Beers & Burgers: Harvey's To Go | SaltWire #harveys #burger #beer #foodblogger - Charles Schwab's first-quarter profit fell 15% as higher interest on clients' deposits and its borrowings offset gains from a surge in asset management fees, the brokerage said on Thursday.
Rate hikes by the U.S. Federal Reserve have compelled companies like Schwab to increase the interest they pay on deposits - a crucial source of capital that is used to invest in interest-earning assets and give out loans.Schwab has also taken on debt to bolster its funding, which hit interest revenue further.The Westlake, Texas-based company on average paid 1.35% on deposits in the three months ended March 31, compared with 0.73% last year.
Net interest revenue - the difference between interest earned on assets and paid out on liabilities - fell 19% to $2.23 billion. Asset management and administration fees, earned from managing mutual funds and exchange-traded funds, jumped 21% to $1.35 billion. Overall, the brokerage reported a profit of $1.36 billion, or 68 cents per share, for the first quarter, compared with $1.6 billion, or 83 cents per share, last year.Schwab had a difficult 2023, the most challenging year for the company since the internet bubble burst in 2000, according to CEO Walter Bettinger. The company had to reduce its headcount by 6%, its stock lost more than 17% and clients moved their funds to other high-yielding alternatives.
Source: Loan Digest (loandigest.net)
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