Thu Jan 02 14:50:00 UTC 2025: ## Schwab Stock Remains Flat Despite Strong Asset Management Growth

**Pleasanton, CA – October 26, 2024** – Charles Schwab (NYSE: SCHW) stock has seen mixed performance this year, rising approximately 11%, lagging behind the S&P 500’s 25% gain and significantly underperforming Morgan Stanley’s 35% increase. While the company’s asset management division thrives, its banking segment struggles due to the Federal Reserve’s interest rate hikes.

Schwab’s Q3 2024 revenue increased 5% year-over-year to $4.85 billion, driven by a robust asset management business that saw client assets reach $9.92 trillion. The successful integration of TD Ameritrade, completed earlier this year, further boosted this segment, with overall asset management and administration fees surging nearly 21%.

However, rising interest rates have negatively impacted Schwab’s banking segment. The “cash sorting” phenomenon, where customers shift funds from low-yielding accounts to higher-yielding assets, has eroded the value of Schwab’s long-term investments, squeezing net interest margins. This contrasts with traditional banks that lend these funds more readily.

Schwab’s stock performance has been volatile in recent years, with returns of 60% in 2021, 0% in 2022, and -16% in 2023. Analysts remain neutral on the stock, projecting a valuation of $78 per share, slightly above the current market price of around $75. While continued market strength and increased investor engagement could benefit the asset management business, the potential for fewer interest rate cuts next year could negatively impact Schwab’s performance. The company’s performance is also compared unfavorably to a Trefis High Quality Portfolio which showed less volatility and better returns over the same period.

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