Schwab Reports Monthly Activity Highlights

Rhea-AI Summary

The Charles Schwab Corporation reported strong growth in core net new assets, reaching $17.2 billion in January 2024. Total client assets stood at $8.56 trillion, up 14% from the previous year. Transactional sweep cash decreased to $406.1 billion due to market reengagement after a build-up in December 2023.

Positive

• Strong core net new assets growth of $17.2 billion in January 2024.
• Total client assets increased to $8.56 trillion, a 14% rise from January 2023.
• Transactional sweep cash declined to $406.1 billion as clients reengaged with the markets post December 2023 build-up.

Negative

• None.

Insights

Financial Analyst

The reported increase in core net new assets by $17.2 billion and $21.4 billion when excluding Ameritrade originated brokerage clients, signifies robust organic growth and client retention for Charles Schwab. This is a critical metric for assessing the company's performance, as it reflects both the acquisition of new clients and the additional assets from existing clients. The year-over-year growth of 14% in total client assets indicates a strong market position and the ability to attract and manage significant wealth. However, the flat growth compared to December 2023 suggests a potential plateau in asset accumulation, which could be a point of concern if the trend continues.

Transactional sweep cash is another significant figure, as it represents the liquidity available for the company to invest and earn interest. The decrease of $11.3 billion in January aligns with seasonal trends, but it also indicates that clients are possibly moving their funds into investment opportunities rather than leaving them in cash. This behavior could signal investor confidence in the market or a strategic shift in asset allocation. The implications of such movements are twofold: while they may reduce immediate interest revenue for Schwab, they also suggest active client engagement, which could lead to higher transaction-based revenues.

Market Research Analyst

Understanding the broader market context is essential when analyzing Charles Schwab's performance. The reported 14% year-over-year increase in client assets outpaces inflation, suggesting real growth in value. It is also indicative of the company's competitive positioning within the financial services industry. Considering the company's flat month-over-month asset growth, it is crucial to compare this with industry trends to determine if this is an isolated case or reflective of a wider market sentiment.

Furthermore, the behavior of transactional sweep cash can be indicative of investor sentiment. The reduction in sweep cash suggests that investors may be taking a more aggressive stance in their investment strategies at the beginning of the year, a pattern that could be influenced by macroeconomic factors such as interest rate changes, stock market performance and economic forecasts. These trends can provide insights into the potential revenue streams from trading activities and asset management fees, which are pivotal for Charles Schwab's profitability.

WESTLAKE, Texas--(BUSINESS WIRE)-- The Charles Schwab Corporation released its Monthly Activity Report today. Company highlights for the month of January 2024 include:

• Total core net new assets brought to the company by new and existing clients equaled $17.2 billion, or $21.4 billion in core net new assets excluding Ameritrade originated brokerage clients.
• Total client assets were $8.56 trillion as of month-end January, up 14% from January 2023 and flat versus December 2023.
• Transactional sweep cash ended January 2024 at $406.1 billion, representing a decrease of $11.3 billion versus the prior month. This decline was in-line with typical January seasonality as clients reengaged with the markets following a nearly $15 billion build-up in cash during December 2023.

About Charles Schwab

The Charles Schwab Corporation (NYSE: SCHW) is a leading provider of financial services, with 35.0 million active brokerage accounts, 5.2 million workplace plan participant accounts, 1.9 million banking accounts, and $8.56 trillion in client assets as of January 31, 2024. 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 LLC. TD Ameritrade Holding LLC 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 January 2024
			2023																																				2024			Change
			Jan			Feb			Mar			Apr			May			Jun			Jul			Aug			Sep			Oct			Nov			Dec			Jan			Mo.		Yr.
Market Indices (at month end)
Dow Jones Industrial Average®			34,086			32,657			33,274			34,098			32,908			34,408			35,560			34,722			33,508			33,053			35,951			37,690			38,150			1	%	12	%
Nasdaq Composite®			11,585			11,456			12,222			12,227			12,935			13,788			14,346			14,035			13,219			12,851			14,226			15,011			15,164			1	%	31	%
Standard & Poor’s® 500			4,077			3,970			4,109			4,169			4,180			4,450			4,589			4,508			4,288			4,194			4,568			4,770			4,846			2	%	19	%
Client Assets (in billions of dollars)
Beginning Client Assets			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			7,824.5			7,653.4			8,180.6			8,516.6
Net New Assets (1)			36.1			41.7			72.9			13.6			24.6			33.8			12.9			8.1			27.2			5.0			19.2			42.1			14.8			(65	%)	(59	%)
Net Market Gains (Losses)			394.7			(142.1	)		126.9			37.9			(5.9	)		331.8			212.3			(154.4	)		(297.4	)		(176.1	)		508.0			293.9			26.7
Total Client Assets (at month end)			7,480.6			7,380.2			7,580.0			7,631.5			7,650.2			8,015.8			8,241.0			8,094.7			7,824.5			7,653.4			8,180.6			8,516.6			8,558.1			-		14	%
Core Net New Assets (1,2)			36.1			41.7			53.9			(2.3	)		20.7			33.8			13.7			4.9			27.1			11.3			21.7			43.1			17.2			(60	%)	(52	%)
Receiving Ongoing Advisory Services (at month end)
Investor Services			524.6			515.5			526.2			530.7			526.3			547.5			560.6			552.2			533.0			522.2			557.0			581.4			584.1			-		11	%
Advisor Services (3)			3,345.4			3,289.6			3,369.3			3,394.9			3,377.8			3,527.8			3,619.8			3,554.2			3,448.0			3,380.3			3,604.4			3,757.4			3,780.4			1	%	13	%
Client Accounts (at month end, in thousands)
Active Brokerage Accounts			33,878			34,010			34,120			34,248			34,311			34,382			34,434			34,440			34,540			34,571			34,672			34,838			35,017			1	%	3	%
Banking Accounts			1,729			1,733			1,746			1,757			1,768			1,781			1,792			1,798			1,799			1,812			1,825			1,838			1,856			1	%	7	%
Workplace Plan Participant Accounts (4)			4,817			4,839			4,845			4,869			4,962			5,003			5,030			5,037			5,141			5,212			5,212			5,221			5,226			-		8	%
Client Activity
New Brokerage Accounts (in thousands)			344			320			378			331			314			315			303			311			280			284			286			340			366			8	%	6	%
Client Cash as a Percentage of Client Assets (5,6)			11.5	%		11.6	%		11.2	%		10.8	%		10.9	%		10.5	%		10.2	%		10.4	%		10.8	%		11.2	%		10.7	%		10.5	%		10.5	%		-		(100) bp
Derivative Trades as a Percentage of Total Trades			23.0	%		23.5	%		22.8	%		23.4	%		23.5	%		23.9	%		23.0	%		24.4	%		24.2	%		23.2	%		23.1	%		21.8	%		21.8	%		-		(120) bp
Selected Average Balances (in millions of dollars)
Average Interest-Earning Assets (7)			512,893			503,122			497,627			493,215			483,438			479,752			466,659			449,483			444,864			438,522			439,118			446,305			443,694			(1	%)	(13	%)
Average Margin Balances			60,211			60,575			60,848			60,338			60,250			61,543			63,040			64,226			64,014			63,946			61,502			62,309			61,368			(2	%)	2	%
Average Bank Deposit Account Balances (8)			122,387			115,816			109,392			104,775			103,149			102,917			102,566			101,928			100,404			97,893			94,991			95,518			95,553			-		(22	%)
Mutual Fund and Exchange-Traded Fund
Net Buys (Sells) (9,10) (in millions of dollars)
Equities			7,236			5,850			(3,234	)		1,126			(1,366	)		9,190			7,423			(278	)		675			(3,039	)		6,099			7,903			8,182
Hybrid			(433	)		47			(1,641	)		(462	)		(889	)		(903	)		(407	)		(1,037	)		(828	)		(1,457	)		(1,466	)		(1,596	)		(501	)
Bonds			5,646			4,281			6,158			2,575			2,029			3,302			2,515			4,696			2,723			1,094			255			6,104			7,510
Net Buy (Sell) Activity (in millions of dollars)
Mutual Funds (9)			552			(2,338	)		(7,423	)		(4,904	)		(7,157	)		(4,485	)		(3,333	)		(6,476	)		(5,853	)		(12,245	)		(9,267	)		(7,406	)		(966	)
Exchange-Traded Funds (10)			11,897			12,516			8,706			8,143			6,931			16,074			12,864			9,857			8,423			8,843			14,155			19,817			16,157
Money Market Funds			24,285			23,347			27,106			6,291			15,256			9,112			7,911			16,869			13,388			16,976			11,670			7,745			11,717

	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 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. Additionally, 2023 includes outflows from a large international relationship of $0.8 billion in September, $6.2 billion in October, $5.4 billion in November, and $0.6 billion in December, and an inflow of $12.0 billion from a mutual fund clearing services client in April.
(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)	Beginning October 2023, Retirement Plan Participants was expanded to include accounts in Stock Plan Services, Designated Brokerage Services, and Retirement Business Services. Participants may be enrolled in services in more than one Workplace business. Prior periods have been recast to reflect this change.
(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.
(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.

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240214557881/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 the core net new assets brought to the company in January 2024?

The core net new assets brought to the company in January 2024 were $17.2 billion.

What was the total client assets value as of January 2024?

The total client assets value as of January 2024 was $8.56 trillion.

Why did the transactional sweep cash decrease in January 2024?

The transactional sweep cash decreased in January 2024 due to market reengagement following a build-up in December 2023.