Schwab Reports Monthly Activity Highlights

Rhea-AI Summary

The Charles Schwab Corporation reported strong performance in its August 2022 Monthly Activity Report, with core net new assets of $43.3 billion and total client assets of $7.13 trillion. New accounts increased by 332,000, and daily average trades were 5.6 million. CFO Peter Crawford highlighted anticipated revenue growth of 18%-19% year-over-year for Q3, driven by net interest margin improvements. The company has adjusted its Tier 1 Leverage Ratio target to 6.50%-6.75%, reflecting a robust balance sheet and effective capital planning.

Positive

• Core net new assets reached $43.3 billion.
• Total client assets amounted to $7.13 trillion.
• 332,000 new accounts were opened in August.
• Daily average trades increased to 5.6 million.
• Projected Q3 revenue growth of 18%-19% year-over-year.
• Increased capital levels from client cash movement, allowing for stockholder returns.

Negative

• Total client assets declined 9% year-over-year.
• Total client assets decreased 2% compared to July 2022.
• Average margin balances dropped 10% year-over-year.

WESTLAKE, Texas--(BUSINESS WIRE)-- The Charles Schwab Corporation released its Monthly Activity Report today. Company highlights for the month of August 2022 include:

• 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

FAQ

What were Charles Schwab's core net new assets in August 2022?

Charles Schwab reported core net new assets of $43.3 billion in August 2022.

How many new accounts did Charles Schwab open in August 2022?

Charles Schwab opened 332,000 new accounts in August 2022.

What is the projected revenue growth for Charles Schwab in Q3 2022?

Charles Schwab projects revenue growth of 18% to 19% year-over-year for Q3 2022.

What are the total client assets of Charles Schwab as of August 2022?

As of August 2022, Charles Schwab's total client assets were $7.13 trillion.

How did average margin balances change for Charles Schwab in August 2022?

Average margin balances for Charles Schwab were $72.9 billion in August 2022, down 10% from August 2021.