On Monday, Deutsche Bank reaffirmed its Buy rating and $84.00 price target for Charles Schwab Corp. (NYSE:SCHW), following the company's first-quarter earnings report. The financial services firm reported total net revenue of $4.740 billion, surpassing both the analyst's projection of $4.717 billion and the consensus estimate of $4.714 billion. This figure also exceeded the management's guidance for 5-6% sequential growth.
Net interest revenue for the quarter reached $2.233 billion, slightly above the estimates of $2.225 billion and the consensus of $2.227 billion. Asset management and administrative fees were reported at $1.348 billion, exceeding the analyst's expectations of $1.326 billion and consensus of $1.318 billion. Broker-dealer advisory fees came in at $183 million, aligning with the forecast and compared to a consensus of $195 million. Trading revenue of $817 million was also higher than the anticipated $807 million, although it was below the consensus of $828 million.
Adjusted expenses for Charles Schwab were reported at $2.802 billion, which was favorable compared to both the analyst's forecast of $2.835 billion and the consensus of $2.826 billion. The core adjusted operating margin stood at 40.9%, which was above the 39.9% estimate and surpassed the management's guidance of approximately 40.0%.
In March, client cash on the balance sheet saw a modest decline of $2.6 billion, which was significantly less than the estimated $6.4 billion and markedly lower than the $30.4 billion shrinkage peak in March 2023. The company's core net new assets amounted to $45.0 billion for the month, which was above the estimate of $35 billion and in line with the consensus of $45 billion, indicating an annualized organic growth rate of 6.1%.
Average earnings assets in March decreased to $431.5 billion from $434.8 billion in February and $446.3 billion in the fourth quarter of 2023. However, the first quarter's average earning assets of $436.7 billion exceeded the estimate of $434.4 billion and the consensus of $436.0 billion, with a net interest margin (NIM) of 2.02% against the estimated 2.06% and the consensus of 2.05%.
Federal Home Loan Bank (FHLB) balances decreased to $24.0 billion from $26.4 billion at the end of the fourth quarter, while certificate of deposit (CD) balances also declined to $39.2 billion from $43.2 billion in February and $48.3 billion at the end of the fourth quarter.
Deutsche Bank views these results positively, highlighting better-than-expected revenue and expenses, as well as encouraging March metrics. The firm anticipates a positive impact on the stock, pending further insights from the management's business update call regarding expectations for the second quarter and the full year of 2024, particularly concerning balance sheet cash and net new assets around tax season, and updates on the repayment of high-cost borrowings.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.