Schwab Earnings Preview: Net Interest Income, Transaction-Based Revenue To Drive Results
Charles Schwab (NYSE:SCHW) is scheduled to announce its Q2 2016 earnings on Monday, July 18th. The company saw an impressive 20% year on year (y-o-y) increase in interest earning assets in the quarter so far, likely due to the expectations of a rate hike in the second half of 2016. However, following the U.K.’s “Brexit” vote, the Fed has delayed the rate hike, possibly until 2017. This will likely partially offset the gains made so far in the year in net interest income. In contrast, despite the slow trading activity in April (2% y-o-y) and May (3% y-o-y), Daily Average Revenue Trades (DARTS) for the quarter were up 5% y-o-y, owing to the volatility caused by “Brexit” in June (8% y-o-y). Consequently, we expect transaction-based revenues to increase in the upcoming quarterly results.
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