In its monthly market activity report for May 2013, The Charles Schwab Corporation (SCHW) reported Daily Average Trades (DATs) of 505,400. The DATs were up 17% from 432,300 in the year-ago month and 8% from 470,000 in the prior month.
Total client assets stood at $2.11 trillion, improving 20% from May 2012 and 0.2% from Apr 2013. However, Schwab’s net new assets – bought by the new and existing clients – stood at negative $1.9 billion, compared with $9.2 billion reported in the year-ago month and $22 million in the prior month. Also, this included a $10.3 billion outflow related to mutual fund clearing services client.
Schwab opened 78,000 new brokerage accounts in the reported month, 11% higher than the May 2012 level but 19% lower than Apr 2013 level. The company’s active brokerage accounts totaled 8.94 million, up 3% year over year and 0.3% sequentially.
Moreover, clients’ banking accounts elevated 11% year over year and 1% over the prior month to 903,000. Also, the company had 1.59 million corporate retirement plan participants, improving 5% from May 2012, but declining marginally from Apr 2013.
The rise in DATs and new brokerage accounts are anticipated to be favorable for Schwab. However, fluctuating interest rates and lower trading activities are expected to adversely affect the company’s financials in the near term.
Additionally, Schwab’s capital intensity in comparison with other investment brokers remains a major concern. However, the focus on low-cost capital is expected to help the company achieve better results in the subsequent quarters.
Schwab currently carries a Zacks Rank #3 (Hold). However, some better performing investment brokers include Investment Technology Group Inc. (ITG) and Ladenburg Thalmann Financial Services Inc. (LTS) with a Zacks Rank #1 (Strong Buy) and Cowen Group, Inc. (COWN) with a Zacks Rank #2 (Buy).
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