In its monthly market activity report for Nov 2013, The Charles Schwab Corporation (SCHW) reported Daily Average Trades (DATs) of 467,300. This marked a decrease of 5% from 490,800 in the prior month. However, it was 8% higher than 431,800 in the year-ago month.
Total client assets were $2.22 trillion, up 2% from Oct 2013 and 15% from Nov 2012. Schwab’s net new assets – bought by existing as well as new clients – were $11.7 billion compared with negative $19.8 billion in the prior month, and $16.2 billion in the year-ago month.
In the reported month, Schwab opened 76,000 brokerage accounts, down 6% from Oct 2013 but increasing 9% from Nov 2012. The company’s active brokerage accounts totaled 9.1 million, almost flat with the prior month but up 4% year over year.
Clients’ banking accounts were 922,000, down 1% from the prior month but up 8% year over year. Moreover, Schwab had 1.30 million corporate retirement plan participants, up 1% from Oct 2013 but down 17% from Nov 2012.
In the reported month, the figures for total client assets and retirement plan participants have been adjusted to reflect the impact of the company’s retirement plan record-keeping platform and resignation of certain retirement plan clients.
Performance of Other Brokerage Firms
TD Ameritrade Holding Corp. (AMTD) reported a fall in average client trades per day in its Activity Report for November. Average client trades per day were 416,000, down 1% from the prior month but rising by 22% year over year.
Online brokerage firm E*TRADE Financial Corp. (ETFC) is expected to report its Daily Average Revenue Trades (DARTs) for Nov 2013 by the end of this week.
Our Take
The declining trend in DATs may continue in the near-to-mid term mainly due to weak trading activity. However, with improvement in market performance, the scenario is expected to change in the quarters ahead.
Schwab’s low-cost capital structure should help it improve results in the upcoming quarters. Moreover, synergies from the acquisitions and stable capital position will boost the company’s financials going forward.
Schwab currently carries a Zacks Rank #3 (Hold). A better-ranked investment broker is Ladenburg Thalmann Financial Services Inc. (LTS), which has a Zacks Rank #1 (Strong Buy).
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