A pedestrian appears in front of a bank branch of Charles Schwab Corp. in Chicago, Illinois, downtown.
Christopher Dilts | Bloomberg | Getty Images
Retail investment Charles Schwab beat Wall Street’s earnings and revenue expectations for the fourth quarter, the first earnings report after Schwab’s $ 26 billion acquisition of rival TD Ameritrade.
Charles Schwab reported adjusted earnings of 74 cents a share on Tuesday, according to Refinitiv. Revenue is $ 4.18 billion, higher than the forecast of $ 4.108 billion.
Schwab said he now operates nearly 29.6 million brokerage accounts.
Shares of Schwab rose after rising slightly on Tuesday after the opening bell.
Total client assets for Schwab rose to a record $ 6.69 billion at the end of 2020, an increase of 66% year-on-year, boosted by the added TD Ameritrade assets.
Schwab added 15.77 million new clients in the fourth quarter, including 14.5 million new brokerage accounts from the TD Ameritrade merger.
“The record performance in the fourth quarter of 2020 and the closing of the largest brokerage acquisition in history was an extraordinary milestone to an extraordinary year,” Schwab CEO Walt Bettinger told clients.
Daily average trading rose to 5.8 million in the fourth quarter, the highest on record. Schwab customers peaked at 7.8 million trades on November 9th.
Record customer trading activity and the addition of TD Ameritrade led to an 88% increase in trading revenue to $ 1.4 billion. This came despite the full annual impact of commission-free trade, which was implemented at the end of 2019.
Schwab and the other major brokers are coming off a record year for small investments in 2020. Unprecedented market volatility and Covid-19 closures have created a unique opportunity for regular investors to play the surprising but epic return of stocks.
Against this background, the client’s involvement in the financial markets has risen to record levels – pro-forma joint households with a new business have increased by more than 175% compared to 2019, with the number of households exceeding 50% more as traded a year ago. -year, “Bettinger added.
Schwab’s shares have risen by almost 60% since its last earnings report in October 2020. In addition to retail investment returns and TD Ameritrade acquisition energy, Schwab is getting a boost from the rise in interest rates.
Schwab’s share remains strongly correlated with the yield on the US ten years, as the broker earns a distribution of the clients’ cash held in each account, by buying instruments with higher returns, such as mortgage loans, and making loans that financed by the deposits.
Schwab’s fourth-quarter results pushed e-brokers’ adjusted earnings for the full year 2020 to $ 2.45 per share and revenue to $ 11.7 billion.
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