Schwab Margin Loans Jump 93% to $187.9B as It Cuts Leveraged-Account Risk
SCHW is trading near its 52-week low of $83.96 (5.3% above the low).
Summary
Schwab's margin loans hit $187.9 billion at Sept. 30, up 93% year over year, with $60.7 billion of that tied to adviser long-short strategies and $63.3 billion in short-sale credits. The firm is now pulling back on the riskiest slice: on Sept. 16 it raised minimums on some new tax-aware long-short accounts from $1 million to $10 million and stopped new enrollments and funding in affected leveraged arrangements. That is a deliberate brake on a business line that has been a big driver of the balance-sheet growth, and it comes after Q3 net income of $2.9 billion and a beat on both lines reported Oct. 15. Traders should weigh the revenue contribution of these accounts against the reduced risk of margin losses if markets turn; the size of the pullback is not disclosed.
At the time of this announcement, SCHW was trading at $88.42 on NYSE in the Finance sector, with a market capitalization of approximately $152.3B. The 52-week trading range was $83.96 to $114.53. This news item was assessed with neutral market sentiment and an importance score of 7 out of 10. Source: Wiseek News.