What’s expected in 2Q18
On May 14, Charles Schwab (SCHW) released its April metrics. Brokerages (XLF) had a strong 1Q18, with increased volatility boosting their trading revenue. Whereas Charles Schwab, TD Ameritrade (AMTD), E*TRADE Financial (ETFC), and Interactive Brokers Group (IBKR) were boosted by higher volatility and interest rate expectations in 1Q18, they may see lower volatility in 2Q18.
Higher interest rates boost brokerages’ interest revenue. Charles Schwab’s future performance is sensitive to competitors’ pricing actions, with lower peer prices boosting Charles Schwab’s client attrition rate and deteriorating its growth prospects.
SCHW’s April numbers
Charles Schwab saw net new assets of $9.9 billion in April. It ended the month with total client assets of $3.3 trillion, reflecting a 12% YoY (year-over-year) rise. The company’s new brokerage accounts rose 13% YoY to 141,000, which may boost its trading activity.
Month-over-month, Charles Schwab’s web logins fell 5% in April. The company saw $410 million in large-cap stock purchases, $359 million in small- and mid-cap stock purchases, and $2.7 billion in ETF purchases.