors Business Daily

Charles Schwab Rallies On Mixed Q3, Offers Ameritrade Client Update

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.

You can follow Harrison Miller for more stock news and updates on X/Twitter @IBD_Harrison

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