Charles Schwab Q2 2023 Earnings Report
Key Takeaways
Charles Schwab reported a net income of $1.3 billion for the second quarter of 2023, compared to $1.8 billion for the same quarter in 2022. The company's total client assets exceeded $8 trillion, and it maintained a strong profitability with a GAAP pre-tax margin of 36.3% (42.0% adjusted).
Schwab gathered $52 billion in core net new assets during the second quarter, bringing year-to-date asset gathering to over $180 billion.
Nearly 1 million new brokerage accounts were attracted, finishing the period serving $8.02 trillion in total client assets across 34 million accounts.
Year-to-date net flows into retail Managed Investing solutions were up 35%.
Approximately 30% of client accounts converted thus far, and company is on-track to move nearly all of the remaining Ameritrade clients over before year-end.
Charles Schwab
Charles Schwab
Charles Schwab Revenue by Segment
Forward Guidance
Schwab is confident in its future based on the resiliency of its core earnings power and diversified model.
Positive Outlook
- Client cash realignment activity expected to inflect before the end of 2023, unlocking growth in client cash held on the balance sheet.
- Effective balance sheet management to optimize capital and liquidity levels.
- Continued commitment to expense discipline.
- Well-positioned heading into the years to come due to diversified model.
- Consistency of mission and long-term management orientation allows focus on growth opportunities.
Challenges Ahead
- Significant near-term headwinds impacted second quarter revenues.
- Temporary increase in the utilization of supplemental funding affected revenue.
- Net interest revenue declined 10% year-over-year.
- Net interest margin down by 32 basis points sequentially to 1.87%.
- Recent results have been negatively influenced by a number of temporary factors.
Revenue & Expenses
Visualization of income flow from segment revenue to net income