Charles Schwab (NYSE:SCHW) has reported a tough second quarter as it navigated “significant near-term headwinds” that saw a decline in bank deposits and net income.
However, it still beat market expectations, sending its shares more than 12% higher in early Tuesday trade.
The company, which provides securities brokerage, banking and related financial services, posted an 8.6% dip in net revenues of $4.66 billion for the three months ended June 30, 2023. Net income fell 28% to $1.29 billion. Adjusted earnings per share came in 23% lower at $0.75, beating the $0.73 consensus forecast from the eight analysts that follow the stock, according to Zacks Investment Research.
“This top-line result was driven primarily by a temporary increase in the utilization of supplemental funding to facilitate client cash allocation decisions during the current rising rate cycle,” chief financial officer Peter Crawford said in a statement.
“Net interest revenue declined 10% from the prior year to $2.3 billion as the incorporation of higher cost liabilities brought our net interest margin down by 32 basis points sequentially to 1.87%.
The company noted that during the second quarter, it gathered $52 billion in core net new assets – bringing year-to-date asset gathering to over $180 billion and keeping it squarely within our long-term organic growth range of 5% – 7%.
“While we observed signs of typical tax seasonality, as well as softer investor sentiment at the beginning of the quarter, we still attracted nearly 1 million new brokerage accounts and finished the period serving $8.02 trillion in total client assets across 34 million accounts,” co-chairman and CEO Walt Bettinger added.
“Against an improving, yet still somewhat unsettled backdrop, clients increased their utilization of help and advice at Schwab during the quarter, reflecting investors’ continued trust in us to support them on their journey towards a better financial future.”
Shortly after the market opened, the company’s shares were up 12% at $66.39.
Contact the author at stephen.gunnion@proactiveinvestors.com