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Schwab's (SCHW) May Client Assets Rise, Q2 Revenues to Decline
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Charles Schwab (SCHW - Free Report) released its monthly activity report for May 2023 and provided revenue guidance for the second quarter of 2023.
The company’s chief financial officer, Peter Crawford, said that second-quarter net interest margin (NIM) is expected to contract 35 basis points sequentially.
Because of NIM compression and a smaller interest-earning asset base, along with softer trading activity, second-quarter revenues are expected to witness a year-over-year decline of 10-11%.
In May 2023, core net new assets were $20.7 billion. This compared with negative core net new assets of $2.3 billion in April 2023 and net new assets of $32.8 billion in the year-earlier month.
Total client assets were $7.65 trillion, up marginally from April 2023 and 5% from May 2022. Client assets receiving ongoing advisory services were $3.90 trillion, declining marginally from the prior month but rising 5% year over year.
Schwab’s average interest-earning assets of $483.4 billion in the reported month declined 2% from April 2023 and 22% year over year. Average margin balances were $60.3 billion, decreasing marginally from the previous month and 24% on a year-over-year basis. Average bank deposit account balances totaled $103.1 billion, down 2% sequentially and 33% from May 2022.
The company opened 314,000 new brokerage accounts in May 2023, declining 5% sequentially and 3% from the year-earlier month.
Schwab’s active brokerage accounts totaled 34.3 million at the end of May 2023, which remained stable on a sequential basis and rose 1% from the year-ago month. Clients’ banking accounts were 1.77 million, up 1% sequentially and 7% from May 2022. The number of corporate retirement plan participants was up marginally from the prior-month level and 6% year over year to 2.40 million.
SCHW’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, it has witnessed a decent rise in client assets and active brokerage accounts, which is improving its market share.
Over the past six months, shares of Schwab have declined 30.5% compared with a 7.8% fall of the industry.
A couple of brokerage firms to consider are Interactive Brokers Group (IBKR - Free Report) and LPL Financial Holdings Inc. (LPLA - Free Report) .
Interactive Brokers released the Electronic Brokerage segment’s performance metrics for May 2023. The segment deals with clearance and settlement of trades for individual and institutional clients globally. It reported a rise in client Daily Average Revenue Trades (DARTs) on a sequential basis.
IBKR’s total client DARTs for the month were 1,860,000, which grew 5% from the April 2023 level but declined 19% year over year.
LPL Financial is likely to come out with its monthly activity report in the coming days.
Currently, IBKR and LPLA carry a Zacks Rank #3.
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Schwab's (SCHW) May Client Assets Rise, Q2 Revenues to Decline
Charles Schwab (SCHW - Free Report) released its monthly activity report for May 2023 and provided revenue guidance for the second quarter of 2023.
The company’s chief financial officer, Peter Crawford, said that second-quarter net interest margin (NIM) is expected to contract 35 basis points sequentially.
Because of NIM compression and a smaller interest-earning asset base, along with softer trading activity, second-quarter revenues are expected to witness a year-over-year decline of 10-11%.
In May 2023, core net new assets were $20.7 billion. This compared with negative core net new assets of $2.3 billion in April 2023 and net new assets of $32.8 billion in the year-earlier month.
Total client assets were $7.65 trillion, up marginally from April 2023 and 5% from May 2022. Client assets receiving ongoing advisory services were $3.90 trillion, declining marginally from the prior month but rising 5% year over year.
Schwab’s average interest-earning assets of $483.4 billion in the reported month declined 2% from April 2023 and 22% year over year. Average margin balances were $60.3 billion, decreasing marginally from the previous month and 24% on a year-over-year basis. Average bank deposit account balances totaled $103.1 billion, down 2% sequentially and 33% from May 2022.
The company opened 314,000 new brokerage accounts in May 2023, declining 5% sequentially and 3% from the year-earlier month.
Schwab’s active brokerage accounts totaled 34.3 million at the end of May 2023, which remained stable on a sequential basis and rose 1% from the year-ago month. Clients’ banking accounts were 1.77 million, up 1% sequentially and 7% from May 2022. The number of corporate retirement plan participants was up marginally from the prior-month level and 6% year over year to 2.40 million.
SCHW’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, it has witnessed a decent rise in client assets and active brokerage accounts, which is improving its market share.
Over the past six months, shares of Schwab have declined 30.5% compared with a 7.8% fall of the industry.
Image Source: Zacks Investment Research
Currently, the company carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Other Brokerage Firms
A couple of brokerage firms to consider are Interactive Brokers Group (IBKR - Free Report) and LPL Financial Holdings Inc. (LPLA - Free Report) .
Interactive Brokers released the Electronic Brokerage segment’s performance metrics for May 2023. The segment deals with clearance and settlement of trades for individual and institutional clients globally. It reported a rise in client Daily Average Revenue Trades (DARTs) on a sequential basis.
IBKR’s total client DARTs for the month were 1,860,000, which grew 5% from the April 2023 level but declined 19% year over year.
LPL Financial is likely to come out with its monthly activity report in the coming days.
Currently, IBKR and LPLA carry a Zacks Rank #3.