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Schwab’s unrealized losses in its bond portfolio widened to $19.4 billion in Q3 due to a selloff in the bond market.
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The losses are in a portfolio of U.S. agency mortgage securities with a face value of $162 billion.
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The losses have no direct impact on Schwab’s financial strength as the portfolio is classified as held to maturity.
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Investors are concerned about the losses as they represent a missed investment opportunity and could weigh on returns for years.
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The $19.4 billion losses exceed Schwab’s average tangible equity during Q3.
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Some analysts apply a tax adjustment to the losses, reducing the figure to $15 billion.
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Schwab stated it won’t need to sell its bond portfolio before maturity, preventing the losses from being realized.
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Schwab’s earnings totaled $4.8 billion after taxes in the first three quarters of 2023.