The Charles Schwab Corporation (SCHW) recorded net new assets, bought by existing as well as new clients, of $9.3 billion for Jan 2015. This reflects a decrease of 22% from the prior-year month and 35% from the preceding month.
Further, total client assets summed $2.45 trillion, up 10% from Jan 2014 but down 1% from Dec 2014. As of Jan 31, 2015, average interest-earning assets amounted to $147.5 billion, up 8% from Jan 2014 and 2% from Dec 2014.
The client assets, receiving ongoing advisory services, totaled $1.22 trillion for the month, up a significant 11.9% from the prior-year month but down about 1% from the previous month.
Schwab opened 84,000 new brokerage accounts, down 7% from Jan 2014 and 13% from Dec 2014 levels. The company’s active brokerage accounts amounted to 9.4 million, up 3% year over year but almost in line with the previous month.
Clients’ banking accounts totaled 978,000, growing 6% year over year but were down 1% from the prior-month level. Moreover, Schwab reported 1.44 million corporate retirement plan participants for Jan 2015, up 9% year over year and 1% from the prior month.
Net buy (sell) activity in the Mutual Fund for Jan 2015 was $3,174 million, down from $4,838 million recorded in the year-ago month, and compared with ($4,381) million in the previous month. Net buy (sell) activity in the Exchange Traded Funds was reported at $3,556 million, improving significantly from the year-ago figure of $923 million but decreasing from the previous-month figure of $4,127 million.
Among other investment brokers, TD Ameritrade Holding Corp. (AMTD) came out with its average client trades per day of 493,000 in its activity report for Jan 2015. This jumped 12% from the prior month though it was down 1% compared with the prior-year period. Another broker – E*TRADE Financial Corp. (ETFC) is expected to report monthly metrics for Jan 2015 earlier next week.
With gradually improving investors’ confidence and broader trends in the investment brokerage industry, firms like Schwab are expected to benefit.
Moreover, diversified revenue streams, improvement in the equity markets and management’s efforts to boost client base in advisory solutions are positive indicators of the company’s future performance.
We believe that synergies from acquisitions and a stable capital position will continue to boost the company’s financials, although threats from a persistent low interest rate environment and sluggish economy remain. However, management is making concerted efforts to reduce dependence on interest rate fluctuations.
Currently, Schwab carries a Zacks Rank #3 (Hold). A better-ranked investment manager is JMP Group LLC (JMP), sporting a Zacks Rank #1 (Strong Buy).
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