Charles Schwab Corporation (SCHW) said today that Charles Schwab Corporation (SCHW) continues to lose retail customers following its merger with TD Ameritrade that was announced in late 2019.
- Charles Schwab sees “temporarily lower net flows” as retail customers take their business elsewhere.
- Chief Financial Officer Peter Crawford said the losses were “in line with or slightly better than (the company’s) initial estimates”.
- SCHW stock is down 3% in trading today and is down nearly 25% since the start of the year.
The company’s stock is down nearly 4% today as Schwab said “the decrease in net flows temporarily reflects … expected attrition” among Ameritrade’s retail clients and advisors. Charles Schwab is also getting out of some of Ameritrade’s “atypical custodial relationships” that don’t align with the company’s approach.
While the brokerage firm declined to provide specific details on the current state of the client’s loss, Chief Financial Officer Peter Crawford said, “The final attrition will be in line with or slightly better than our preliminary estimates — approximately 4% of Ameritrade’s pre-transaction revenue or approximately 1% of total assets.” Aggregated customers as of December 31, 2022.”
Despite client outflows, Charles Schwab has seen growth in total assets: $8.24 trillion under management at the end of July. This represents an increase of 3% compared to the previous month and 13% compared to last year.
Charles Schwab’s stock is down nearly 25% this year, thanks to a higher interest rate environment and increased scrutiny of the balance sheet in the wake of the regional banking crisis triggered by the Silicon Valley bank collapse.
Despite the slowdown in deposits, Schwab has performed well in quarterly earnings this year, with SCHW stock rising in April and again in July as deposit losses narrowed.