Charles Schwab generated a profit of $1.6 billion in the first quarter of the year, it said Monday, faring better than Wall Street expected and seeming to ease recent concerns about its financial health. Schwab’s stock, which plunged after the company was swept into the banking turmoil following the collapse of Silicon Valley Bank last month, rose after the report.
Still, the outlook was mixed: A meaningful share of Schwab’s customers moved their deposits into accounts that paid more interest, which could put pressure on the company’s earnings for the foreseeable future.
Although Schwab is best known for its giant brokerage business, it also has a large banking arm. The bank’s balance sheet held billions of dollars in bonds that dropped in value as the Federal Reserve rapidly raised interest rates. Silicon Valley Bank held similar bonds, and when it was forced to sell some at a loss, nervous depositors demanded their money in a classic run on the bank.
That spooked investors…
This article was written by Tara Siegel Bernard and originally published on www.nytimes.com