"We are nearing the point in which we could accelerate capital return," Peter Crawford, Charles Schwab's ( SCHW ) chief financial officer, said Thursday during the company's Summer Business update. Schwab ( SCHW ) shares are gaining 4.5% in Thursday trading near noon ET.
Board has already approved a 10% increase in its quarterly dividend and a new $15B buyback authorization, he pointed out.
"The dynamics on cash sorting in Q2 are on par with our expectations," Crawford said "Our expectation is that the level of sorting won't be higher" than the last rate hike cycle and "could be lower" given the influx of smaller accounts that tend to do less sorting, he noted.
Furthermore, cash is staying at Schwab ( SCHW )," he said. "We want that cash to stay at Schwab and we're seeing that happen."
The rate increases will help boost its net interest revenue, the CFO added. "The rate increases that give rise to sorting will also help us earn more on the interest assets that remain here."
In the scenario that Crawford shared, the company would expect to generate ~$500M more in net interest revenue in Q4 than it did in Q2.
The company's expense outlook remains the same as what it provided during its Winter business update. At that time, he expected adjusted expense growth could rise ~6%-7% this year .
"We feel very confident about our ability to drive revenue, growth and resume a higher pace of capital return," Crawford said.
"We want to continue to drive down our expenses on client assets through the cycle and we want to deliver operating leverage," said CEO and Co-Chair Walt Bettinger.
Earlier this month, Schwab ( SCHW ) Q2 earnings beat consensus, as higher interest rates offset lower fees
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Charles Schwab nearing point of accelerating capital return