(Bloomberg) — Charles Schwab Corp. expects its revenue to slide as much as 11% in the second quarter compared with a year earlier, the company’s Chief Financial Officer Peter Crawford said in a statement Wednesday.
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The forecast comes as the Westlake, Texas-based brokerage endures a squeeze on its net interest margin, as it borrows from the Federal Home Loan Bank network and endures a period of lower trading activity.
Shares rose 0.3% to $54.90 at 9:49 a.m. in New York.
The Federal Reserve’s rapid interest rate hikes put pressure on Schwab, encouraging customers to yank cash out of its low-yielding sweep accounts, searching for more interest from products like money-market funds. How far those movements will go has been an open question for investors in Schwab. The company’s shares have lost more than one-third of their value this year.
Schwab’s average pace of cash outflows slowed to $350 million per business day in May from $1 billion in April, according to Crawford’s statement.
Executives maintain that the firm’s higher-cost borrowing is temporary. Crawford said the “vast majority” of its more expensive balances should be repaid before the end of 2024.
(Updates with shares in third paragraph.)
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