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Schwab (SCHW) April Client Assets Down on Cash Disbursements

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Charles Schwab (SCHW - Free Report) released its activity report for April 2022. Total client assets were $7.84 trillion, down 7% from March 2022 and 1% from April 2021. The decline from the prior month was mainly due to client cash disbursements during tax season.

The company’s chief financial officer, Peter Crawford noted, “Client cash disbursements during this year’s tax season were the highest we’ve ever seen at Schwab.”

Client assets receiving ongoing advisory services were $3.6998 trillion, down 6% from the prior month but up 2% year over year. Schwab’s core net new assets were negative $9.2 billion in the reported month. This compared with positive net new assets of $46.3 billion in March 2022 and $37.2 billion in April 2021.

Schwab’s average interest-earning assets of $636.7 billion declined 1% from March 2022 but were up 21% year over year. Average margin balances were $83.8 billion, increasing 3% from the previous month and 15% on a year-over-year basis. Average bank deposit account balances totaled $152.7 billion, down 2% from the previous month and 6% from April 2021.
Schwab opened 386,000 new brokerage accounts in April 2022, declining 8% sequentially and 37% from the year-earlier month.

Schwab’s active brokerage accounts totaled 33.8 million at the end of April 2022, up 1% on a sequential basis and 6% from the year-ago month. Clients’ banking accounts were 1.65 million, up 1% sequentially and 6% from April 2021. Likewise, the number of corporate retirement plan participants was up 1% from the prior-month level and 7% year over year to 2.26 million.

Schwab’s inorganic growth efforts have reinforced its position as a leading brokerage player and are expected to be accretive to earnings. By offering commission-free trading, the company has witnessed a rise in client assets and brokerage accounts, which, in turn, is improving its market share.

Over the past year, shares of Schwab have lost 10.2% compared with an 18.8% fall of the industry.

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Currently, Schwab carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Competitive Landscape

A couple of other brokerage firms that have come out with monthly data are Interactive Brokers Group (IBKR - Free Report) and Tradeweb Markets Inc. (TW - Free Report) .

Interactive Brokers’ Electronic Brokerage segment announced performance metrics for February 2022. The segment (dealing with the clearance and settlement of trades for individual and institutional clients globally) reported a decline in client Daily Average Revenue Trades (DARTs) on a sequential basis.

Total client DARTs for the month were 2,204,000, down 10% from the March 2022 level but up 1% year over year. On an annualized basis, IBKR recorded Cleared Average DARTs per customer account of 269. The metric declined 12% sequentially and 27% from the prior-year period.

Tradeweb Markets reported a total trading volume of $21.6 trillion in April 2022. Average daily volumes (ADV) were $1.09 trillion, up 21.1% year over year.

In the reported month, TW’s U.S. government bond ADV was up 41.5% year over year to $135.9 billion and European government bond ADV was up 18.2% to $33.5 billion.

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