Is Charles Schwab safe for now?

It was a result that was better than expected. Share prices went up after the release of their results.

So what are the key updates of the results, and is Charles Schwab really risky in the bank turmoil?

Total revenue was up 10% year-over-year and exceeded $5 billion for the fourth consecutive quarter. As Charles Schwab is also involved in commercial banking, a better net interest margin helped buoyed its interest revenue.

Net interest margin expanded by 81 basis points from the first quarter of 2022.

Bank deposits shrank by 11% versus the prior year-end as clients realigned their allocations and investment cash solutions. This is in line and similar with some of the US banks which saw lower deposits as well.

Walt Bettinger, CEO of Charles Schwab, famously said that the company has sufficient liquidity to cover all deposit outflows.

Despite not being really a bank, holding on to deposits, and investing funds into interest-bearing assets, makes Charles Schwab liable to the same risks as full-fledged banks.

So is the company really immune to a bank run in your opinion?

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