Schwab Shares Soar After Strong Q3 Earnings: Revenue Beats Estimates, Assets Hit Record High
The Charles Schwab Corporation (SCHW) is off to a strong start to the day, with its shares surging in premarket trading. The surge follows the release of the company’s third-quarter earnings report, which revealed impressive financial performance.
Revenue for the quarter climbed 5% year-over-year to $4.85 billion, surpassing the consensus estimate of $4.78 billion. This positive performance was largely attributed to a significant increase in asset management and administration fees, which rose 21% year-over-year to $1.48 billion. The company also saw a rise in active brokerage accounts, reaching 36.0 million during the quarter.
While net interest revenue dipped by 1% to $2.222 billion, the company’s total client assets reached a record high of $9.92 trillion, representing a 27% increase year-over-year. This robust growth is a testament to the continued confidence investors have in Schwab’s services.
Despite the positive financial performance, the company’s deposits took a hit, falling 13% year-over-year to $246.5 billion by the end of the third quarter. However, this decline was offset by the strong growth in client assets.
The company’s CEO, Walt Bettinger, highlighted the impressive performance of Schwab Wealth Advisory, which saw $40 billion in net inflows during the year-to-date period. This represented a 65% increase compared to the same period in 2023.
Looking ahead, Bettinger announced his retirement at the end of 2024, with the company’s current president, Rick Wurster, set to take over as CEO starting January 1, 2025.
Investors seeking exposure to Schwab can consider the IShares U.S. Broker-Dealers & Securities Exchanges ETF (IAI) and the Tidal ETF Trust God Bless America ETF (YALL).
Schwab’s strong Q3 earnings and record client assets are positive signs for the company’s future growth.
Schwab Trading Activity Falls In September Despite Market Strength
While Schwab’s overall performance was strong, the company did experience a decline in trading activity during September. Despite a robust market, daily average trades dropped to 5.697 million, a 9% decrease year-over-year.
This decrease in trading activity could be attributed to several factors, including the overall market sentiment and investor behavior. However, the company’s strong financial results demonstrate its ability to navigate market volatility and maintain its growth trajectory.