Charles Schwab stock dips after disappointing quarterly results

Autor: Financial Market
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Charles Schwab (SCHW.US) stock fell over 2.05 on Wednesday after finiacial servies company posted slightly weaker than expected results for Q4 2022. The company’s net profit improved compared to Q4 2021, however, revenues and profits from customer trading decreased.

Financial highlights

• Revenue: $5.5 billion vs. $5.56 billion expected (approx. 17% increase y/y)

• Earnings per share (EPS): $1.07 vs. $1.09 expected

• Net profit: $2 billion vs. $1.9 billion expected and $1.6 billion in Q4 2021

The number of investment accounts increased by 4 million throughout 2022. Despite this, revenue from customer trading in Q4 amounted to $895 million and was over 10% lower compared to Q4 2021, when it amounted to USD 1 billion;

Higher interest rates had a positive impact on the results due to an increase in net interest income. Cost-adjusted interest income reached $3 billion, compared to $2.1 billion in Q4 2021;

Total net profit for 2022 amounted to $7.2 billion, which is a 23% increase on an annual basis. The company’s revenues in 2022 increased by 12% and amounted to $20.8 billion, which gave a profit per share of $3.9.

Highlights of Charles Schwab Q4 2022 earnings report. Source: AlphaStreet, XTB Research

CFO Peter Crawford commented, “Schwab’s record financial performance in 2022 highlighted the resiliency of our diversified financial model. Sustained business momentum through an uneven macroeconomic environment helped drive 12% growth in total net revenues.

Net interest revenue reached $10.7 billion, an increase of 33% versus the prior year, as higher interest rates more than offset the impact of balance sheet contraction due to client cash sorting. Lower market valuations throughout the year pushed asset management and administration fees down slightly to $4.2 billion, or 1% year-over-year.

Trading revenue declined by 12% to $3.7 billion as daily average trades subsided from 2021’s unprecedented levels to just under 6 million for the full year.

Transitioning to expenses, our total GAAP spending grew 5% to $11.4 billion, reflecting client engagement and growth, as well as the 12-month impact of the broad employee salary increase that went into effect at the end of 2021.

Acquisition and integration-related costs and amortization of acquired intangibles were $392 million and $596 million, respectively.

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