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Schwab, TD Ameritrade Top Estimates on Strong Q4 Asset Gains

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Charles Schwab (SCHW) beat estimates and reported fourth-quarter profits of $416 million, up close to 20% from a year ago and 11% from the prior period, on Tuesday. Meanwhile, TD Ameritrade (AMTD) said early Wednesday that it had net income of $212 million in the three months ending Dec. 31, up $1 million from the year-ago quarter. Both companies’ earnings topped analysts’ estimates.

For the full-year 2015, Schwab’s net income jumped 10% to $1.45 billion. The company had sales of nearly $1.7 billion in Q4’15, up about 9% from the year-ago period. For the full year, sales were close to $6.4 billion, an increase of of 10%.

“A fundamental measure of our success is the willingness of new and existing clients to bring their hard-earned assets to us,” said CEO Walt Bettinger, in a statement. “This year, we attracted $134.7 billion in core net new assets, up 8% from 2014 and in excess of $100 billion for the fourth consecutive year.”

Bettinger adds that total client assets stand at $2.51 trillion, up $50.2 billion from a year ago, “solidifying our leadership among publicly traded U.S. investment services firms.” Clients opened 1.1 million new brokerage accounts in 2015, so the firm ended 2015 with 9.8 million active brokerage accounts, 1 million banking accounts and 1.5 million retirement plan participants.

Schwab clients have about $1.36 trillion in asset held in investor services accounts and $1.55 trillion in advisor services accounts. In the fourth quarter, net new asset flows were $21.6 billion for investor services accounts and $21.3 billion into advisor services accounts. For the full year, these flows were $84.1 billion and $55.3 billion, respectively.

The firm says it hosted more than 5,000 advisors and other guests at its 25th annual Impact conference, added enhancements to its platform for portfolio management and reporting and rolled out more capabilities to Schwab OpenView Gateway.

Client assets in Schwab Intelligent Portfolios and Institutional Intelligent Portfolios total $5.3 billion as of Dec. 31, up $1.2 billion from the third quarter of 2015. Client assets managed by Schwab Private Client reached $75.4 billion, up 4% from the fourth quarter of 2014, and Schwab ETFs had net inflows of $4.4 billion in the fourth quarter — with assets in proprietary ETFs at nearly $40 billion, up close to 50% from a year ago.

TD Ameritrade

TD Ameritrade said it gathered some $17 billion in net new client assets in the most recent quarter, giving it an annualized growth rate of 10%.

Overall, however, its revenues weakened for the period to $812 billion from $819 billion last year. Its recent sales are concentrated, 58%, in asset-based accounts. Plus, the firm said it had investment product fee revenue of $92 million in the latest quarter, up 11% from the year-ago period.

TD Ameritrade’s client assets total $695 billion, up 3% from last year. The level of interest rate-sensitive assets stands at $110 billion, up 9% year over year.

The company also says it had average client trades per day of roughly 438,000, an activity rate of 6.6%.

“Asset gathering is going particularly well, as we delivered our second best quarter ever – and a double-digit annualized growth rate,” said CEO Fred Tomczyk in a statement. “With the Federal Reserve raising interest rates for the first time in nine years and continued execution on our growth strategy going well, we are well-positioned for the current environment.”

— Check out Who’s Right on Future Rate Hikes — the Market or the Fed? on ThinkAdvisor.