Charles Schwab Corp. Beats Profit Expectations but Falls Short on Revenue
Shares of Charles Schwab Corp. (SCHW) dropped 1.5% in premarket trading on Monday, reaching a five-month low. While the financial services and discount brokerage giant exceeded third-quarter profit expectations, it fell slightly below revenue forecasts.
Strong Earnings Performance
Charles Schwab reported a net income of $1.02 billion, or 56 cents per share, compared to $1.88 billion, or 99 cents per share, in the same period last year. Adjusted earnings per share came in at 77 cents, surpassing the FactSet consensus of 74 cents.
Revenue Decline
However, the company experienced a decline in revenue, which totaled $4.606 billion, marking a 16.3% drop compared to the previous year's figures. This fell just short of the FactSet consensus of $4.615 billion.
Revenue Breakdown
While net interest revenue fell 23.5% to $2.237 billion, it still managed to beat the FactSet consensus of $2.218 billion. Asset management and administration fee revenue, on the other hand, rose 16.9% to $1.224 billion, in line with expectations. However, trading revenue disappointed, falling 17.4% to $768 million, missing expectations of $804 million.
Stable Brokerage Accounts
The number of new brokerage accounts remained steady compared to the previous year but decreased by 7% from the sequential second quarter.
Market Performance
Over the past three months, Charles Schwab Corp.'s stock has declined by 12.3%. In contrast, the S&P 500 has experienced a more modest decline of 3.9%.
With pleasing profit results and a slight miss on revenue expectations, Charles Schwab Corp. aims to strategically navigate these challenges and continue providing quality financial services and discount brokerage to its customers.
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