Schwab's (SCHW) May Metrics: An Improvement In Financials

The Charles Schwab Corporation’s (NYSE:SCHW) monthly activity report for May 2016 reflects an overall improvement in metrics. Net new assets, through both existing and new clients, totaled $16 billion, up a whopping 58% on a year-over-year basis. The figure includes an inflow of $2.7 billion from a mutual fund clearing services client.

Total client assets were $2.61 trillion at May end, increasing 1% both year over year and from the previous month. Client assets receiving ongoing advisory services were $1.31 trillion as of May end, up 3% year over year and 1% from the prior month.

Average interest earning assets were $184.4 billion, as of May end. The figure rose 20% on a year-over-year basis and 1% from the prior month.

Schwab opened 81,000 new brokerage accounts in May 2016, increasing 1% from the prior-year month but declining 21% from the prior month. Further, the company’s active brokerage accounts totaled $9.95 million as of May-end 2016, compared with $9.57 million in May 2015 and $9.92 million in Apr 2016.

The client’s banking accounts as of May end totaled 1.06 million, increasing 6% from the prior-year comparable month and by 1% from the previous month. Also, the number of retirement plan participants increased to 1.56 million, which implies an increase of 6% year over year and 2% from the preceding month.

Net buy activity reported by the company for mutual funds for the month of May 2016 was $620 million, compared with $813 million in May 2015 and net sell activity of $207 million in Apr 2016. The net buy activity for Exchange traded funds amounted to $1.97 billion compared with $1.83 billion in May 2015 and $1.99 billion in Apr 2016.

Further, the money market funds reported net sales of $738 million, as against a net buy activity of $421 million in May 2015 and net sales activity of $3.96 billion in Apr 2016.

The new fully automated investment advisory service offered by Schwab will likely boost its trading revenues going forward. However, the company’s elevated expenses, sensitivity to interest rates and significant dependence on fee-based revenue streams remain matters of concern.

Currently, Schwab holds a Zacks Rank #3 (Hold).

Among other investment brokers, TD Ameritrade Holding Corporation (NASDAQ:AMTD) reported $727.8 billion in total client assets, up 1% from the prior month and 2% year over year. Average fee-based balances were $161.5 billion, almost stable with both the prior month and the prior-year period. Also, AMTD came up with average client trades per day of 445,000 in its activity report for May 2016. The reported figure declined 5% from the prior month while increasing 4% from the prior-year period.

E*TRADE Financial Corporation (NASDAQ:ETFC) reported a fall in its Daily Average Revenue Trades (DARTs) in the monthly market activity report for May 2016. According to the report, DARTs were 149,475, down 6% sequentially and 1% on a year-over-year basis.

Interactive Brokers Group, Inc.’s (NASDAQ:IBKR) total client DARTs were 641,000, up 4% from May 2015, but down 3% from Apr 2016. Further, total customer accounts were 352,600, up 15% from the prior-year month and 1% from the preceding month.


E TRADE FINL CP (ETFC): Free Stock Analysis Report

SCHWAB(CHAS) (SCHW): Free Stock Analysis Report

INTERACTIVE BRK (IBKR): Free Stock Analysis Report

TD AMERITRADE (AMTD): Free Stock Analysis Report

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