How the Heck Did Schwab's Net Interest Income Fall 23% Last Quarter?
Broadly speaking, higher interest rates are supposed to be beneficial to the financial sector. A handful of big banks reported sizable increases in last quarter's net interest income, for instance, thanks to the wider profit margins on loans made at elevated interest rates. However, brokerage firm Charles Schwab (NYSE: SCHW) hasn't been able to cash in on this trend. Its net interest income tumbled 23.5% year over year during the three-month stretch ending in September, dragging earnings down with it.
What gives?
The culprit is a quirk that's unique to the brokerage business. It's an important enough quirk, however, that investors would be wise to take a closer look at what just happened to Schwab, and how. It could happen again, and in the meantime, it likely is happening to competitors.
Source Fool.com
