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Charles Schwab's (NYSE:SCHW) Q2 adjusted earnings likely won't come in higher than Q1, Chief Financial Officer Peter Crawford said Wednesday during its first Institutional Investor Day. Shares of the online brokerage extended losses amid Crawford's remarks, retreating 2.8% in midafternoon trading.
Transactional cash is down about 2% in May, he noted, partly owing to the residual impact of tax season. That, combined with the decline in transactional cash seen at the start of the year, points to "relatively modest" expansion in Q2 vs. Q1.
SCHW expects to finish 2024 with Y/Y growth in adjusted quarterly earnings at the upper-end of the 20%-30% range. Controllable costs remain contained within initial expectations, Crawford said, though certain factors, including the additional FDIC special assessment and higher bonus funding, are pushing expenses above previous "no growth" expectations.
Meantime, Schwab (SCHW) continues to see net interest margin approaching 3% by the end of 2025.
And it doesn't stop there, he said. Following the company's paydown of supplemental borrowings, longer-term NIM accretion is expected to further buoyed by reinvestment of fixed-rate book.
In all, this year "has started off much better than we had expected at the beginning of the year," Crawford said, pointing to higher transactional cash deposits, equity market appreciation, as well as strong growth in margin lending.