Charles Schwab sees Q2 revenue down 10%-11% y/y, consensus $4.77B

Earlier, the company said “As previously mentioned, part of our strategy to navigate the fastest interest rate tightening cycle in four decades includes supplementing our organic cash flows with certain temporary higher cost funding sources – primarily Federal Home Loan Bank borrowings and retail certificates of deposit. While we plan for the vast majority of these more expensive balances to be repaid before the end of 2024, they are currently weighing on our near-term net interest margin. We estimate that the impact from these transitory borrowings and time deposits will more than offset the benefits of higher asset yields in this environment, resulting in our second quarter NIM contracting by approximately 35 basis points sequentially. The combination of a temporarily compressed NIM and a smaller interest-earning asset base, along with softer trading activity, is expected to drive a year-over-year decline in second quarter revenue of 10%-11%.”