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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