Schwab reported Q4 earnings this morning. Revenue was $4.46B vs. $4.48B expected. Adjusted EPS was $0.68 vs. $0.64 expected. Net interest income fell 29.7% YoY and bank deposits fell 25% YoY. Overall, it was an underwhelming quarter and a huge contrast from
Schwab had 11% outflow to debt instruments/treasuries.
Absolutely agree it seems they need to offer higher rates to retain deposits. Unfortunately they have a ton of HTM 10 year + that would result in them loosing money on deposits if they increased rates.
They issued around 6B in senior notes to help offset decline but it will only do so much.
They are selling off HTM assets at around 3B per quarter but they have 159B left.
I didn't think schwab was an insolvency risk when SVB happened and actually went long for a brief period. But watching them now they could be a slow moving train wreck. If AUM keep falling faster than they can deleverge they are in for a serious problem.
Schwab had 11% outflow to debt instruments/treasuries.
Absolutely agree it seems they need to offer higher rates to retain deposits. Unfortunately they have a ton of HTM 10 year + that would result in them loosing money on deposits if they increased rates.
They issued around 6B in senior notes to help offset decline but it will only do so much.
They are selling off HTM assets at around 3B per quarter but they have 159B left.
I didn't think schwab was an insolvency risk when SVB happened and actually went long for a brief period. But watching them now they could be a slow moving train wreck. If AUM keep falling faster than they can deleverge they are in for a serious problem.
Fidelity has been amazing for me for close to 20 years. Great interest available across a wide offering of MM accounts too