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Schwab (SCHW) Up on Solid Q2 View, Rise in May Net New Assets
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Shares of Charles Schwab (SCHW - Free Report) rose 1.4% in response to an upbeat second-quarter 2022 revenue outlook and an increase in net new assets balance in May.
SCHW’s CFO Peter Crawford stated that “to the extent equity market valuations, client trading activity, and margin loan utilization remain at early June levels”, the company projects second-quarter 2022 revenues to rise 7.5-8.5% on a sequential basis. Further, GAAP operating expenses are expected to be stable with the prior quarter.
Also, Schwab came out with its activity report for May 2022. Core net new assets were $32.8 billion in the reported month. This compared with negative net new assets of $9.2 billion in April 2022 and $28.1 billion in May 2021.
For May, SCHW reported total client assets of $7.30 trillion, essentially flat sequentially but down 1% from May 2021. Client assets receiving ongoing advisory services were $3.7268 trillion, down marginally from the prior month but up 2% year over year.
Schwab’s average interest-earning assets of $620.2 billion declined 3% from April 2022 but were up 17% year over year. Average margin balances were $78.8 billion, decreasing 6% from the previous month but rising 4% on a year-over-year basis. Average bank deposit account balances totaled $154.7 billion, up 1% from the previous month but down 4% from May 2021.
Schwab opened 323,000 new brokerage accounts in May 2022, declining 16% sequentially and 41% from the year-earlier month.
Schwab’s active brokerage accounts totaled 33.8 million at the end of May 2022, stable on a sequential basis but up 5% from the year-ago month. Clients’ banking accounts were 1.66 million, flat sequentially but up 5% from May 2021. The number of corporate retirement plan participants was up 1% from the prior-month level and 7% year over year to 2.28 million.
Schwab’s inorganic growth efforts have reinforced its position as a leading brokerage player and are expected to be accretive to earnings. By offering commission-free trading, the company has witnessed a rise in client assets and brokerage accounts, which, in turn, is improving its market share.
Over the past year, shares of Schwab have lost 17.2% compared with a 25.6% fall of the industry.
A couple of other brokerage firms that have come out with monthly data are Interactive Brokers Group (IBKR - Free Report) and LPL Financial Holdings Inc. (LPLA - Free Report) .
Interactive Brokers’ Electronic Brokerage segment announced performance metrics for May 2022. The segment (dealing with the clearance and settlement of trades for individual and institutional clients globally) reported a rise in client Daily Average Revenue Trades (DARTs) on a sequential and a year-over-year basis.
Total client DARTs for the month were 2,297,000, up 4% from the April 2022 level and 2% year over year. On an annualized basis, IBKR recorded Cleared Average DARTs per customer account of 274,000. The metric increased 2% sequentially but declined 27% from the prior-year period.
LPL Financial’s total brokerage and advisory assets were $1.12 trillion at the end of May 2022, increasing 2.2% from the prior month and 4.3% year over year. The rise in assets balance was mainly due to heightened market volatility and higher net new assets balance.
Of LPLA’s total assets, brokerage assets were $523.6 billion and advisory assets totaled $591.8 billion.
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Schwab (SCHW) Up on Solid Q2 View, Rise in May Net New Assets
Shares of Charles Schwab (SCHW - Free Report) rose 1.4% in response to an upbeat second-quarter 2022 revenue outlook and an increase in net new assets balance in May.
SCHW’s CFO Peter Crawford stated that “to the extent equity market valuations, client trading activity, and margin loan utilization remain at early June levels”, the company projects second-quarter 2022 revenues to rise 7.5-8.5% on a sequential basis. Further, GAAP operating expenses are expected to be stable with the prior quarter.
Also, Schwab came out with its activity report for May 2022. Core net new assets were $32.8 billion in the reported month. This compared with negative net new assets of $9.2 billion in April 2022 and $28.1 billion in May 2021.
For May, SCHW reported total client assets of $7.30 trillion, essentially flat sequentially but down 1% from May 2021. Client assets receiving ongoing advisory services were $3.7268 trillion, down marginally from the prior month but up 2% year over year.
Schwab’s average interest-earning assets of $620.2 billion declined 3% from April 2022 but were up 17% year over year. Average margin balances were $78.8 billion, decreasing 6% from the previous month but rising 4% on a year-over-year basis. Average bank deposit account balances totaled $154.7 billion, up 1% from the previous month but down 4% from May 2021.
Schwab opened 323,000 new brokerage accounts in May 2022, declining 16% sequentially and 41% from the year-earlier month.
Schwab’s active brokerage accounts totaled 33.8 million at the end of May 2022, stable on a sequential basis but up 5% from the year-ago month. Clients’ banking accounts were 1.66 million, flat sequentially but up 5% from May 2021. The number of corporate retirement plan participants was up 1% from the prior-month level and 7% year over year to 2.28 million.
Schwab’s inorganic growth efforts have reinforced its position as a leading brokerage player and are expected to be accretive to earnings. By offering commission-free trading, the company has witnessed a rise in client assets and brokerage accounts, which, in turn, is improving its market share.
Over the past year, shares of Schwab have lost 17.2% compared with a 25.6% fall of the industry.
Image Source: Zacks Investment Research
Currently, Schwab carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Competitive Landscape
A couple of other brokerage firms that have come out with monthly data are Interactive Brokers Group (IBKR - Free Report) and LPL Financial Holdings Inc. (LPLA - Free Report) .
Interactive Brokers’ Electronic Brokerage segment announced performance metrics for May 2022. The segment (dealing with the clearance and settlement of trades for individual and institutional clients globally) reported a rise in client Daily Average Revenue Trades (DARTs) on a sequential and a year-over-year basis.
Total client DARTs for the month were 2,297,000, up 4% from the April 2022 level and 2% year over year. On an annualized basis, IBKR recorded Cleared Average DARTs per customer account of 274,000. The metric increased 2% sequentially but declined 27% from the prior-year period.
LPL Financial’s total brokerage and advisory assets were $1.12 trillion at the end of May 2022, increasing 2.2% from the prior month and 4.3% year over year. The rise in assets balance was mainly due to heightened market volatility and higher net new assets balance.
Of LPLA’s total assets, brokerage assets were $523.6 billion and advisory assets totaled $591.8 billion.