Schwab’s Net Interest Revenue Sinks 24%

Charles Schwab Corp. executives have reported that the issues related to cash sorting, with clients transferring funds from the bank into higher-yielding products, are starting to diminish, despite persistent elevated interest rates, Paige Smith and Silla Brush reported for Bloomberg.

The Texas-based company noted that deposits fell by 28% to $284.4 billion in the third quarter compared to the previous year. I Photo: Charles Schwab Corp. X

Chief Financial Officer Peter Crawford stated, "Cash realignment activity decelerated further during the quarter, even with the brief uptick in August and an increase in long-term interest rates," as the firm released its third-quarter results.

The Texas-based company noted that deposits fell by 28% to $284.4 billion in the third quarter compared to the previous year, surpassing the $268.8 billion average estimate of analysts surveyed by Bloomberg.

Schwab shares rose by 3.7% to $53.22 at 10:05 a.m. in New York.

The firm's net interest revenue declined by 24% to $2.2 billion compared to the previous year as clients moved their funds into higher-yielding products. Schwab reported $46 billion in core net new assets for the quarter and $27 billion in September, representing a 32% decrease from the previous year.

Adjusted earnings per share stood at 77 cents, slightly exceeding analysts' estimates of 74 cents. Net revenues dropped by 16% to $4.6 billion from the previous year, falling short of analysts' expectations. It is expected that full-year 2023 revenue will decline by 8% to 9% compared to the previous year.

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