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A Look at Charles Schwab’s Total Net Revenue

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Mar. 28 2018, Updated 9:31 a.m. ET

Performance recap

Charles Schwab (SCHW) generated total net revenue of $8.6 billion in 2017, reflecting a 15% rise YoY (year-over-year) thanks to asset management and administration fees as well as net interest revenue. During the same period, the company’s net interest revenue made up 50% of its total net revenue, while asset management and administration fees made up 39%.

SCHW generated $2.2 billion in revenue in the December quarter. In comparison, competitors (XLF) Interactive Brokers Group (IBKR), E*TRADE Financial (ETFC), and TD Ameritrade Holding (AMTD) generated revenues of $0.51 billion, $0.63 billion, and $1.3 billion, respectively, in the December quarter.

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Charles Schwab generated net interest revenue of $4.3 billion in 2017, reflecting a 29% rise on a YoY basis mainly due to a rise in its interest-earning assets as well as interest rates. Moreover, the expected rate hikes from the Federal Reserve in 2018 should improve the company’s net interest margin.

What led to the rise in asset management and administration fees?

Charles Schwab garnered total asset management and administration fees of $3.4 billion in 2017, which reflected an 11% rise YoY. This rise was mainly the result of a rise in average client assets with respect to ETFs, advice solutions, and mutual funds. However, a fall in fee waivers with respect to money market funds was also a primary contributor.

Of its total asset management and administration fees, Schwab’s money market funds after fee waivers stood at $865 million in 2017.

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