Schwab Reports Monthly Activity Highlights

Rhea-AI Summary

The Charles Schwab Corporation's Monthly Activity Report for April 2022 revealed significant client cash disbursements, totaling negative $9.2 billion in net new assets. Excluding mutual fund clearing, the negative total stands at $6.5 billion. Total client assets reached $7.28 trillion, marking a 1% decline year-on-year and a 7% decrease from March 2022. Average interest-earning assets increased by 21% year-over-year to $636.7 billion. CFO Peter Crawford noted that the high outflows during tax season reflect past portfolio actions, hinting at potential future rebalancing as interest rates rise.

Positive

• Average interest-earning assets rose by 21% year-over-year to $636.7 billion.
• Strong long-term growth potential highlighted by the 'Through Clients’ Eyes' strategy.

Negative

• Client cash disbursements resulted in negative net new assets of $9.2 billion.
• Total client assets decreased by 1% year-over-year and 7% from March 2022.

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

• Core net new assets brought to the company by new and existing clients totaled negative $9.2 billion. Net new assets excluding mutual fund clearing totaled negative $6.5 billion. These flows reflect client cash disbursements during tax season.
• Total client assets were $7.28 trillion as of month-end April, down 1% from April 2021 and down 7% compared to March 2022.
• Average interest-earning assets were $636.7 billion in April, up 21% from April 2021 and down 1% compared to March 2022.

CFO Peter Crawford commented, “Client cash disbursements during this year’s tax season were the highest we’ve ever seen at Schwab. These outflows include the impact of client portfolio actions taken during 2021, a year marked by strong equity market performance and robust trading activity. Such seasonal activity is distinct from flows within client accounts rebalancing their cash positions between daily liquidity and investments such as money market funds. This rebalancing, or sorting, activity tends to occur as an extended period of low interest rates shifts into a rising rate environment and clients refresh their allocations.”

“While the Federal Reserve has taken initial steps to move interest rates higher thus far in 2022, short rates are just now approaching the point where we’d expect to see clients start to rebalance their cash positions,” Mr. Crawford continued. “Assuming the Fed’s tightening cycle remains consistent with current forecasts, we believe we could see rebalancing activity begin to surface before the end of the second quarter. Such actions may lead to a slight decline in balance sheet assets from current levels over the next quarter or two (assuming clients don’t meaningfully shift their investments from equities to cash). As we help clients navigate this environment, we remain confident that the successful execution of our 'Through Clients’ Eyes' strategy, coupled with our all-weather financial model, will support strong long-term growth - in our client base, and in value for our stockholders.”

Forward-Looking Statements
This press release contains forward-looking statements relating to the rebalancing of client cash positions; balance sheet growth; and growth in the client base and stockholder value. Achievement of these expectations, beliefs, 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, general market conditions, including equity valuations, trading activity, and the level of interest rates; competitive pressures on pricing; client cash sorting; client sensitivity to rates; the level of client assets, including cash balances; the migration of bank deposit account balances; capital and liquidity needs and management; market volatility; the company’s ability to attract and retain clients and registered investment advisors and grow those relationships and associated client assets; the company’s ability to monetize client assets; the company’s ability to develop and launch new and enhanced products, services, and capabilities, as well as enhance its infrastructure, in a timely and successful manner; client use of the company’s advisory solutions and other products and services; the company’s ability to support client activity levels and attract and retain talent; the Ameritrade integration, including expected synergies; the company’s ability to manage expenses; balance sheet positioning relative to changes in interest rates; interest earning asset mix and growth; the scope and duration of the COVID-19 pandemic and actions taken by governmental authorities to contain the spread of the virus and the economic impact; 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 33.8 million active brokerage accounts, 2.3 million corporate retirement plan participants, 1.7 million banking accounts, and $7.28 trillion in client assets as of April 30, 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 April 2022
		2021																											2022												Change
		Apr			May			Jun			Jul			Aug			Sep			Oct			Nov			Dec			Jan			Feb			Mar			Apr			Mo.			Yr.
Market Indices (at month end)
Dow Jones Industrial Average®		33,875			34,529			34,503			34,935			35,361			33,844			35,820			34,484			36,338			35,132			33,893			34,678			32,977			(5	%)		(3	%)
Nasdaq Composite®		13,963			13,749			14,504			14,673			15,259			14,449			15,498			15,538			15,645			14,240			13,751			14,221			12,335			(13	%)		(12	%)
Standard & Poor’s® 500		4,181			4,204			4,298			4,395			4,523			4,308			4,605			4,567			4,766			4,516			4,374			4,530			4,132			(9	%)		(1	%)
Client Assets (in billions of dollars)
Beginning Client Assets		7,069.1			7,336.1			7,395.7			7,574.8			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
Net New Assets (1)		37.2			28.1			43.5			44.3			51.8			42.9			22.9			31.4			80.3			33.6			40.6			46.3			(9.2	)		(120	%)		(125	%)
Net Market Gains (Losses)		229.8			31.5			135.6			23.6			143.7			(267.1	)		345.4			(95.4	)		139.4			(367.8	)		(157.8	)		129.2			(568.5	)
Total Client Assets (at month end)		7,336.1			7,395.7			7,574.8			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	%)		(1	%)
Core Net New Assets (2)		37.2			28.1			43.5			44.3			51.8			42.9			36.8			45.1			80.3			33.6			40.6			46.3			(9.2	)		(120	%)		(125	%)
Receiving Ongoing Advisory Services (at month end)
Investor Services		511.1			517.8			525.1			531.9			542.5			530.1			548.3			543.1			559.2			541.9			533.7			538.9			509.3			(5	%)		-
Advisor Services (3)		3,112.5			3,150.4			3,209.3			3,256.5			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			(6	%)		3	%
Client Accounts (at month end, in thousands)
Active Brokerage Accounts		31,877			32,110			32,265			32,386			32,513			32,675			32,796			32,942			33,165			33,308			33,421			33,577			33,759			1	%		6	%
Banking Accounts		1,562			1,584			1,574			1,578			1,594			1,580			1,593			1,608			1,614			1,628			1,641			1,641			1,652			1	%		6	%
Corporate Retirement Plan Participants		2,116			2,130			2,149			2,159			2,188			2,207			2,213			2,198			2,200			2,216			2,235			2,246			2,261			1	%		7	%
Client Activity
New Brokerage Accounts (in thousands)		609			549			499			402			402			374			397			448			473			426			356			420			386			(8	%)		(37	%)
Client Cash as a Percentage of Client Assets (4)		10.9	%		10.8	%		10.5	%		10.4	%		10.3	%		10.8	%		10.4	%		10.5	%		10.9	%		11.3	%		11.5	%		11.4	%		11.9	%		50 bp			100 bp
Derivative Trades as a Percentage of Total Trades		20.4	%		20.9	%		20.6	%		22.2	%		23.1	%		23.1	%		22.5	%		23.4	%		23.0	%		22.4	%		24.0	%		22.4	%		21.9	%		(50) bp			150 bp
Selected Average Balances (in millions of dollars)
Average Interest-Earning Assets (5)		527,194			528,642			536,146			546,579			552,372			565,379			574,181			584,362			605,709			622,997			629,042			644,768			636,668			(1	%)		21	%
Average Margin Balances		72,863			75,921			78,410			79,910			81,021			81,705			83,835			87,311			88,328			86,737			84,354			81,526			83,762			3	%		15	%
Average Bank Deposit Account Balances (6)		162,392			160,459			161,377			151,275			150,896			152,330			154,040			153,877			154,918			157,706			153,824			155,657			152,653			(2	%)		(6	%)
Mutual Fund and Exchange-Traded Fund
Net Buys (Sells) (7,8) (in millions of dollars)
Equities		13,422			9,854			10,873			7,418			8,808			7,596			8,840			13,099			11,519			7,384			9,371			14,177			(786	)
Hybrid		877			1			390			666			569			335			81			308			(1,207	)		(367	)		(478	)		(497	)		(529	)
Bonds		8,940			5,906			10,101			6,917			8,044			6,232			4,425			4,097			5,600			1,804			(1,973	)		(7,851	)		(6,933	)
Net Buy (Sell) Activity (in millions of dollars)
Mutual Funds (7)		5,754			2,022			5,872			2,644			3,876			(308	)		302			189			(2,859	)		(4,961	)		(6,318	)		(11,888	)		(16,657	)
Exchange-Traded Funds (8)		17,485			13,739			15,492			12,357			13,545			14,471			13,044			17,315			18,771			13,782			13,238			17,717			8,409
Money Market Funds		(5,153	)		(3,988	)		(3,806	)		(2,501	)		(1,372	)		(1,512	)		(451	)		(1,725	)		(144	)		(1,984	)		(1,086	)		(1,344	)		(3,430	)

		Note: Certain supplemental details related to the information above can be found at: https://www.aboutschwab.com/financial-reports.
(1)		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/20220513005112/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 net new assets for April 2022?

Charles Schwab reported negative net new assets of $9.2 billion for April 2022.

How much did total client assets decline in April 2022?

Total client assets declined to $7.28 trillion, a 1% decrease from April 2021 and a 7% decrease from March 2022.

What did Charles Schwab's CFO say about cash disbursements?

CFO Peter Crawford mentioned that the cash disbursements during tax season were the highest ever seen at Schwab.

How have interest-earning assets changed for Schwab in April 2022?

Average interest-earning assets increased by 21% from the previous year to $636.7 billion.

What strategy does Schwab believe will support long-term growth?

Schwab is confident in its 'Through Clients’ Eyes' strategy for supporting long-term growth.