A pedestrian passes a bank branch of Charles Schwab Corp. in downtown Chicago, Illinois.
Christopher Dilts | Bloomberg | Getty Images
Handsome retail investor Charles Schwab exceeded Wall Street’s earnings and revenue expectations for the fourth quarter, the first profit report since Schwab’s $ 26 billion acquisition of rival TD Ameritrade.
Charles Schwab reported adjusted earnings of 74 cents per share on Tuesday, exceeding estimates of 71 cents per share, according to Refinitiv. Revenue reached $ 4.188 billion, higher than the projected $ 4.108 billion.
Schwab said it now operates about 29.6 million brokerage accounts.
Shares of Schwab’s rise were flat after rising slightly after Tuesday’s opening bell.
Schwab’s total customer assets stood at a record $ 6.69 trillion at the end of 2020, a 66% year-over-year increase, bolstered by TD Ameritrade’s additional assets.
Schwab added 15.77 million new customers in the fourth quarter, which includes 14.5 million new TD Ameritrade merger brokerage accounts.
“Producing a record operating performance and closing the largest brokerage acquisition in history during the fourth quarter of 2020 was a milestone for an extraordinary year,” Schwab CEO Walt Bettinger told customers.
Average daily operations rose to 5.8 million in the fourth quarter, the highest on record. Schwab customers reached a peak of 7.8 million transactions on November 9th.
Customer record trading activity and the addition of TD Ameritrade resulted in an 88% increase in commercial revenue to $ 1.4 billion. This occurred despite the impact of year-round no-commission negotiation, which was implemented in late 2019.
Schwab and other major brokers arrive at a record year of retail investment in 2020. Unprecedented market volatility and Covid-19 closures created a unique opportunity for regular investors to return to the startling but epic recovery of the actions.
“In this context, customer engagement with financial markets increased to record levels: new company pro-forma combined households increased more than 175% compared to 2019, with a number of households marketing more 50% year-on-year, ”Bettinger added.
Schwab’s shares have risen nearly 60% since its last earnings report in October 2020. In addition to the retail investment boom and TD Ameritrade’s acquisition synergy, Schwab receives an increase of the rise in interest rates.
Schwab’s shares remain highly correlated with U.S. ten-year profitability, as the broker obtains a cash distribution from customers that are held in all accounts, by purchasing higher-performing instruments such as mortgage-backed securities and the realization of loans financed by these deposits.
Schwab’s fourth-quarter results pushed e-brokers year-over-year adjusted earnings to $ 2.45 per share and revenue to $ 11.7 billion.
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