SCHWAB CHARLES CORP Quarterly Report for Q3 Ended Sep 30, 2018

Summary

Charles Schwab Corporation (SCHW) reported strong financial results for the quarter and nine months ended September 30, 2018. The company saw significant growth in net income, driven by increased net revenues and the benefits of lower corporate income taxes resulting from the Tax Act of 2017. Total net revenues grew 19% year-over-year for the quarter, primarily due to higher net interest revenue from rising interest rates and larger client cash balances. Expenses also increased, reflecting investments in growth and efficiency. Client engagement remained robust, with a notable increase in new brokerage accounts and core net new client assets. The company also managed its balance sheet effectively, leading to a higher return on equity. Significant subsequent events include a new authorization for common stock repurchases and the issuance of senior notes, indicating proactive capital management. Overall, SCHW demonstrated solid performance, benefiting from favorable economic conditions and strategic initiatives.

Key Highlights

• 1Net income available to common stockholders increased by 54% year-over-year to $885 million for the third quarter of 2018.
• 2Total net revenues grew by 19% to $2.579 billion for the third quarter, driven by a 41% increase in net interest revenue.
• 3Core net new client assets increased by 4% to $53.5 billion in Q3 2018, and client assets grew 12% to $3.56 trillion.
• 4New brokerage accounts increased by 10% to 369,000 in Q3 2018.
• 5The effective income tax rate decreased significantly due to the Tax Act of 2017, contributing to higher net income.
• 6Return on average common stockholders' equity improved to 20% in Q3 2018, up from 15% in the prior year.
• 7The company announced a new authorization to repurchase up to $1.0 billion of common stock and issued $1.1 billion in Senior Notes.

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