Charles Schwab Corp SCHW reported a Q2 net revenues decline of 9% Y/Y to $4.66 billion, beating the consensus of $4.61 billion.
Revenues were impacted by a temporary rise in the utilization of supplemental funding to enable client cash allocation decisions.
Asset management and administration fees increased 12% Y/Y to $1.17 billion, while trading revenue declined 9% Y/Y to $803 million in the quarter.
Bank deposit account fees revenue declined 50% Y/Y to $175 million in Q2.
Net interest revenue declined 10% Y/Y to $2.29 billion, with net interest margin expanding to 1.87% (vs. 1.62% a year ago).
Bank deposits declined 31% Y/Y to $304.4 billion.
Total expenses rose 5% Y/Y to $2.97 billion, which includes acquisition and integration-related costs of $130 million and $134 million in amortization of acquired intangibles.
Year-to-date, net flows into Managed Investing solutions grew 35% Y/Y.
In Q2, the bank opened over 960K new brokerage accounts (-5% Y/Y), comprising $52 billion worth of core net new assets, ending Q2 with total client assets worth $8.02 trillion across 34 million accounts.
Adjusted net income fell 25% Y/Y to $1.49 billion in Q2.
Adjusted EPS stood at $0.75, down 23% Y/Y, exceeding the consensus of $0.71.
Total assets decreased 20% Y/Y to $511.5 billion. Tier 1 leverage ratio stood at 7.5% in Q2.
"In late May, we completed the conversion of over 5 million Ameritrade accounts to the combined platform. Successfully transitioning what is believed to be the largest number of client accounts in the history of the industry over a single weekend is a testament to the team’s diligent preparation and the tireless work of our dedicated employees. With approximately 30% of client accounts converted thus far, we are on-track to move nearly all of the remaining Ameritrade clients over before year-end – with the final transition group scheduled for the first half of 2024," said Walt Bettinger, Co-Chairman and CEO.
Also Read: Anticipating Charles Schwab's Recovery: JMP Securities Upgrades SCHW Amid Projected Revenue Growth
Price Action: SCHW shares are trading higher by 8.4% at $63.56 premarket on the last check Tuesday.
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