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Schwab (SCHW) Up as Q2 Earnings Beat Estimates, Revenues Rise
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Charles Schwab’s (SCHW - Free Report) second-quarter 2022 adjusted earnings of 97 cents per share handily beat the Zacks Consensus Estimate of 91 cents. The bottom line also jumped 39% from the prior-year quarter.
The stock jumped 3.7% in pre-market trading, reflecting investors’ bullish sentiments over its better-than-expected quarterly performance. The full-day trading session will display a clearer picture.
Results gained from higher rates, which led to an increase in net interest income. Thus, revenues witnessed an improvement despite higher volatility hurting trading income. Also, lower fee waivers and growth in brokerage account numbers acted as tailwinds during the quarter. However, higher expenses were a headwind.
Results excluded acquisition and integration-related costs and amortization of acquired intangibles. After considering these, net income available to common shareholders (GAAP basis) was $1.79 billion or 87 cents per share, up from $1.27 billion or 59 cents per share in the year-ago quarter.
Revenues & Expenses Rise
Net revenues were $5.09 billion, which grew 13% year over year. The increase was mainly driven by a 31% surge in net interest income. The top line surpassed the Zacks Consensus Estimate of $5.04 billion.
Total non-interest expenses (GAAP basis) increased marginally to $2.82 billion. Excluding non-recurring items, expenses were $2.57 billion, up 2%.
The company recorded fee waivers of $3 million in the quarter compared with $85 million in the prior-year quarter.
Pre-tax profit margin increased to 44.6% from 38% in the prior-year quarter.
At the end of the second quarter, Schwab’s average interest-earning assets increased 18% year over year to $623.6 billion.
Annualized return on equity, as of Jun 30, 2022, was 19%, up from 10% in the prior-year quarter number.
Other Business Metrics
As of Jun 30, 2022, Schwab had total client assets of $6.83 trillion (down 10% year over year). During the reported quarter, net new assets — brought by new and existing clients — were $43.4 billion.
Schwab added 1 million new brokerage accounts during the quarter. As of Jun 30, 2022, the company had 33.9 million active brokerage accounts, 1.7 million banking accounts and 2.3 million corporate retirement plan participants.
Our Take
Schwab’s inorganic expansion efforts are expected to strengthen its position as a leading brokerage player. Also, higher interest rates are supporting the top-line growth. However, mounting expenses remain a concern.
The Charles Schwab Corporation Price, Consensus and EPS Surprise
Earnings Release Dates of Other Investment Brokers
Raymond James (RJF - Free Report) is scheduled to announce quarterly numbers on Jul 27.
Over the past 30 days, the Zacks Consensus Estimate for Raymond James’ quarterly earnings has been revised 5.8% lower to $1.63, suggesting a 10.9% decrease from the prior-year reported number.
LPL Financial (LPLA - Free Report) is slated to announce second-quarter 2022 numbers on Aug 2.
Over the past 30 days, the Zacks Consensus Estimate for LPL Financial’s quarterly earnings has moved 1.5% north to $2.03, implying a 9.7% rise from the prior-year reported number.
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Schwab (SCHW) Up as Q2 Earnings Beat Estimates, Revenues Rise
Charles Schwab’s (SCHW - Free Report) second-quarter 2022 adjusted earnings of 97 cents per share handily beat the Zacks Consensus Estimate of 91 cents. The bottom line also jumped 39% from the prior-year quarter.
The stock jumped 3.7% in pre-market trading, reflecting investors’ bullish sentiments over its better-than-expected quarterly performance. The full-day trading session will display a clearer picture.
Results gained from higher rates, which led to an increase in net interest income. Thus, revenues witnessed an improvement despite higher volatility hurting trading income. Also, lower fee waivers and growth in brokerage account numbers acted as tailwinds during the quarter. However, higher expenses were a headwind.
Results excluded acquisition and integration-related costs and amortization of acquired intangibles. After considering these, net income available to common shareholders (GAAP basis) was $1.79 billion or 87 cents per share, up from $1.27 billion or 59 cents per share in the year-ago quarter.
Revenues & Expenses Rise
Net revenues were $5.09 billion, which grew 13% year over year. The increase was mainly driven by a 31% surge in net interest income. The top line surpassed the Zacks Consensus Estimate of $5.04 billion.
Total non-interest expenses (GAAP basis) increased marginally to $2.82 billion. Excluding non-recurring items, expenses were $2.57 billion, up 2%.
The company recorded fee waivers of $3 million in the quarter compared with $85 million in the prior-year quarter.
Pre-tax profit margin increased to 44.6% from 38% in the prior-year quarter.
At the end of the second quarter, Schwab’s average interest-earning assets increased 18% year over year to $623.6 billion.
Annualized return on equity, as of Jun 30, 2022, was 19%, up from 10% in the prior-year quarter number.
Other Business Metrics
As of Jun 30, 2022, Schwab had total client assets of $6.83 trillion (down 10% year over year). During the reported quarter, net new assets — brought by new and existing clients — were $43.4 billion.
Schwab added 1 million new brokerage accounts during the quarter. As of Jun 30, 2022, the company had 33.9 million active brokerage accounts, 1.7 million banking accounts and 2.3 million corporate retirement plan participants.
Our Take
Schwab’s inorganic expansion efforts are expected to strengthen its position as a leading brokerage player. Also, higher interest rates are supporting the top-line growth. However, mounting expenses remain a concern.
The Charles Schwab Corporation Price, Consensus and EPS Surprise
The Charles Schwab Corporation price-consensus-eps-surprise-chart | The Charles Schwab Corporation Quote
Currently, Schwab carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Earnings Release Dates of Other Investment Brokers
Raymond James (RJF - Free Report) is scheduled to announce quarterly numbers on Jul 27.
Over the past 30 days, the Zacks Consensus Estimate for Raymond James’ quarterly earnings has been revised 5.8% lower to $1.63, suggesting a 10.9% decrease from the prior-year reported number.
LPL Financial (LPLA - Free Report) is slated to announce second-quarter 2022 numbers on Aug 2.
Over the past 30 days, the Zacks Consensus Estimate for LPL Financial’s quarterly earnings has moved 1.5% north to $2.03, implying a 9.7% rise from the prior-year reported number.