With the potential for corporate tax reform under President Donald Trump, and the prospect of multiple interest rate hikes by the Federal Reserve this year, Charles Schwab Corp. President and CEO Walt Bettinger believes his company is poised to see accelerating growth after enduring a period of sustained headwinds.
Bettinger said Schwab could increase revenue by $300 million to $400 million in the first 12 months following an initial 25-basis-point rate increase by the Fed. Any subsequent rate hikes could result in an additional $200 million to $300 million in revenue due to the anticipated elimination of a money-market waiver estimated at $100 million, Bettinger told analysts at the company's winter business update.
In terms of potential tax cuts, Bettinger noted that a reduction of 15 to 20 basis points to the federal corporate tax rate could provide the company with annualized estimated incremental after-tax savings of $450 million to $600 million. Bettinger's comments come in the wake of Trump on Jan. 23 promising to reduce taxes considerably for U.S.-domiciled companies.
"We're not one of those firms that is able to move intellectual property to a lower tax location and then attribute profits to it," Bettinger said. "We pay at the full statutory 35% rate so we have the potential to be a significant beneficiary of corporate tax reform."
The company also unveiled plans to lower commission fees on online equity and exchange-traded fund trades by $2.00 to $6.95 per trade. While Bettinger provided few details on whether the broker could adjust fee levels for its option-based platforms, he indicated that customers could benefit from lower pricing for such trades across the industry.