Nomura Securities Maintains a 'Neutral' on Charles Schwab (SCHW); Tier 1 Leverage Ratio Target Reduced

Nomura Securities maintains a 'Neutral' on Charles Schwab Corp. (NYSE: SCHW) price target of $13.00.

Analyst, Keith Murray, said, "Schwab Bank’s Tier 1 Leverage Ratio Target Reduced to 6.25% from 7.5%. This meaningful reduction should lead to improved capital flexibility (125bp capital reduction on the Bank’s $72bn of assets frees up $900mm) to either grow the bank’s balance sheet (and improve its ROE) or return capital to the parent (Schwab’s updated capital plan includes regular Bank dividends to the parent starting in 4Q12). Despite the surprise 7bp q/q NIM increase in 2Q12, management guided to a 155bp NIM by the end of 2012 (within the 140-160bp range discussed in April), assuming no large pre-payment impact. MMF Net Revenue Guidance Improved a Bit. At current balances & yields, net MMF revenue could be around $75-80mm per qtr in 2H12 (April guidance was for $60-65mm, SCHW reported $74mm in 2Q12). Active trading clients are valuable beyond trading."

For an analyst ratings summary and ratings history on Charles Schwab Corp. click here. For more ratings news on Charles Schwab Corp. click here.

Shares of Charles Schwab Corp. closed at $12.32 yesterday.

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