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A pedestrian walks past a bank branch of Charles Schwab Corp. in downtown Chicago, Illinois.
Christopher Dilts | Bloomberg | Getty Images
Retail investment giant Charles Schwab has beaten Wall Street earnings and earnings forecasts for the fourth quarter, the first earnings report after Schwab’s $ 26 billion acquisition of its rival TD Ameritrade.
Charles Schwab on Tuesday announced adjusted earnings of 74 cents per share, beating estimates of 71 cents per share, according to Refinitiv. Revenue was $ 4.18 billion, higher than the $ 4.108 billion forecast.
Schwab said he now manages nearly 29.6 million brokerage accounts.
Schwab shares rose steadily after rising slightly after the opening bell on Tuesday.
Schwab’s total customer assets climbed to a record $ 6.69 trillion at the end of 2020, a 66% year-over-year increase, supported by additional assets from TD Ameritrade.
Schwab added 15.77 million new clients in the fourth quarter, which includes 14.5 million new brokerage accounts from the TD Ameritrade merger.
“Producing a record operating performance and closing the largest brokerage acquisition in history in the fourth quarter of 2020 was an extraordinary cornerstone for an extraordinary year,” said Walt Bettinger, CEO of Schwab.
Average daily trades reached 5.8 million in the fourth quarter, the highest on record. Schwab customers hit a record 7.8 million transactions on November 9.
Record client trading activity and the addition of TD Ameritrade led to an 88% increase in trading revenue to $ 1.4 billion. This happened despite the year-round impact of commission-free trading, which was implemented at the end of 2019.
Schwab and the other big brokers are coming off a record year for retail investing in 2020. Unprecedented market volatility and Covid-19 lockdowns have created a unique opportunity for regular investors to play for the surprising but epic return actions.
“Against this backdrop, client engagement with financial markets has reached record levels – combined new to business pro-forma households increased by over 175% from 2019, as the number of households transacting increased over 50% year over year, ”Bettinger added.
Shares of Schwab shares have risen nearly 60% since its last earnings report in October 2020. In addition to the boom in retail investment and the TD Ameritrade acquisition synergy, Schwab is receiving a boost. inch of rising interest rates.
Schwab’s stock remains highly correlated with 10-year yield in the US, as the broker earns a spread on client cash held in each account, buying higher-yielding instruments like mortgage-backed securities. and by granting loans financed by these deposits.
Schwab’s fourth quarter results pushed 2020 adjusted e-broker earnings to $ 2.45 per share and revenue to $ 11.7 billion.
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