2024-01-16 09:32:16 ET
Charles Schwab (NYSE: SCHW) stock price pulled back in the pre-market as traders waited for its Q4 earnings. The shares retreated by 1%, joining other banks like Morgan Stanley, Goldman Sachs, and PNC Financial in the red. Similarly, the Invesco Bank ETF (KBW) retreated by almost 1%.
Charles Schwab has been one of the most embattled banks in the past 12 months. Its woes started after the mini-banking crisis that led to the collapse of the likes of First Republic Bank (FRC), Signature, and Silicon Valley Bank.
While the SCHW stock price has bounced back from its 2023 lows, it has dropped by over 21.8% in the past 12 months. It has trailed the performance of the KBW and KRE ETFs, which track the biggest banks in the US.
The next important catalyst for Charles Schwab will be its upcoming earnings which are scheduled for Wednesday. Analysts expect the results to show that its revenue came in at $4.49 billion in the fourth quarter while its GAAP earnings per share (EPS) will be at 49 cents. Schwab’s revenue and EPS in the same quarter in 2022 was $5.5 billion and $1.07.
Schwab results come at a time when American banking giants are releasing mixed financial results. Goldman Sachs published results that were better than expected as its revenue jumped by 7% to $11.32 billion. Its investment banking and trading revenues retreated.
Meanwhile, Morgan Stanley’s quarterly profits dropped as the cost of its wealth management business rose. Its profits dropped to $1.5 billion in the quarter and $9.1 billion for the year.
On Friday, JPMorgan released strong results while Citigroup said that it would slash 20,000 workers to cut costs. The company is implementing a turnaround strategy in a bid to boost profits and reduce its bureaucracy. Charles Schwab has been under pressure because of its bond portfolio, which has led to high unrealized losses. Its business is also not growing as it did in the past. The most recent results showed that its net revenue dropped from $5.5 billion to $4.6 billion.
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