uploads/2018/01/market-cap-5-1.png

Analyzing Charles Schwab’s Expenses

By

Updated

Total expenses excluding interest

Charles Schwab (SCHW) reported total expenses excluding interest of $1.2 billion in 4Q17—compared to $1.1 billion in 4Q16. It reflects a rise of 12%. In 2017, the company incurred total expenses excluding interest of $4.9 billion—compared to $4.4 billion in 2016, which implies a rise of 11%.

According to management, the rise was in line with the expectations. Charles Schwab saw a rise in compensation expenses in 2017—compared to 2016. The increased expenses were due to more incentive costs and additional employees. The company saw a rise in the expenses for professional services in 2017 due to projects and third-party fees.

Article continues below advertisement

Advertising and market development

Charles Schwab incurred total advertising and market development expenses of $63 million in 4Q17—compared to $61 million in 4Q16. The company saw a rise in compensation and benefits expenses from $629 million in 4Q16 to $711 million in 4Q17.

Charles Schwab saw a rise in the expenses for professional services from $134 million in 4Q16 to $151 million in 4Q17. However, there was a marginal rise in regulatory fees and assessment expenses from $42 million in 4Q16 to $46 million in 4Q17. Communication expenses stood at $60 million in 4Q17—compared to $58 million in 4Q16.

Charles Schwab’s market capitalization stood at $74.1 billion. Peers (XLF) JPMorgan Chase (JPM), Goldman Sachs (GS), and Northern Trust (NTRS) have market caps of $392.9 billion, $94.6 billion, and $23.9 billion, respectively.

Advertisement

More From Market Realist