Charles Schwab and Interactive Brokers both posted better-than-expected Q2 earnings with their respective early Friday and late Thursday reports. IBKR rallied strongly, while SCHW tacked on further gains after Thursday's strong session.
Schwab hosts institutional investors for a business update starting at 8:30 a.m. ET on Friday. A key question for investors, Deutsche Bank analyst Brian Bedell noted in a Q2 earnings preview, is when Schwab "may enter the crypto space."
Interactive Brokers Earnings
Estimates: Analysts expected Interactive Brokers to post Q2 earnings per share of 47 cents, up 7% from a year ago, according to FactSet. Revenue was seen growing 11.7% to $1.374 billion.
Results: Interactive Brokers earned 51 cents, up 16% from a year ago. Revenue grew 14.7% to $1.48 billion.
Interactive Brokers said commission revenue grew 27% to $516 million on higher customer trading volumes. Trading in stocks rose 31%, options 24% and futures 18%.
Net interest income grew 9% to $860 million on higher customer credit balances and securities lending.
Interactive Brokers didn't offer full-year guidance ahead of its earnings call at 4:30 p.m. ET.
Schwab Earnings
Estimates: Schwab is expected to post Q2 EPS of $1.10, up 50.7% from a year ago. Revenue is seen growing 22% to $5.734 billion.
Results: Schwab earned an adjusted $1.14 per share, up 56% from a year ago. Revenue grew 25% to $5.851 billion.
Total client assets increased 14% from a year ago to a record $10.76 trillion.
Net interest margin rose 12 basis points from Q1 to 2.65% from 2.03% a year ago and 2.59% in Q1, helped by the reduction of high-cost funding and a rebound in securities lending.
Schwab said it reduced higher-cost bank funding by $10.4 billion, ending the quarter with $27.7 billion remaining.
In a July 9 note, Raymond James analyst Patrick O'Shaughnessy wrote that he expects Schwab to fully pay down its high-cost funding by the end of the year, providing a further boost to net interest margins.
Raymond James hiked its price target for SCHW to 99 from 91, keeping an outperform rating.
Interactive Brokers, Schwab Stock
Schwab rose 1% to 94, adding to Thursday's 2.1% advance. Through yesterday's close, SCHW had run up about 14% since clearing an 81.24 buy point from a double-bottom base on April 29.
IBKR jumped 5.4% to 62.65 in early Friday stock market action. IBKR had closed nearly unchanged at 59.43 ahead of earnings, right at all-time levels. Interactive Brokers broke above a 53.53 cup-with-handle buy point on June 27 and has since climbed out of buy range.
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