Schwab's Q1 Earnings and Revenues Beat Estimates, Stock Gains

Core Insights - Charles Schwab's first-quarter 2025 adjusted earnings were $1.04 per share, exceeding the Zacks Consensus Estimate of$1.00, marking a 41% year-over-year increase [1] - The company's shares rose nearly 4.5% in pre-market trading due to better-than-expected results [1] - The asset management business significantly contributed to revenue growth, alongside higher net interest revenues and solid brokerage account numbers, although increased expenses posed a challenge [1] Financial Performance - Net income on a GAAP basis was $1.91 billion or 99 cents per share, up from$1.36 billion or 68 cents per share in the same quarter last year, surpassing the projected $1.77 billion [2] - Quarterly net revenues reached$5.6 billion, an 18% increase year over year, exceeding the Zacks Consensus Estimate of $5.52 billion [3] - Total non-interest expenses increased by 7$3.14 billion, slightly above the projected $3.11 billion, while adjusted total expenses rose 8$3.01 billion [3] Profitability Metrics - The pre-tax profit margin improved to 43.8% from 37.9% in the prior-year quarter [4] - Average interest-earning assets decreased by 2% to $427.3 billion, slightly below the estimate of$430.95 billion [4] - The annualized return on equity was 18%, up from 15% in the prior-year quarter [4] Client Metrics - As of March 31, 2025, total client assets were $9.93 trillion, reflecting a 9$132.4 billion during the quarter and added 1.18 million new brokerage accounts, bringing the total to 37 million active brokerage accounts [5] Capital Distribution - Schwab announced an 8% increase in its quarterly dividend to 27 cents per share during the reported quarter [6] - The company repurchased 19.2 million shares for $1.5 billion related to The Toronto-Dominion Bank's secondary offering [6] Strategic Outlook - A decline in funding costs and lower rates are expected to support Schwab's margins, along with strategic acquisitions and increased advice solution fees [7] - However, rising expenses and near-term macroeconomic challenges are identified as potential headwinds [7]