Charles Schwab Corp. expects its revenue to slide as much as 11% in the second quarter compared with a year earlier, the company’s chief financial officer, Peter Crawford, said in a statement Wednesday.
The forecast is the latest sign that higher rates and changing customer behavior have strained the brokerage. Schwab is enduring a squeeze on its net interest margin as it borrows from the Federal Home Loan Bank network and navigates a period of lower trading activity.
The Federal Reserve’s rapid interest rate hikes over the past year have pressured Schwab’s banking arm, a pivotal piece of its overall business. The higher rates spurred customers to yank cash out of Schwab’s low-yielding sweep accounts, searching for more interest from products such as money-market funds and certificates of deposit.
The risks Schwab faces came into sharper focus as several regional banks collapsed this spring, and the brokerage’s shares lost more than one-third of their value this year.
Crawford underscored that the rate of withdrawals is slowing. Schwab’s average pace of cash outflows slowed to $350 million per business day in May from $1 billion in April, according to his statement.
Shares rose 0.4% to $54.98 at 1:25 p.m. in New York.
Executives maintain that the firm’s higher-cost borrowing is temporary. Crawford said the “vast majority” of its more expensive balances should be repaid before the end of 2024.
The finance professor and quant investing veteran believes with the right guardrails, artificial intelligence could be trusted to meet the high bar of fiduciary advice.
UBS has also regained some ground as it recruited an experienced Merrill advisor in New York.
The ex-Bay Area broker reportedly continued to peddle fake bond investments, promising rates of returns exceeding 20%, even after FINRA suspended his license in 2014.
Predictive analytics, artificial intelligence, and cybersecurity are now high on compliance officers' lists as off-channel communications are relegated down the rankings.
Latest deal further expands the RIA acquirer’s footprint in Texas.
Orion's Tom Wilson on delivering coordinated, high-touch service in a world where returns alone no longer set you apart.
Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.
