Schwab's Total Client Assets Rise Y/Y in May, Stock Down 1.3%

Charles Schwab's May 2025 activity report showed total client assets reaching $10.35 trillion, a 12.4% increase year-over-year, and core net new assets surging to $35 billion, up 12.5% from the prior year. Despite these gains, Schwab's shares declined 1.3% following the report's release, while peers Interactive Brokers and Robinhood reported increases in client Daily Average Revenue Trades (DARTs).

Analysis

Charles Schwab's May 2025 activity report presented a mixed but generally positive operational picture. Total client assets demonstrated robust year-over-year growth, increasing by 12.4% to $10.35 trillion, and also rose 4.6% from April 2025. Similarly, client assets under advisory services grew 12.6% year-over-year to $5.24 trillion. A significant highlight was the surge in core net new assets to $35 billion, a 12.5% year-over-year increase and a substantial recovery from April's $2.7 billion. New brokerage account openings were up 7% year-over-year to 336,000, and active brokerage accounts increased 5.2% to 37.4 million. However, the market reacted negatively, with SCHW shares declining 1.3% post-release. This could be attributed to certain moderating factors, such as new brokerage accounts falling 23.5% sequentially from April. Average interest-earning assets, while up 1% year-over-year to $419.6 billion, decreased 2.6% from the previous month. More notably, average bank deposit account balances fell 6.2% year-over-year and 3.1% sequentially to $81.5 billion, a potential area of concern. Conversely, average margin balances showed strength, rising 17% year-over-year to $79.1 billion. Despite the immediate stock dip, Schwab's shares have rallied 12.3% over the past three months, outperforming the industry's 10.3% gain, and the company currently holds a Zacks Rank #3 (Hold). Peers like Interactive Brokers and Robinhood also reported strong DARTs growth in May, indicating healthy trading activity across the sector.

Key Decisions for Investors

• Investors should acknowledge Schwab's strong year-over-year growth in client assets and the significant rebound in core net new assets as positive long-term indicators, though the immediate share price decline suggests some market apprehension.
• Monitor the persistent decline in average bank deposit account balances and the sequential slowdown in new brokerage account openings, as these could impact net interest revenue and organic growth momentum if trends continue.
• Given the stock's recent outperformance and the current 'Hold' rating, alongside mixed signals in the May report (strong asset growth vs. declining deposits and sequential account opening slowdown), a cautious approach may be warranted, evaluating if the 1.3% dip presents a buying opportunity or reflects underlying concerns.