Schwab’s earnings beat may take heat off TD, but deposit flight leaves questions

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An earnings beat by the Charles Schwab Corp. may take some of the heat off stakeholder Toronto\u002DDominion Bank. Find out more.

Canccord Genuity analyst Scott Chan said that while it was good to see the beat, expectations were a lot lower for banks such as Charles Schwab following the“Earnings expectations have been significantly lowered at Schwab over the past three months,” Chan said. “To put it in perspective, according to Bloomberg, Schwab’s earnings for 2023 was revised down 25 per cent all of 2023, and then 2024 at this point, it’s revised down 20 per cent.

Chan said Schwab’s results likely won’t have a material impact on earnings at TD, which is more exposed to the U.S. than its Big Six peers due to the Schwab stake and itsof Tennessee-based First Horizon Corp. The banking crisis that unfolded in the wake of the SVB collapse hit TD the hardest, sending its shares tumbling by as much as 11 per cent last month to a low of $77.33 on March 23, erasing $18 billion in value. They’ve since pared some of those losses and were trading at $81.

The crisis left a bigger scar on Schwab’s shares, which fell nearly 32 per cent in the same timeframe. Another large U.S. bank, State Street Corp., also reported a decline in deposits April 17, a sign that people are still anxious about U.S. bank stability in the wake of the SVB crisis. Shares of State Street, a custodian bank that depends on fees paid by other financial firms, plunged as a result of the deposit flight and its effect on earnings, plunging 17 per cent to a low of $66.45.

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