Charles Schwab Corp.’s groundbreaking plan to eliminate trading fees helped push client assets to a record $4 trillion.
Customers opened 433,000 new brokerage accounts in the fourth quarter, an increase from the previous quarter, reflecting the company’s move to zero commissions. The largest U.S. discount broker reported $211.7 billion in core net new assets for the period.
Schwab posted earnings of 62 cents per share, according to a statement issued Thursday. That fell short of the average estimate of 64 cents. The shares declined about 1% in pre-market trading.
Key Insights
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Schwab opened the fourth quarter by announcing it eliminated fees on trades of stocks and exchange-traded funds, a move quickly matched by competitors. Today’s results show the impact of that.
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Net interest revenue, the money Schwab makes from client cash and the largest source of profits, was $1.6 billion, little changed from a year earlier when interest rates were higher.
- The fourth quarter was momentous for Schwab—and the brokerage industry—as the company slashed fees to reel in more assets, gain efficiencies of scale and increase revenue. On Nov. 25, the company unveiled its biggest deal ever, a $26 billion agreement to buy rival TD Ameritrade Holding Corp., creating a potential manager of $5 trillion in assets. The company said it incurred $17 million in pre-tax acquisition-related expenses.
This article was provided by Bloomberg News.