Charles Schwab's first-quarter net revenue topped estimates as the retail brokerage tries to put 2023's turbulence behind it.
The Westlake, Texas-based firm reported $4.74 billion in net revenue for the three months though March, down 7.3% from a year earlier but topping analysts' estimates of $4.71 billion. Schwab expects its net interest margin to expand through 2024 and approach 3% before the end of next year as the firm prioritizes paying down costlier debt, according to a company presentation.
"Against an improved macroeconomic backdrop, clients entrusted us with $96 billion in core net new assets – including $45 billion in March alone," Chief Executive Officer Walt Bettinger said in a statement. "At the same time, solid investor engagement contributed to over 1 million new brokerage account openings during the quarter."
Schwab shares climbed 4.6% to $73.25 at 9:44 a.m. in New York. They've gained 6.3% this year.
The firm plans to resume opportunistic stock repurchases as "temporary headwinds continue to subside," Schwab said in the presentation.
"Capital return is a very, very important part of our financial formula," Chief Financial Officer Peter Crawford said.
The firm reported $269.5 billion in total deposits, slightly below estimates of $270.5 billion for the period. Schwab's deposits have been watched closely as consumers sought higher-yielding alternatives amid escalated interest rates. That shuffling of money, coupled with Schwab's association with last year's regional-banking chaos, marked 2023 as one of the firm's most challenging years in decades, Bettinger had said.
Net new assets totaled $88.2 billion in the first quarter, down 41% from a year earlier. The first-quarter figure is still up from the last three months of 2023, when Schwab reported $66.3 billion in total net new assets.
Bettinger attributed some of the decline to attrition associated with the acquisition and integration of rival TD Ameritrade Holding Corp. Still, he said on the call, the decline continues to moderate and remains better than anticipated. The last 10% of TD Ameritrade clients and their accounts will be converted to Schwab in May, he said.
