Charles Schwab reported first-quarter adjusted earnings of $1.43 per share, four cents ahead of the $1.39 analyst consensus. Revenue came in at $6.48 billion, missing estimates by $28 million.
Why it matters: Schwab is the largest retail brokerage in the United States with $10.3 trillion in client assets, and its results reflect how ordinary investors are positioning their money as interest rates remain elevated.
Cash sorting continues to bite
The revenue miss centred on net interest income, Schwab’s largest revenue line. Clients have been steadily moving cash out of low-yielding bank sweep accounts and into money market funds and certificates of deposit that pay higher rates. The trend, known as cash sorting, has compressed Schwab’s net interest margin for several quarters.
Management said the pace of cash sorting slowed in March, suggesting the worst may be behind the firm. Net interest revenue still declined year on year but fell less than in the fourth quarter.
Assets and accounts grow
Total client assets reached $10.3 trillion, a 14% increase from a year earlier, driven by rising equity valuations and $114 billion in net new assets during the quarter. New brokerage accounts rose 6% year on year, with the company attributing growth to younger investors entering the market.
Trading revenue was a bright spot. Daily average trades rose 8% as retail investors increased activity amid the volatile market conditions created by the Iran conflict and earnings season.
Outlook
CEO Rick Wurster said the firm remains on track to complete the final stages of the TD Ameritrade integration by mid-2026. Schwab expects net interest revenue to stabilise in the second half of the year as the Federal Reserve’s rate path becomes clearer.
Shares were roughly flat in morning trading.