A pedestrian passes by the Charles Schwab Corp Bank branch in downtown Chicago, Illinois.
Christopher Delitz | Bloomberg | Getty Images
Retail investment giant Charles Schwab beat Wall Street’s earnings and revenue forecast for the fourth quarter, its first earnings report after Schwab acquired rival TD Ameritrade for $ 26 billion.
Charles Schwab on Tuesday announced adjusted earnings of 74 cents per share, beating estimates of 71 cents per share, according to Refinitiv. Revenue came in at $ 4.18 billion, higher than expected at $ 4.108 billion.
Schwab said it now manages nearly 29.6 million brokerage accounts.
Schwab shares stabilized after rising slightly after the opening bell on Tuesday.
Schwab’s total customer assets swelled to a record $ 6.69 trillion at the end of 2020, an increase of 66% year-on-year, buoyed by TD Ameritrade’s added assets.
Schwab added 15.77 million new customers in the fourth quarter, including 14.5 million new brokerage accounts from the TD Ameritrade merger.
“Generating record operating performance and closing the largest brokerage acquisition in history during the fourth quarter of 2020 was an exceptional climax to an exceptional year,” Schwab CEO Walt Bettinger told clients.
Average daily trading increased to 5.8 million in the fourth quarter, the highest level ever. Schwab customers reached a peak of 7.8 million deals on November 9.
Record client trading activity, and the addition of TD Ameritrade, increased trading revenue by 88% to $ 1.4 billion. This came despite the impact of commission-free trading throughout the year, which was implemented at the end of 2019.
Schwab and other big mediators are coming out of A. Record year for retail investment in 2020. The unprecedented market volatility and Covid-19 shutdowns have created a unique opportunity for ordinary investors to play a sudden but epic stock comeback.
“Against this background, customer interaction with the financial markets has risen to record levels – the newly combined initial pooled households increased to a company by more than 175% compared to 2019, with the number of households placing trades increasing by more than 50% year on year. Bettinger added.
Schwab shares are up nearly 60% since its last earnings report in October 2020. In addition to a boom in retail investment and a synergistic acquisition of TD Ameritrade, Schwab is getting a boost from a slight rise in interest rates.
The Schwab stock remains closely tied to the yield in the US for 10 years as the broker earns a difference from the client’s money held in each account, by purchasing higher-yielding instruments such as mortgage-backed securities and making loans financed from these deposits.
Schwab’s fourth-quarter results pushed e-brokers’ earnings for the entire year of 2020 to $ 2.45 a share and revenue to $ 11.7 billion.
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