Schwab Reports Monthly Activity Highlights
09/15/2022 - 08:45 AM
WESTLAKE, Texas --(BUSINESS WIRE)--
The Charles Schwab Corporation released its Monthly Activity Report today. Company highlights for the month of August 2022 include:
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Core net new assets brought to the company by new and existing clients totaled $43.3 billion . Net new assets excluding mutual fund clearing totaled $43.1 billion .
Total client assets were $7.13 trillion as of month-end August, down 9% from August 2021 and down 2% compared to July 2022 .
Average margin balances were $72.9 billion in August, down 10% from August 2021 and up 1% compared to July 2022 .
CFO Peter Crawford commented, “Schwab’s business momentum remained strong in August, with $43 billion in core net new assets, 332 thousand new accounts, and 5.6 million daily average trades. We did see a pick-up in so-called client cash sorting behavior during the month, consistent with our expectations that a faster rise in the Fed Funds rate could prompt an increase in the pace of sorting. That being said, we continue to expect that the total amount of overall sorting activity shouldn’t be any higher this cycle than during the prior stretch of rising rates – and we still think it could even be a bit lower due to the factors discussed at our Summer Business Update back in July. Additionally, our ongoing success with clients and stronger net interest margin currently have the company’s third quarter revenues on track to grow by 18% to 19% versus the prior year.
As clients move some of their cash to purchased money funds and fixed income, it increases our capital levels – freeing up capital which we can return to stockholders through higher common dividends, preferred redemptions, and/or stock buybacks. Our binding constraint of course is our consolidated Tier 1 Leverage Ratio. For many years, our operating objective for Tier 1 Leverage has been 6.75% -7.00% . Recently, however, we made the decision to lower that operating objective by 25 basis points to 6.50% -6.75% . This lower range reflects the increased maturity of our capital planning processes, the strength and resilience of our balance sheet, and the positive results from our inaugural CCAR submission. We’ll discuss the implications of this change on our near-term capital activities at the upcoming Fall Business Update in October.”
Forward-Looking Statements
This press release contains forward-looking statements relating to Schwab’s business momentum and client success; client cash sorting; net interest margin; expected third quarter revenue growth; capital levels; returning excess capital to stockholders; Tier 1 Leverage Ratio operating objective; and balance sheet strength. 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 company’s ability to 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; successfully implement integration strategies and plans; manage expenses; and monetize client assets. Other important factors include client use of the company’s advisory solutions and other products and services; general market conditions, including equity valuations and the level of interest rates; the level and mix of client trading activity; market volatility; margin loan balances; securities lending; competitive pressures on pricing; client cash allocation decisions; client sensitivity to rates; level of client assets, including cash balances; capital and liquidity needs and management; balance sheet positioning relative to changes in interest rates; interest earning asset mix and growth; the migration of bank deposit account balances; 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 34.0 million active brokerage accounts, 2.3 million corporate retirement plan participants, 1.7 million banking accounts, and $7.13 trillion in client assets as of August 31, 2022 . 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 2022
2021
2022
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®
35,361
33,844
35,820
34,484
36,338
35,132
33,893
34,678
32,977
32,990
30,775
32,845
31,510
(4
%)
(11
%)
Nasdaq Composite®
15,259
14,449
15,498
15,538
15,645
14,240
13,751
14,221
12,335
12,081
11,029
12,391
11,816
(5
%)
(23
%)
Standard & Poor’s® 500
4,523
4,308
4,605
4,567
4,766
4,516
4,374
4,530
4,132
4,132
3,785
4,130
3,955
(4
%)
(13
%)
Client Assets (in billions of dollars)
Beginning Client Assets
7,642.7
7,838.2
7,614.0
7,982.3
7,918.3
8,138.0
7,803.8
7,686.6
7,862.1
7,284.4
7,301.7
6,832.5
7,304.8
Net New Assets (1)
51.8
42.9
22.9
31.4
80.3
33.6
40.6
46.3
(9.2
)
32.8
19.8
31.5
43.3
37
%
(16
%)
Net Market Gains (Losses)
143.7
(267.1
)
345.4
(95.4
)
139.4
(367.8
)
(157.8
)
129.2
(568.5
)
(15.5
)
(489.0
)
440.8
(220.5
)
Total Client Assets (at month end)
7,838.2
7,614.0
7,982.3
7,918.3
8,138.0
7,803.8
7,686.6
7,862.1
7,284.4
7,301.7
6,832.5
7,304.8
7,127.6
(2
%)
(9
%)
Core Net New Assets (2)
51.8
42.9
36.8
45.1
80.3
33.6
40.6
46.3
(9.2
)
32.8
40.6
31.5
43.3
37
%
(16
%)
Receiving Ongoing Advisory Services (at month end)
Investor Services
542.5
530.1
548.3
543.1
559.2
541.9
533.7
538.9
509.3
513.0
483.8
514.8
499.2
(3
%)
(8
%)
Advisor Services (3)
3,333.4
3,253.2
3,399.8
3,374.3
3,505.2
3,382.4
3,342.5
3,404.6
3,190.5
3,213.8
3,040.4
3,222.5
3,150.5
(2
%)
(5
%)
Client Accounts (at month end, in thousands)
Active Brokerage Accounts
32,513
32,675
32,796
32,942
33,165
33,308
33,421
33,577
33,759
33,822
33,896
33,934
33,984
-
5
%
Banking Accounts
1,594
1,580
1,593
1,608
1,614
1,628
1,641
1,641
1,652
1,658
1,669
1,680
1,690
1
%
6
%
Corporate Retirement Plan Participants
2,188
2,207
2,213
2,198
2,200
2,216
2,235
2,246
2,261
2,275
2,275
2,267
2,285
1
%
4
%
Client Activity
New Brokerage Accounts (in thousands)
402
374
397
448
473
426
356
420
386
323
305
278
332
19
%
(17
%)
Client Cash as a Percentage of Client Assets (4)
10.3
%
10.8
%
10.4
%
10.5
%
10.9
%
11.3
%
11.5
%
11.4
%
11.9
%
12.0
%
12.8
%
12.0
%
12.1
%
10 bp
180 bp
Derivative Trades as a Percentage of Total Trades
23.1
%
23.1
%
22.5
%
23.4
%
23.0
%
22.4
%
24.0
%
22.4
%
21.9
%
22.6
%
22.3
%
24.2
%
23.3
%
(90) bp
20 bp
Selected Average Balances (in millions of dollars)
Average Interest-Earning Assets (5)
552,372
565,379
574,181
584,362
605,709
622,997
629,042
644,768
636,668
620,157
614,100
605,751
586,154
(3
%)
6
%
Average Margin Balances
81,021
81,705
83,835
87,311
88,328
86,737
84,354
81,526
83,762
78,841
74,577
72,177
72,855
1
%
(10
%)
Average Bank Deposit Account Balances (6)
150,896
152,330
154,040
153,877
154,918
157,706
153,824
155,657
152,653
154,669
155,306
154,542
148,427
(4
%)
(2
%)
Mutual Fund and Exchange-Traded Fund
Net Buys (Sells) (7,8) (in millions of dollars)
Equities
8,808
7,596
8,840
13,099
11,519
7,384
9,371
14,177
(786
)
1,889
(1,586
)
5,589
10,465
Hybrid
569
335
81
308
(1,207
)
(367
)
(478
)
(497
)
(529
)
(1,718
)
(1,054
)
(2,041
)
(783
)
Bonds
8,044
6,232
4,425
4,097
5,600
1,804
(1,973
)
(7,851
)
(6,933
)
(6,121
)
(5,631
)
729
(141
)
Net Buy (Sell) Activity (in millions of dollars)
Mutual Funds (7)
3,876
(308
)
302
189
(2,859
)
(4,961
)
(6,318
)
(11,888
)
(16,657
)
(20,761
)
(16,258
)
(8,674
)
(7,117
)
Exchange-Traded Funds (8)
13,545
14,471
13,044
17,315
18,771
13,782
13,238
17,717
8,409
14,811
7,987
12,951
16,658
Money Market Funds
(1,372
)
(1,512
)
(451
)
(1,725
)
(144
)
(1,984
)
(1,086
)
(1,344
)
(3,430
)
7,106
11,544
13,711
19,702
Note: Certain supplemental details related to the information above can be found at: https://www.aboutschwab.com/financial-reports .
(1)
June 2022 includes an outflow of $20.8 billion from a mutual fund clearing services client. November 2021 includes an outflow of $13.7 billion from a mutual fund clearing services client. October 2021 includes an outflow of $13.9 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. These flows may span multiple reporting periods.
(3)
Excludes Retirement Business Services.
(4)
Schwab One®, certain cash equivalents, bank deposits, third-party bank deposit accounts, and money market fund balances as a percentage of total client assets.
(5)
Represents average total interest-earning assets on the company's balance sheet.
(6)
Represents average TD Ameritrade clients’ uninvested cash sweep account balances held in deposit accounts at third-party financial institutions.
(7)
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.
(8)
Represents the principal value of client ETF transactions handled by Schwab, including transactions in proprietary ETFs.
View source version on businesswire.com : https://www.businesswire.com/news/home/20220915005416/en/
MEDIA:
Mayura Hooper
Charles Schwab
Phone: 415-667-1525
INVESTORS/ANALYSTS:
Jeff Edwards
Charles Schwab
Phone: 415-667-1524
Source: The Charles Schwab Corporation