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Jun 30, 2023
Charles Schwab Q2 2023 Earnings Report
Charles Schwab's profitability remained strong, while total client assets exceeded $8 trillion.
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.
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%.
Revenue & Expenses
Visualization of income flow from segment revenue to net income
Historical Earnings Impact
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Avg. Return Before/After Earnings
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