The logo for financial broker Charles Schwab at a location in New York, on March 20.BRENDAN MCDERMID/Reuters
Charles Schwab’s SCHW-N third-quarter profit edged past Wall Street estimates on Monday as strong growth in its asset management business more than made up for a fall in its net interest revenue.
Shares of the U.S. brokerage firm surged 5.4 per cent to $54.08 and were set for their best day in nearly three months, after Schwab reported a 17 per cent rise in fees to $1.22-billion due to robust inflows into its many funds.
The company, which relies primarily on clients’ uninvested cash to fund its interest-earning businesses, is among the financial firms facing a drop in customer deposits.
The Federal Reserve’s actions are slowing the rate of inflation, but at a significant cost to the markets, to consumers, to investors and to firms like Schwab, Charles Schwab’s CEO and Co-Chairman Walter William Bettinger said.
The Westlake, Texas-based company had said in August it would lay off staff and close or downsize some corporate offices as part of its cost-cutting plans.
Charles Schwab’s net interest revenue tumbled 23.5 per cent, to $2.24-billion in the third quarter, reflecting the impact of client allocation decisions within a higher-interest-rate environment, it said.
Its quarterly revenue dropped 16.2 per cent, to $4.61-billion, compared to the same quarter last year, missing analysts’ average estimate of $4.63-billion, according to LSEG data.
Excluding one-time costs, the company posted a profit of 77 cents per share for the third quarter. Analysts had expected 74 cents per share, according to LSEG data.