Schwab Reports Monthly Activity Highlights
- Core net new assets brought in by new and existing clients amounted to $33.4 billion in February 2024.
- Total client assets stood at $8.88 trillion at the end of February 2024, marking a 20% increase from the previous year.
- Anticipated first-quarter revenue growth is expected to be around 5-6% with a nearly four-percentage-point expansion in adjusted pre-tax profit margin compared to the fourth quarter of 2023.
- The company expects a significant expansion in GAAP pre-tax profit margin by more than 900 basis points compared to the previous quarter.
- The financial model of the company benefited from rising equity markets and increased client trading activity at the beginning of the year.
- None.
Insights
The Charles Schwab Corporation's report of a 20% year-over-year increase in total client assets and a 4% increase from the previous month signifies a robust growth trajectory, which is particularly noteworthy in the context of the broader financial services industry. This growth can be attributed to a combination of organic client expansion and positive market conditions. The reported core net new assets of $33.4 billion, with $31.1 billion excluding mutual fund clearing, reflect strong client inflows and potentially increased investor confidence.
Furthermore, the anticipated first quarter sequential revenue growth of 5% to 6% and a significant pre-tax profit margin expansion are indicative of operational efficiency and successful cost management strategies, particularly the realization of incremental cost savings from late 2023. The expected 900 basis point increase in GAAP pre-tax profit margin compared to the previous quarter is a substantial improvement, likely to be well-received by investors seeking indications of profitability and financial health.
Charles Schwab's diversified financial model appears to be capitalizing on the rising equity markets and stronger client trading activity, as evidenced by the report. This diversification is key in the financial services sector, as it helps companies weather market volatility and maintain consistent growth. The decrease in transactional sweep cash, however, could suggest a shift in how clients are managing their liquidity, possibly opting for investment over holding cash, which aligns with the overall positive market sentiment.
From a market perspective, the expansion in pre-tax profit margin, especially when adjusted for non-recurring costs, offers a clear picture of underlying operational performance. It is essential to consider these adjusted figures as they provide a more normalized view of profitability, excluding the noise of one-time expenses such as acquisition and integration-related costs or restructuring expenses.
The data presented by Charles Schwab Corporation reflects broader economic trends, such as the health of the equity markets and investor behavior. The significant inflow of net new assets and the growth in client assets could be seen as indicators of economic confidence, suggesting that both retail and institutional investors are actively engaging with the market. This behavior typically correlates with positive economic indicators and a favorable investment climate.
Moreover, the company's forecast for revenue growth and margin expansion in the first quarter of 2024 may be reflective of an efficient response to macroeconomic conditions, including interest rate changes and market dynamics. The ability to adjust costs and improve margins in such an environment is critical for long-term sustainability and competitiveness in the financial sector.
-
Core net new assets brought to the company by new and existing clients totaled
$33.4 billion $31.1 billion -
Total client assets were
$8.88 trillion 20% from February 2023 and up4% versus January 2024. -
Transactional sweep cash ended February 2024 at
$403.2 billion $2.9 billion -
With the company’s diversified financial model benefiting from rising equity markets and stronger client trading activity to start the year, the company anticipates first quarter sequential revenue growth of approximately
5% to6% and adjusted(1) pre-tax profit margin expansion of nearly four percentage points versus the fourth quarter as the full impact of the late 2023 incremental cost savings are realized.
(1) |
Adjusted pre-tax profit margin is calculated as total net revenues less adjusted total expenses, which exclude acquisition and integration-related costs, amortization of acquired intangible assets, and restructuring costs, as a percentage of total net revenues. 1Q24 GAAP pre-tax profit margin is currently expected to expand by more than 900 basis points versus 4Q23. This sequential improvement is driven by a combination of business performance and lower expected non-GAAP adjustments during the first quarter of 2024. 4Q23 adjustments totaled |
Forward-Looking Statements
This press release contains forward-looking statements relating to first quarter revenue and adjusted pre-tax profit margin. These forward-looking statements reflect management’s expectations as of the date hereof. Achievement of these expectations 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, 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; 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; and margin loan balances. Other important factors include the company’s ability to support client activity levels, monetize client assets, and manage expenses; developments in litigation or regulatory matters; and other factors set forth in the company’s most recent report on Form 10-K.
About Charles Schwab
The Charles Schwab Corporation (NYSE: SCHW) is a leading provider of financial services, with 35.1 million active brokerage accounts, 5.3 million workplace plan participant accounts, 1.9 million banking accounts, and
| The Charles Schwab Corporation Monthly Activity Report For February 2024 | |||||||||||||||||||||||||||||||||||||||||||||
2023 |
|
2024 |
|
Change | |||||||||||||||||||||||||||||||||||||||||
| Feb | Mar | Apr | May | Jun | Jul | Aug | Sep | Oct | Nov | Dec | Jan | Feb | Mo. | Yr. | |||||||||||||||||||||||||||||||
| Market Indices (at month end) | |||||||||||||||||||||||||||||||||||||||||||||
| Dow Jones Industrial Average® | 32,657 |
|
33,274 |
|
34,098 |
|
32,908 |
|
34,408 |
|
35,560 |
|
34,722 |
|
33,508 |
|
33,053 |
|
35,951 |
|
37,690 |
|
38,150 |
|
38,996 |
|
2 |
% |
19 |
% |
|||||||||||||||
| Nasdaq Composite® | 11,456 |
|
12,222 |
|
12,227 |
|
12,935 |
|
13,788 |
|
14,346 |
|
14,035 |
|
13,219 |
|
12,851 |
|
14,226 |
|
15,011 |
|
15,164 |
|
16,092 |
|
6 |
% |
40 |
% |
|||||||||||||||
| Standard & Poor’s® 500 | 3,970 |
|
4,109 |
|
4,169 |
|
4,180 |
|
4,450 |
|
4,589 |
|
4,508 |
|
4,288 |
|
4,194 |
|
4,568 |
|
4,770 |
|
4,846 |
|
5,096 |
|
5 |
% |
28 |
% |
|||||||||||||||
| Client Assets (in billions of dollars) | |||||||||||||||||||||||||||||||||||||||||||||
| Beginning Client Assets | 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 |
|
|||||||||||||||||||
| Net New Assets (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 |
|
31.7 |
|
114 |
% |
(24 |
%) |
|||||||||||||||
| Net Market (Losses) Gains | (142.1 |
) |
126.9 |
|
37.9 |
|
(5.9 |
) |
331.8 |
|
212.3 |
|
(154.4 |
) |
(297.4 |
) |
(176.1 |
) |
508.0 |
|
293.9 |
|
26.7 |
|
289.7 |
|
|||||||||||||||||||
| Total Client Assets (at month end) | 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 |
|
8,879.5 |
|
4 |
% |
20 |
% |
|||||||||||||||
| Core Net New Assets (1,2) | 41.7 |
|
53.9 |
|
(2.3 |
) |
20.7 |
|
33.8 |
|
13.7 |
|
4.9 |
|
27.1 |
|
11.3 |
|
21.7 |
|
43.1 |
|
17.2 |
|
33.4 |
|
94 |
% |
(20 |
%) |
|||||||||||||||
| Receiving Ongoing Advisory Services (at month end) | |||||||||||||||||||||||||||||||||||||||||||||
| Investor Services | 515.5 |
|
526.2 |
|
530.7 |
|
526.3 |
|
547.5 |
|
560.6 |
|
552.2 |
|
533.0 |
|
522.2 |
|
557.0 |
|
581.4 |
|
584.1 |
|
601.8 |
|
3 |
% |
17 |
% |
|||||||||||||||
| Advisor Services (3) | 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 |
|
3,902.5 |
|
3 |
% |
19 |
% |
|||||||||||||||
| Client Accounts (at month end, in thousands) | |||||||||||||||||||||||||||||||||||||||||||||
| Active Brokerage Accounts | 34,010 |
|
34,120 |
|
34,248 |
|
34,311 |
|
34,382 |
|
34,434 |
|
34,440 |
|
34,540 |
|
34,571 |
|
34,672 |
|
34,838 |
|
35,017 |
|
35,127 |
|
- |
|
3 |
% |
|||||||||||||||
| Banking Accounts | 1,733 |
|
1,746 |
|
1,757 |
|
1,768 |
|
1,781 |
|
1,792 |
|
1,798 |
|
1,799 |
|
1,812 |
|
1,825 |
|
1,838 |
|
1,856 |
|
1,871 |
|
1 |
% |
8 |
% |
|||||||||||||||
| Workplace Plan Participant Accounts (4) | 4,839 |
|
4,845 |
|
4,869 |
|
4,962 |
|
5,003 |
|
5,030 |
|
5,037 |
|
5,141 |
|
5,212 |
|
5,212 |
|
5,221 |
|
5,226 |
|
5,268 |
|
1 |
% |
9 |
% |
|||||||||||||||
| Client Activity | |||||||||||||||||||||||||||||||||||||||||||||
| New Brokerage Accounts (in thousands) | 320 |
|
378 |
|
331 |
|
314 |
|
315 |
|
303 |
|
311 |
|
280 |
|
284 |
|
286 |
|
340 |
|
366 |
|
345 |
|
(6 |
%) |
8 |
% |
|||||||||||||||
| Client Cash as a Percentage of Client Assets (5,6) | 11.6 |
% |
11.2 |
% |
10.8 |
% |
10.9 |
% |
10.5 |
% |
10.2 |
% |
10.4 |
% |
10.8 |
% |
11.2 |
% |
10.7 |
% |
10.5 |
% |
10.5 |
% |
10.2 |
% |
(30) bp | (140) bp | |||||||||||||||||
| Derivative Trades as a Percentage of Total Trades | 23.5 |
% |
22.8 |
% |
23.4 |
% |
23.5 |
% |
23.9 |
% |
23.0 |
% |
24.4 |
% |
24.2 |
% |
23.2 |
% |
23.1 |
% |
21.8 |
% |
21.8 |
% |
22.2 |
% |
40 bp | (130) bp | |||||||||||||||||
| Selected Average Balances (in millions of dollars) | |||||||||||||||||||||||||||||||||||||||||||||
| Average Interest-Earning Assets (7) | 503,122 |
|
497,627 |
|
493,215 |
|
483,438 |
|
479,752 |
|
466,659 |
|
449,483 |
|
444,864 |
|
438,522 |
|
439,118 |
|
446,305 |
|
443,694 |
|
434,822 |
|
(2 |
%) |
(14 |
%) |
|||||||||||||||
| Average Margin Balances | 60,575 |
|
60,848 |
|
60,338 |
|
60,250 |
|
61,543 |
|
63,040 |
|
64,226 |
|
64,014 |
|
63,946 |
|
61,502 |
|
62,309 |
|
61,368 |
|
63,600 |
|
4 |
% |
5 |
% |
|||||||||||||||
| Average Bank Deposit Account Balances (8) | 115,816 |
|
109,392 |
|
104,775 |
|
103,149 |
|
102,917 |
|
102,566 |
|
101,928 |
|
100,404 |
|
97,893 |
|
94,991 |
|
95,518 |
|
95,553 |
|
92,075 |
|
(4 |
%) |
(20 |
%) |
|||||||||||||||
| Mutual Fund and Exchange-Traded Fund | |||||||||||||||||||||||||||||||||||||||||||||
| Net Buys (Sells) (9,10) (in millions of dollars) | |||||||||||||||||||||||||||||||||||||||||||||
| Equities | 5,850 |
|
(3,234 |
) |
1,126 |
|
(1,366 |
) |
9,190 |
|
7,423 |
|
(278 |
) |
675 |
|
(3,039 |
) |
6,099 |
|
7,903 |
|
8,182 |
|
7,624 |
|
|||||||||||||||||||
| Hybrid | 47 |
|
(1,641 |
) |
(462 |
) |
(889 |
) |
(903 |
) |
(407 |
) |
(1,037 |
) |
(828 |
) |
(1,457 |
) |
(1,466 |
) |
(1,596 |
) |
(501 |
) |
(1,330 |
) |
|||||||||||||||||||
| Bonds | 4,281 |
|
6,158 |
|
2,575 |
|
2,029 |
|
3,302 |
|
2,515 |
|
4,696 |
|
2,723 |
|
1,094 |
|
255 |
|
6,104 |
|
7,510 |
|
9,883 |
|
|||||||||||||||||||
| Net Buy (Sell) Activity (in millions of dollars) | |||||||||||||||||||||||||||||||||||||||||||||
| Mutual Funds (9) | (2,338 |
) |
(7,423 |
) |
(4,904 |
) |
(7,157 |
) |
(4,485 |
) |
(3,333 |
) |
(6,476 |
) |
(5,853 |
) |
(12,245 |
) |
(9,267 |
) |
(7,406 |
) |
(966 |
) |
(1,348 |
) |
|||||||||||||||||||
| Exchange-Traded Funds (10) | 12,516 |
|
8,706 |
|
8,143 |
|
6,931 |
|
16,074 |
|
12,864 |
|
9,857 |
|
8,423 |
|
8,843 |
|
14,155 |
|
19,817 |
|
16,157 |
|
17,525 |
|
|||||||||||||||||||
| Money Market Funds | 23,347 |
|
27,106 |
|
6,291 |
|
15,256 |
|
9,112 |
|
7,911 |
|
16,869 |
|
13,388 |
|
16,976 |
|
11,670 |
|
7,745 |
|
11,717 |
|
10,129 |
|
|||||||||||||||||||
|
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 |
(2) |
Net new assets before significant one-time inflows or outflows, such as acquisitions/divestitures or extraordinary flows (generally greater than |
(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/20240314277581/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 Charles Schwab Corporation in February 2024?
What were the total client assets for The Charles Schwab Corporation at the end of February 2024?
What is the expected revenue growth for the first quarter of 2024 for The Charles Schwab Corporation?
What is the expected expansion in adjusted pre-tax profit margin for The Charles Schwab Corporation in the first quarter of 2024?
How much is the anticipated expansion in GAAP pre-tax profit margin for The Charles Schwab Corporation in the first quarter of 2024?
