(Bloomberg) — Charles Schwab Corp. raised its full-year revenue growth forecast on optimism around investor engagement and strength in the equity market following the US presidential election.
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Schwab now expects revenue to increase 3% to 3.5%, up from its previous forecast of 2%-to-3% growth, according to a statement Friday. In addition to increased engagement and stronger markets, the firm said the slowing pace of customers searching for higher-yielding alternatives for their cash also contributed to the rosier revenue outlook.
The firm’s total client assets also surpassed $10 trillion for the first time in November, reaching $10.31 trillion at the end of the month.
Transactional sweep cash — which helps the firm pay down costly debt it previously accumulated — ended the month at $393.7 billion, flat from October.
Schwab shares fell 3.9% to $79.65 at 10:33 a.m. in New York. They’ve gained 16% this year.
“For December 2024, we see the potential for particularly strong further cash build as we see larger than typical fund mutual fund distributions for 2024,” JPMorgan Chase & Co. analysts led by Kenneth Worthington, said in a note to clients. “This client cash build bodes well for the pay-down of Schwab’s short-term borrowings and Schwab’s earnings trajectory near term.”
Schwab is expecting leadership changes at the end of this year, with Chief Executive Officer Walt Bettinger retiring and Rick Wurster slated to step into the CEO role.
The milestone for client assets and raised guidance represent a marked contrast from last year, which Bettinger called the firm’s “most challenging” in decades. In addition to the CEO change, a new chief financial officer was named to oversee the books of the Westlake, Texas-based firm, founded more than five decades ago.
–With assistance from Elena Popina.
(Updates with transactional cash sweep metrics starting in fourth paragraph.)
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