Charles Schwab's results align with the trends seen in the earnings of major U.S. banks. They exceeded expectations, with the most significant surprise coming from trading revenues, where activity significantly increased after the elections.
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Open account Try demo Download mobile app Download mobile appAs a result, the company recorded its highest net revenue since Q4 2022. Year-over-year, revenue growth reached +20%. In the latter part of the quarter, the average number of daily trades rose significantly, leading to a total of 6.31 million trades for the quarter, compared to the 6.04 million forecasted. If this trend continues, as indicated by the sector's post-election environment, Charles Schwab could see strengthened sales performance in upcoming quarters. However, it is worth noting that the company still primarily generates net interest income, which accounted for over 47% of total net revenues.
This figure is likely to decline in the event of interest rate cuts, putting pressure on the trading revenue segment to compensate for losses from reduced interest income.
In terms of adjusted earnings per share, the company achieved $1.01, significantly exceeding the forecasted $0.91.
Q4 2024 Financial Results:
- Adjusted EPS: $1.01, estimate: $0.91 (Bloomberg consensus)
- Net revenue: $5.33 billion, estimate: $5.19 billion
- Total net new assets: $108.4 billion
- Average daily trades: 6.31 million, estimate: 6.04 million
- Revenue per trade: $2.20, estimate: $2.19
- Net interest revenue: $2.53 billion, estimate: $2.43 billion
- Bank deposit account fees: $241 million, estimate: $202.7 million
- Trading revenue: $873 million, estimate: $841.1 million
Today's results led to a sharp rise of over 3% in the company's stock price. The share price approached $83.4, a resistance level from November, but the positive sentiment was not enough for the stock to break through this level. Source: xStation
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