“We now expect Q2 revenue to be down a mid- to upper single-digit percent versus the second quarter of 2022.”

In context

“e current challenges we're facing are quite manageable and the impact on our financial performance is near term, which means that Schwab's long-term financial model of growth plus capital return remains firmly intact. Though, as we have discussed, there are some early signs of moderation of the client cash allocation activity, the overall level to start the year has exceeded the assumptions incorporated within the scenario shared with winter business update. That means we've utilized a higher level of supplemental funding with the vast majority of that now expected to be paid off by the end of 2024. This temporary -- emphasis temporary mix shift toward higher cost of funds is expected to pressure the next few quarters of revenue at which point the impact should start to decrease, reverse. We now expect Q2 revenue to be down a mid- to upper single-digit percent versus the second quarter of 2022. But it will have very minimal impact on our long-term financial performance, with our NIM, net interest margin still poised to increase throughout 2024 and approach 3% by the end of 2025, even if rates fall from current levels as the market anticipates. Now it's important, I think, to put that NIM outlook into perspective. As I mentioned earlier, net interest revenue only accounts for half of our revenue. And with an adjusted pretax margin well in the upper 40s, we can continue to produce margins that would be the envy of most other financial services firms even as we navigate these dynamics. And remember, that all this has been happening, we have been adding clients, adding net new assets, increasing the adoption of advice and lending and moving forward on the Ameritrade integration. Reg”