The Charles Schwab Corporation released its Monthly Activity
Report today. Company highlights for the month of August 2023
include:
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the full release here:
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- Core net new assets brought to the company excluding Ameritrade
brokerage originated clients equaled $28.1 billion for the month –
bringing year-to-date Schwab originated core asset gathering up to
$219.9 billion. Total core net new assets across all clients
totaled $4.9 billion in August and $202.5 billion on a year-to-date
basis.
- Total client assets were $8.09 trillion as of month-end August,
up 14% from August 2022 and down 2% compared to July 2023.
- Average interest-earning assets were $449.5 billion in August,
down 23% from August 2022 and down 4% compared to July 2023.
Commentary from the CFO
CFO Peter Crawford commented on recent company events and select
trends, “Our Labor Day Weekend conversion of former Ameritrade
clients was a tremendous success. The latest conversion weekend was
approximately 40% larger than the May cohort in terms of total
accounts and would by itself be the largest brokerage firm
conversion in history. In total, we migrated $1.3 trillion in
client assets from over 7,000 Registered Investment Advisory (RIA)
firms and 3.6 million Retail accounts. Perhaps even more
impressive, the amount of assets converted earlier this month was
equivalent to the total Ameritrade client asset base at the time
the acquisition was announced in late 2019. Following the Labor Day
conversion, we have not observed any meaningful disruptions in the
overall client experience and service volumes have already
normalized to pre-conversion levels.
Our organic asset gathering remains solid. In an effort to share
additional insight into recent net new asset (NNA) trends, today’s
release provides a break-out of asset flows for clients whose
accounts were opened at Schwab versus those initially opened at
Ameritrade. The break-out helps illustrate that core NNA from
Schwab originated accounts continues to be robust – up 15%
year-to-date relative to the same period in 2022.
As expected, firmwide NNA has been temporarily impacted by asset
attrition from clients originating at Ameritrade. Currently,
attrition levels are measurably better than what we communicated at
the time we announced the acquisition in November 2019. The
majority of these deal-related outflows have been attributable to
Ameritrade RIA clients, including a select number of relationships
that did not meet our criteria for an ongoing service
relationship.
Regarding client cash trends, realignment activity in the first
half of September has resulted in essentially neutral flows – or
inflows generally equal to outflows. This comes after August, where
we saw a brief uptick in client cash movement from transactional
cash to higher yielding investment solutions offered at Schwab
following the late July increase to the Fed Funds rate. This
immediate, yet relatively transitory reaction has been common
throughout the current tightening cycle.
Schwab’s diversified financial model has enabled us to deliver
strong results through a wide range of environments, including 33
consecutive quarters of GAAP pre-tax margin exceeding 35%. On an
adjusted basis (1), we have posted a pre-tax margin of 40% or
greater for 11 consecutive quarters and we expect to extend that
streak to 12 when we report third quarter results next month.”
(1)
Adjusted pre-tax margin percentage, or
adjusted income before taxes on income, is calculated as total net
revenues less adjusted total expenses divided by total net
revenues. Adjusted total expenses exclude the impact of applicable
acquisition and integration-related costs, the amortization of
acquired intangible assets, and restructuring costs related to
achieving incremental cost savings.
Forward-Looking Statements
This press release contains forward-looking statements relating
to the Ameritrade client conversion; net new assets; asset
attrition from clients originating at Ameritrade; client cash
trends; financial results; and third quarter pre-tax margin. These
forward-looking statements reflect management’s expectations as of
the date hereof. Achievement of these expectations and objectives
is subject to risks and uncertainties that could cause actual
results to differ materially from the expressed expectations.
Important factors that may cause such differences include, but
are not limited to, the risk that Ameritrade client transitions are
not completed when expected or do not result in a positive client
experience; asset attrition from clients originating at Ameritrade
is higher than expected; client use of the company’s advisory
solutions and other products and services; general market
conditions, including the level of interest rates and equity
valuations; client cash allocation decisions; client sensitivity to
rates; level of client assets, including cash balances; competitive
pressures on pricing; capital and liquidity needs and management;
balance sheet positioning relative to changes in interest rates;
interest earning asset mix and growth; the level and mix of client
trading activity; market volatility; securities lending; margin
loan balances; the amount and timing of restructuring costs related
to achieving incremental cost savings; and new or changed
legislation, regulation or regulatory expectations, including the
timing of the FDIC’s enactment of a final rule relating to a
special assessment and our recognition of the full amount of the
special assessment in earnings upon such enactment. Other important
factors include the company’s ability to successfully implement
integration strategies and plans; attract and retain clients and
independent investment advisors and grow those relationships and
client assets; develop and launch new and enhanced products,
services, and capabilities, as well as enhance its infrastructure
and capacity, in a timely and successful manner; hire and retain
talent; support client activity levels; monetize client assets;
manage expenses; and other factors set forth in the company’s most
recent reports on Form 10-K and Form 10-Q.
About Charles Schwab
The Charles Schwab Corporation (NYSE: SCHW) is a leading
provider of financial services, with 34.4 million active brokerage
accounts, 2.5 million corporate retirement plan participants, 1.8
million banking accounts, and $8.09 trillion in client assets as of
August 31, 2023. Through its operating subsidiaries, the company
provides a full range of wealth management, securities brokerage,
banking, asset management, custody, and financial advisory services
to individual investors and independent investment advisors. Its
broker-dealer subsidiaries, Charles Schwab & Co., Inc., TD
Ameritrade, Inc., and TD Ameritrade Clearing, Inc., (members SIPC,
https://www.sipc.org), and their affiliates offer a complete range
of investment services and products including an extensive
selection of mutual funds; financial planning and investment
advice; retirement plan and equity compensation plan services;
referrals to independent, fee-based investment advisors; and
custodial, operational and trading support for independent,
fee-based investment advisors through Schwab Advisor Services. Its
primary banking subsidiary, Charles Schwab Bank, SSB (member FDIC
and an Equal Housing Lender), provides banking and lending services
and products. More information is available at
https://www.aboutschwab.com.
TD Ameritrade, Inc. and TD Ameritrade Clearing, Inc. are
separate but affiliated companies and subsidiaries of TD Ameritrade
Holding Corporation. TD Ameritrade Holding Corporation is a wholly
owned subsidiary of The Charles Schwab Corporation. TD Ameritrade
is a trademark jointly owned by TD Ameritrade IP Company, Inc. and
The Toronto-Dominion Bank.
The Charles Schwab Corporation Monthly Activity Report For
August 2023
2022
2023
Change Aug Sep
Oct Nov Dec
Jan Feb Mar
Apr May Jun
Jul Aug Mo.
Yr. Market Indices (at month
end) Dow Jones Industrial Average®
31,510
28,726
32,733
34,590
33,147
34,086
32,657
33,274
34,098
32,908
34,408
35,560
34,722
(2
%)
10
%
Nasdaq Composite®
11,816
10,576
10,988
11,468
10,466
11,585
11,456
12,222
12,227
12,935
13,788
14,346
14,035
(2
%)
19
%
Standard & Poor’s® 500
3,955
3,586
3,872
4,080
3,840
4,077
3,970
4,109
4,169
4,180
4,450
4,589
4,508
(2
%)
14
%
Client Assets (in billions of dollars) Beginning Client
Assets
7,304.8
7,127.6
6,644.2
7,004.6
7,320.6
7,049.8
7,480.6
7,380.2
7,580.0
7,631.5
7,650.2
8,015.8
8,241.0
Net New Assets (1)
43.3
39.8
42.0
33.1
53.3
36.1
41.7
72.9
13.6
24.6
33.8
12.9
8.1
(37
%)
(81
%)
Net Market (Losses) Gains
(220.5
)
(523.2
)
318.4
282.9
(324.1
)
394.7
(142.1
)
126.9
37.9
(5.9
)
331.8
212.3
(154.4
)
Total Client Assets (at month end)
7,127.6
6,644.2
7,004.6
7,320.6
7,049.8
7,480.6
7,380.2
7,580.0
7,631.5
7,650.2
8,015.8
8,241.0
8,094.7
(2
%)
14
%
Core Net New Assets (2)
43.3
39.8
42.0
33.1
53.3
36.1
41.7
53.9
(2.3
)
20.7
33.8
13.7
4.9
(64
%)
(89
%)
Receiving Ongoing Advisory Services (at month end) Investor
Services
499.2
466.6
487.3
514.0
499.8
524.6
515.5
526.2
530.7
526.3
547.5
560.6
552.2
(1
%)
11
%
Advisor Services (3)
3,150.5
2,950.9
3,106.0
3,270.5
3,173.4
3,345.4
3,289.6
3,369.3
3,394.9
3,377.8
3,527.8
3,619.8
3,554.2
(2
%)
13
%
Client Accounts (at month end, in thousands) Active
Brokerage Accounts (4)
33,984
33,875
33,896
33,636
33,758
33,878
34,010
34,120
34,248
34,311
34,382
34,434
34,440
-
1
%
Banking Accounts
1,690
1,696
1,706
1,705
1,716
1,729
1,733
1,746
1,757
1,768
1,781
1,792
1,798
-
6
%
Corporate Retirement Plan Participants
2,285
2,305
2,322
2,336
2,351
2,369
2,384
2,379
2,391
2,401
2,443
2,458
2,458
-
8
%
Client Activity New Brokerage Accounts (in thousands)
332
287
298
303
330
344
320
378
331
314
315
303
311
3
%
(6
%)
Client Cash as a Percentage of Client Assets (5,6)
12.1
%
12.9
%
12.2
%
11.5
%
12.2
%
11.5
%
11.6
%
11.2
%
10.8
%
10.9
%
10.5
%
10.2
%
10.4
%
20 bp (170) bp Derivative Trades as a Percentage of Total Trades
23.3
%
23.6
%
24.1
%
24.6
%
23.2
%
23.0
%
23.5
%
22.8
%
23.4
%
23.5
%
23.9
%
23.0
%
24.4
%
140 bp 110 bp
Selected Average Balances (in millions of
dollars) Average Interest-Earning Assets (7)
586,154
568,351
552,631
527,019
520,100
512,893
503,122
497,627
493,215
483,438
479,752
466,659
449,483
(4
%)
(23
%)
Average Margin Balances
72,855
73,224
69,188
66,011
64,759
60,211
60,575
60,848
60,338
60,250
61,543
63,040
64,226
2
%
(12
%)
Average Bank Deposit Account Balances (8)
148,427
141,198
136,036
130,479
126,953
122,387
115,816
109,392
104,775
103,149
102,917
102,566
101,928
(1
%)
(31
%)
Mutual Fund and Exchange-Traded Fund Net Buys (Sells)
(9,10) (in millions of dollars) Equities
10,465
(2,662
)
3,984
3,777
(1,837
)
7,236
5,850
(3,234
)
1,126
(1,366
)
9,190
7,423
(278
)
Hybrid
(783
)
(938
)
(1,380
)
(2,052
)
(1,595
)
(433
)
47
(1,641
)
(462
)
(889
)
(903
)
(407
)
(1,037
)
Bonds
(141
)
(5,801
)
(7,218
)
(3,721
)
(3,260
)
5,646
4,281
6,158
2,575
2,029
3,302
2,515
4,696
Net Buy (Sell) Activity (in millions of dollars) Mutual
Funds (9)
(7,117
)
(15,200
)
(18,473
)
(17,143
)
(21,851
)
552
(2,338
)
(7,423
)
(4,904
)
(7,157
)
(4,485
)
(3,333
)
(6,476
)
Exchange-Traded Funds (10)
16,658
5,799
13,859
15,147
15,159
11,897
12,516
8,706
8,143
6,931
16,074
12,864
9,857
Money Market Funds
19,702
17,018
21,542
16,929
27,778
24,285
23,347
27,106
6,291
15,256
9,112
7,911
16,869
Note: Certain supplemental details related to the information above
can be found at:
https://www.aboutschwab.com/financial-reports.
(1)
Unless otherwise noted, differences between net new assets and core
net new assets are net flows from off-platform Schwab Bank Retail
Certificates of Deposit (CDs) - including March 2023 which reflects
inflows of $19.0 billion from off-platform Schwab Bank Retail CDs
issued year-to-date through March 31, 2023. April 2023 also
includes an inflow of $12.0 billion from a mutual fund clearing
services client.
(2)
Net new assets before significant one-time inflows or outflows,
such as acquisitions/divestitures or extraordinary flows (generally
greater than $10 billion) relating to a specific client, and
activity from off-platform Schwab Bank Retail CDs. These flows may
span multiple reporting periods.
(3)
Excludes Retirement Business Services.
(4)
November 2022 includes the company-initiated closure of
approximately 350 thousand low-balance accounts. September 2022
includes the company-initiated closure of approximately 152
thousand low-balance accounts.
(5)
Schwab One®, certain cash equivalents, bank deposits, third-party
bank deposit accounts, and money market fund balances as a
percentage of total client assets.
(6)
Beginning July 2023, client cash as a percentage of client assets
excludes brokered CDs issued by Charles Schwab Bank. Prior periods
have been recast to reflect this change.
(7)
Represents average total interest-earning assets on the company's
balance sheet. November 2022 includes the impact of transferring
certain investment securities from the available for sale category
to the held-to-maturity category.
(8)
Represents average clients’ uninvested cash sweep account balances
held in deposit accounts at third-party financial institutions.
(9)
Represents the principal value of client mutual fund transactions
handled by Schwab, including transactions in proprietary funds.
Includes institutional funds available only to Investment Managers.
Excludes money market fund transactions.
(10)
Represents the principal value of client ETF transactions handled
by Schwab, including transactions in proprietary ETFs.
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MEDIA: Mayura Hooper Charles Schwab Phone:
415-667-1525
INVESTORS/ANALYSTS: Jeff Edwards Charles Schwab Phone:
415-667-1524
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