By Andrew Welsch

Charles Schwab reported adjusted earnings per share of $1.04 on record revenue of $5.6 billion, beating Wall Street estimates for EPS of $1.01 and revenue of $5.5 billion.

For the first quarter of 2024, Schwab reported earnings of 74 cents on revenue of $4.7 billion.

Shares of Schwab rose 3.7% in premarket trading on Thursday.

Schwab said it hauled in core net new assets of $137.7 billion, showing strong growth during the quarter.

"This 44% year-over-year increase in asset gathering was powered by our unwavering focus on serving the needs of clients across retail, advisor services, and workplace financial services," CEO Rick Wurster said in a statement.

This is breaking news. Read a preview of Schwab's earnings below and check back for more analysis soon.

Charles Schwab kicked off the year with a renewed focus on growth. When the company reports earnings on Thursday, investors will look for signs Schwab can meet its growth goals amid a market that has been rocked by tariffs and economic uncertainty.

Analysts expect Schwab to report first-quarter earnings per share of $1.01 and revenue of $5.5 billion. For the first quarter of 2024, Schwab reported earnings of 74 cents on revenue of $4.7 billion.

In addition to the headline numbers, shareholders will look for management's commentary around investor behavior at a time of acute uncertainty around trade policy and the economy.

It is a marked turnabout from earlier this year when Wall Street CEOs were talking about a revival in investment banking activity and an uptick in investor activity. But the stock market has tumbled since President Donald Trump began unveiling a series of wide-ranging tariffs. In response, analysts lowered earnings estimates for 2025, and economists have forecast slower economic growth and even raised concerns about a possible recession.

Schwab shares are up 2.3% so far this year and have fared better than other financial stocks. The Vanguard Financials ETF, which tracks a broad basket of financials, is down 1.6% year to date.

Westlake, Texas-based Schwab is one of the nation's largest wealth managers, with more than $10 trillion in assets. It serves both retail investors and independent financial advisors.

The company's brand and more durable growth may help it power through what could be a turbulent year, Morgan Stanley analyst Michael Cyprys wrote in a research note earlier this month. He upgraded shares of Charles Schwab to Overweight. He also warned that volatility and uncertainty may spur retail investors to disengage from markets for a prolonged period.

On Thursday, investors will be keen to see how much new money Schwab brought in. For the fourth quarter of 2024, Schwab reported $115 billion in core net new assets. For all of 2024, Schwab's haul was $367 billion, representing a 4.3% growth rate. The company is aiming for annual growth in core net new assets of 5% to 7%.

Shareholders will also look for progress in Schwab's ability to pay down short-term debt that it accumulated in previous years. Paying down those borrowings can improve the company's net interest margin.

During turbulent times, clients tend to move into cash, thus increasing balances in Schwab sweep accounts and potentially enabling the company to pay down short-term debt more quickly, according to Ken Worthington, analyst at J.P. Morgan Securities.

"When looking over the last decade, Schwab customer cash balances as a percent of total assets have averaged 11.5% with a high of 15% during the early days of Covid," he writes in a Wednesday note. "We note that cash builds quickly in more challenging periods and is invested more slowly over time in more benign / stronger markets."

Worthington is Overweight the stock.

Schwab has been striving to expand its offering for retail investors and high-net-worth individuals in particular, efforts that may help it win both new customers and more assets. In February, the company expanded access to 24-hour trading to all of its clients. And this month it unveiled a new alternative investments platform for wealthy customers.

In January, the company said it anticipated 2025 revenue would increase by 13% to 15% from the previous year, while adjusted expenses could grow by a more modest 4.5% to 5.5%.

Other wealth managers that have reported first-quarter earnings showed strong growth. Morgan Stanley, which operates a large wealth management business that includes online brokerage firm E*Trade, reeled in $93.8 billion in net new assets. That's down slightly from $94.9 billion for the first quarter of 2024. Morgan Stanley executives also said the firm had record investor activity on its self-directed platform. Daily average revenue trades jumped 19% year over year to just over one million.

Brokerage firm Interactive Brokers notched record levels of investor activity, account openings, and trading, according to the company's earnings report issued Tuesday. Executives cautioned on the company's earnings call, however, that investors were de-risking in April as the Trump administration unveiled sweeping tariffs. Margin loan balances fell 12%.

Write to Andrew Welsch at andrew.welsch@barrons.com

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April 17, 2025 07:42 ET (11:42 GMT)

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