SCHW Charles Schwab Corporation

The Charles Schwab Corporation released its Monthly Activity Report today. Company highlights for the month of August 2022 include:

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• Core net new assets brought to the company by new and existing clients totaled $43.3 billion. Net new assets excluding mutual fund clearing totaled $43.1 billion.
• Total client assets were $7.13 trillion as of month-end August, down 9% from August 2021 and down 2% compared to July 2022.
• Average margin balances were $72.9 billion in August, down 10% from August 2021 and up 1% compared to July 2022.

CFO Peter Crawford commented, “Schwab’s business momentum remained strong in August, with $43 billion in core net new assets, 332 thousand new accounts, and 5.6 million daily average trades. We did see a pick-up in so-called client cash sorting behavior during the month, consistent with our expectations that a faster rise in the Fed Funds rate could prompt an increase in the pace of sorting. That being said, we continue to expect that the total amount of overall sorting activity shouldn’t be any higher this cycle than during the prior stretch of rising rates – and we still think it could even be a bit lower due to the factors discussed at our Summer Business Update back in July. Additionally, our ongoing success with clients and stronger net interest margin currently have the company’s third quarter revenues on track to grow by 18% to 19% versus the prior year.

As clients move some of their cash to purchased money funds and fixed income, it increases our capital levels – freeing up capital which we can return to stockholders through higher common dividends, preferred redemptions, and/or stock buybacks. Our binding constraint of course is our consolidated Tier 1 Leverage Ratio. For many years, our operating objective for Tier 1 Leverage has been 6.75%-7.00%. Recently, however, we made the decision to lower that operating objective by 25 basis points to 6.50%-6.75%. This lower range reflects the increased maturity of our capital planning processes, the strength and resilience of our balance sheet, and the positive results from our inaugural CCAR submission. We’ll discuss the implications of this change on our near-term capital activities at the upcoming Fall Business Update in October.”

Forward-Looking Statements

This press release contains forward-looking statements relating to Schwab’s business momentum and client success; client cash sorting; net interest margin; expected third quarter revenue growth; capital levels; returning excess capital to stockholders; Tier 1 Leverage Ratio operating objective; and balance sheet strength. These forward-looking statements reflect management’s expectations as of the date hereof. Achievement of these expectations 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, the company’s ability to attract and retain clients and independent investment advisors and grow those relationships and client assets; develop and launch new and enhanced products, services, and capabilities, as well as enhance its infrastructure and capacity, in a timely and successful manner; hire and retain talent; support client activity levels; successfully implement integration strategies and plans; manage expenses; and monetize client assets. Other important factors include client use of the company’s advisory solutions and other products and services; general market conditions, including equity valuations and the level of interest rates; the level and mix of client trading activity; market volatility; margin loan balances; securities lending; competitive pressures on pricing; client cash allocation decisions; client sensitivity to rates; level of client assets, including cash balances; capital and liquidity needs and management; balance sheet positioning relative to changes in interest rates; interest earning asset mix and growth; the migration of bank deposit account balances; 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 34.0 million active brokerage accounts, 2.3 million corporate retirement plan participants, 1.7 million banking accounts, and $7.13 trillion in client assets as of August 31, 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 August 2022  

2021

2022

Change

Aug

Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Mo. Yr. Market Indices (at month end) Dow Jones Industrial Average®

35,361

 

33,844

 

35,820

 

34,484

 

36,338

 

35,132

 

33,893

 

34,678

 

32,977

 

32,990

 

30,775

 

32,845

 

31,510

 

(4

%)

(11

%)

Nasdaq Composite®

15,259

 

14,449

 

15,498

 

15,538

 

15,645

 

14,240

 

13,751

 

14,221

 

12,335

 

12,081

 

11,029

 

12,391

 

11,816

 

(5

%)

(23

%)

Standard & Poor’s® 500

4,523

 

4,308

 

4,605

 

4,567

 

4,766

 

4,516

 

4,374

 

4,530

 

4,132

 

4,132

 

3,785

 

4,130

 

3,955

 

(4

%)

(13

%)

Client Assets (in billions of dollars) Beginning Client Assets

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

 

7,301.7

 

6,832.5

 

7,304.8

 

Net New Assets (1)

51.8

 

42.9

 

22.9

 

31.4

 

80.3

 

33.6

 

40.6

 

46.3

 

(9.2

)

32.8

 

19.8

 

31.5

 

43.3

 

37

%

(16

%)

Net Market Gains (Losses)

143.7

 

(267.1

)

345.4

 

(95.4

)

139.4

 

(367.8

)

(157.8

)

129.2

 

(568.5

)

(15.5

)

(489.0

)

440.8

 

(220.5

)

Total Client Assets (at month end)

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

 

7,301.7

 

6,832.5

 

7,304.8

 

7,127.6

 

(2

%)

(9

%)

Core Net New Assets (2)

51.8

 

42.9

 

36.8

 

45.1

 

80.3

 

33.6

 

40.6

 

46.3

 

(9.2

)

32.8

 

40.6

 

31.5

 

43.3

 

37

%

(16

%)

Receiving Ongoing Advisory Services (at month end) Investor Services

542.5

 

530.1

 

548.3

 

543.1

 

559.2

 

541.9

 

533.7

 

538.9

 

509.3

 

513.0

 

483.8

 

514.8

 

499.2

 

(3

%)

(8

%)

Advisor Services (3)

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

 

3,213.8

 

3,040.4

 

3,222.5

 

3,150.5

 

(2

%)

(5

%)

Client Accounts (at month end, in thousands) Active Brokerage Accounts

32,513

 

32,675

 

32,796

 

32,942

 

33,165

 

33,308

 

33,421

 

33,577

 

33,759

 

33,822

 

33,896

 

33,934

 

33,984

 

-

 

5

%

Banking Accounts

1,594

 

1,580

 

1,593

 

1,608

 

1,614

 

1,628

 

1,641

 

1,641

 

1,652

 

1,658

 

1,669

 

1,680

 

1,690

 

1

%

6

%

Corporate Retirement Plan Participants

2,188

 

2,207

 

2,213

 

2,198

 

2,200

 

2,216

 

2,235

 

2,246

 

2,261

 

2,275

 

2,275

 

2,267

 

2,285

 

1

%

4

%

Client Activity New Brokerage Accounts (in thousands)

402

 

374

 

397

 

448

 

473

 

426

 

356

 

420

 

386

 

323

 

305

 

278

 

332

 

19

%

(17

%)

Client Cash as a Percentage of Client Assets (4)

10.3

%

10.8

%

10.4

%

10.5

%

10.9

%

11.3

%

11.5

%

11.4

%

11.9

%

12.0

%

12.8

%

12.0

%

12.1

%

10 bp 180 bp Derivative Trades as a Percentage of Total Trades

23.1

%

23.1

%

22.5

%

23.4

%

23.0

%

22.4

%

24.0

%

22.4

%

21.9

%

22.6

%

22.3

%

24.2

%

23.3

%

(90) bp 20 bp Selected Average Balances (in millions of dollars) Average Interest-Earning Assets (5)

552,372

 

565,379

 

574,181

 

584,362

 

605,709

 

622,997

 

629,042

 

644,768

 

636,668

 

620,157

 

614,100

 

605,751

 

586,154

 

(3

%)

6

%

Average Margin Balances

81,021

 

81,705

 

83,835

 

87,311

 

88,328

 

86,737

 

84,354

 

81,526

 

83,762

 

78,841

 

74,577

 

72,177

 

72,855

 

1

%

(10

%)

Average Bank Deposit Account Balances (6)

150,896

 

152,330

 

154,040

 

153,877

 

154,918

 

157,706

 

153,824

 

155,657

 

152,653

 

154,669

 

155,306

 

154,542

 

148,427

 

(4

%)

(2

%)

Mutual Fund and Exchange-Traded Fund Net Buys (Sells) (7,8) (in millions of dollars) Equities

8,808

 

7,596

 

8,840

 

13,099

 

11,519

 

7,384

 

9,371

 

14,177

 

(786

)

1,889

 

(1,586

)

5,589

 

10,465

 

Hybrid

569

 

335

 

81

 

308

 

(1,207

)

(367

)

(478

)

(497

)

(529

)

(1,718

)

(1,054

)

(2,041

)

(783

)

Bonds

8,044

 

6,232

 

4,425

 

4,097

 

5,600

 

1,804

 

(1,973

)

(7,851

)

(6,933

)

(6,121

)

(5,631

)

729

 

(141

)

Net Buy (Sell) Activity (in millions of dollars) Mutual Funds (7)

3,876

 

(308

)

302

 

189

 

(2,859

)

(4,961

)

(6,318

)

(11,888

)

(16,657

)

(20,761

)

(16,258

)

(8,674

)

(7,117

)

Exchange-Traded Funds (8)

13,545

 

14,471

 

13,044

 

17,315

 

18,771

 

13,782

 

13,238

 

17,717

 

8,409

 

14,811

 

7,987

 

12,951

 

16,658

 

Money Market Funds

(1,372

)

(1,512

)

(451

)

(1,725

)

(144

)

(1,984

)

(1,086

)

(1,344

)

(3,430

)

7,106

 

11,544

 

13,711

 

19,702

 

Note: Certain supplemental details related to the information above can be found at: https://www.aboutschwab.com/financial-reports.

(1)

June 2022 includes an outflow of $20.8 billion from a mutual fund clearing services client. 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/20220915005416/en/

MEDIA: Mayura Hooper Charles Schwab Phone: 415-667-1525

INVESTORS/ANALYSTS: Jeff Edwards Charles Schwab Phone: 415-667-1524