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Schwab Client Assets Up 17% YoY, Net Income Down 27%

By Alex Padalka October 16, 2020

Charles Schwab’s client assets continued rising in the third quarter, but growing expenses and dampened revenues were not enough to bring net income to last year’s levels.

Schwab reached a record 14.4 trillion active brokerage accounts by the end of the third quarter, a 2% increase from the prior quarter and a 19% jump year-over-year, according to its latest earnings report.

The company saw $51.2 billion in net new assets in the third quarter, offset by seasonal tax outflows in July as a result of the delayed tax filing deadline, CEO Walt Bettinger says in the report. That includes an inflow of $8.5 billion from Schwab’s acquisition of Wasmer, Schroeder & Co.

In the prior quarter, however, Schwab pulled in $137.4 billion in net new assets. 

Nonetheless, Schwab’s client assets reached $4.4 trillion by the end of the quarter, up from $4.11 trillion the firm had at the end of June and 17% higher year-over-year.

But the $26 billion acquisition of TD Ameritrade , which Schwab closed on October 6, has “created a company with tremendous reach — approximately $6 trillion in client assets and 28 million brokerage accounts,” Bettinger says in the report.

Schwab’s total net revenues in the third quarter reached $2.45 billion, unchanged from the prior quarter but 10% lower year-over-year, according to the report. Schwab’s trading revenues in the third quarter were down 12% year-over-year and its net interest revenues were down 18%, the company says. However, other revenues, which were not broken down, shot up 31% year-over-year, according to the report. 

In addition, expenses excluding interest stayed flat from the prior quarter at $1.56 billion, but were 6% higher year-over-year, Schwab says. 

Schwab’s net income climbed slightly to $698 million in the third quarter, up from $671 million reported in the second quarter, but still 27% lower than in the third quarter of 2019, according to the report. 

Net income year-to-date, meanwhile, is 24% lower than in the first nine months of 2019, the company says.

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Tags:  Finding and winning new clients , Client retention , Fees and compensation , Staffing and recruiting , Charles Schwab , TD Ameritrade , Schwab

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