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2 months ago | 
morningstar.com | Michael Wong
Charles Schwab SCHW reported earnings on Jan. 21. Here’s Morningstar’s take on Schwab’s results and the outlook for the stock. Key metrics in the quarter supported our investment thesis of higher net interest revenue and revenue in the medium to long term from reducing high-cost supplemental borrowing balances and growth in low-cost client cash balances. We were happy to see the decrease in high-cost supplemental funding balances that helped to improve NII.
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Jan 21, 2025 | 
morningstar.com | Michael Wong
Key metrics for Charles Schwab SCHW continued to trend positively in the fourth quarter. The company reported net income to common shareholders of $1.7 billion, or $0.94 per diluted share, on $5.3 billion of net revenue. Net revenue increased 10% from the previous quarter and 20% from the previous year, with growth across all revenue lines.
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Jan 21, 2025 | 
morningstar.com | Michael Wong
KeyCorp KEY reported fourth-quarter results that largely met our expectations. Adjusting for a loss of $0.66 per share from the sale of lower-yielding securities, earnings per share of $0.38 came in 52% higher year over year, aided by a 60%-plus increase in investment banking fees and a 14% increase in net interest income. The bank provided an outlook for 2025 that included NII growth of 20%, consistent with previous outlooks and our projection.
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Jan 17, 2025 | 
morningstar.com | Michael Wong
Truist Financial TFC reported net income to common shareholders of around $1.2 billion, or $0.91 per diluted share, on $5.1 billion of taxable-equivalent revenue. The company posted solid results for the fourth quarter and a 2025 full-year outlook that’s mostly in line with our expectations. As we incorporate these results, we don’t expect a material change to our $47 per share fair value estimate and still view shares as fairly valued.
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Jan 15, 2025 | 
morningstar.com | Michael Wong
While many companies in the financial services sector benefit from a steeper yield curve, we believe much of those benefits are already priced in. Companies with long-duration, interest-yielding assets earn higher revenue when long-term interest rates are high. Companies with most of their interest-bearing liabilities tied to short-term interest rates reduce one of their main costs of generating revenue when short-term interest rates are low.
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Nov 18, 2024 | 
morningstar.com | Michael Wong
Goldman Sachs is refocusing the initiatives it’s been working on the previous several years. At its most recent investor day in 2023, the firm emphasized three priorities. In its investment banking and trading business, it wants to maximize client wallet share and grow its financing business. In asset and wealth management, it wants to grow its management fees, including in wealth management and raising third-party capital for its alternatives business.
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Nov 18, 2024 | 
morningstar.com | Michael Wong
Morgan Stanley has built a more stable business model, and its shift to wealth management from investment banking will continue to be a main part of the company’s story over the long term. Investment banking is capital intensive, and many banks, especially the European investment banks, have had trouble earning adequate returns in that business and have purposely shrunk that business line. Morgan Stanley has remained dedicated to investment banking and has gained market share.
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Nov 18, 2024 | 
morningstar.com | Michael Wong
Stifel Financial’s revenue and earnings took a step back in 2022 and 2023 as higher net interest income from tightening monetary policy couldn’t offset the effects of fear of a recession on client assets and investment banking revenue. About 20%-25% of the company’s revenue is from net interest income, which grew about 80% in 2022 to $900 million and another 25% in 2023 to $1.1 billion as the Federal Reserve increased interest rates.
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Oct 25, 2024 | 
morningstar.com | Michael Wong
Charles Schwab SCHW released its third-quarter earnings report on Oct. 17. Here’s Morningstar’s take on Schwab’s earnings and stock. This was the company’s best quarter for revenue and net income since the first quarter of 2023. As expected, there was high growth in client assets and asset prices. We were happy to see a decrease in bank supplemental borrowing balances, which helped improve net interest income.
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Oct 17, 2024 | 
morningstar.com | Michael Wong
Truist Financial TFC reported net income to common shareholders of around $1.3 billion, or $0.99 per diluted share, on $5.1 billion of taxable-equivalent revenue. The company showed strong results for the third quarter. This is encouraging, as it was the first full quarter following the sale of Truist Insurance Holdings. We don’t anticipate a material change to our fair value estimate of $46 per share, and still view the stock as fairly valued.
