Shares of The Charles Schwab Corporation (SCHW) dropped 1.2% after the company recorded a decline in Daily Average Trades (DATs) for Jul 2014. Per its monthly market activity report, the company charted DATs of 458,000, reflecting a decrease of 8% from the prior-year month and 1% from the previous month.
However, total client assets summed $2.38 trillion, up 12% from Jul 2013 but down 1% from Jun 2014. Moreover, Schwab’s net new assets – bought by existing as well as new clients – surged 81% year over year and 38% from the prior month to $15.9 billion. The substantial increase was attributable to an inflow of $2.4 billion from a certain mutual fund clearing services client in the reported month.
Schwab opened 78,000 brokerage accounts, up 4% from Jul 2013 and 3% from Jun 2014. The company’s active brokerage accounts amounted to 9.3 million, up 3% year over year but almost in line with the previous month.
Clients’ banking accounts totaled 956,000, increasing 4% year over year and 1% from the prior month. On the other hand, Schwab had 1.38 million corporate retirement plan participants, down 14% year over year but up 3% from the prior month.
Schwab’s steady growth in net new assets continues to be its strength despite a fall in DATs. However, investors’ confidence was slightly shaken due to mixed performance during the reported month.
Schwab’s better-than-expected second-quarter earnings as well as focus on low-cost capital structure are impressive. Moreover, we believe that synergies from the acquisitions and a stable capital position will boost the company’s financials to some extent in the upcoming quarters.
Nevertheless, despite several initiatives to reduce dependency on interest rates, Schwab’s financials will likely remain pressurized due to a persisting low interest rate environment and sluggish economic recovery. Currently, it carries a Zacks Rank #3 (Hold).
Among other investment brokers, TD Ameritrade Holding Corp.’s (AMTD) average client trades per day came in at 405,000, rising 9% year over year and 8% from the preceding month.
For Interactive Brokers Group, Inc. (IBKR), total customer Daily Average Revenue Trades (DARTs) totaled 528,000, up 14% from the year-ago month and 7% from the prior month. Additionally, E*TRADE Financial Corporation’s (ETFC) DARTs summed 153,671, rising 9% from the prior-year month and 5% from the previous month.
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