(Corrects net outflow to $500 million in first bullet point
and in first sentence)
* Clients withdrew net $500 million from accounts
* April revenue trades fell by 1 percent vs previous year
* Shares of Schwab fall almost 2 percent
(Recasts with reversal to net withdrawals, adds spokesman's
comment, updates shares)
By Joseph A. Giannone and Philipp Gollner
NEW YORK/SAN FRANCISCO, May 13 Charles Schwab
Corp (SCHW.N), the biggest U.S. online brokerage, said on
Friday that clients withdrew a net $500 million in April, the
first down month since last June, and its stock fell nearly 2
percent on fears the company would not meet its asset-growth
Schwab said customers withdrew the money to pay taxes, and
that customer trading activity slowed from a year earlier. A
spokesman said April is typically the slowest month for inflows
because of tax payments, but the company said the net outflow
was its first for the month since 2001.
This April may have been worse than others because taxes
were due later in the month, on the 18th -- not the customary
April 15 cutoff, spokesman Greg Gable said. Tax payments "had a
more dominant effect," he said.
Inflows have returned to "seasonal norms" in May, Gable
said, and April's trading activity was little changed from
March after several months of rising activity.
Trading activity at Schwab and other online brokers is
watched closely since it helps measure the confidence that
individual investors have in the stock market. Customer trading
had been on the rebound over the past several months.
"Retail customers appear to remain engaged and net new
brokerage accounts were the second highest in the past 12
months," analyst Matt Fischer at CLSA Credit Agricole
Securities wrote in a note to clients.
Rising markets helped generate $35 billion in market gains
for Schwab customers in April. That helped push client assets
at the firm up to $1.68 trillion as of April 30, an 11 percent
increase from the prior year.
But the outflows brought to $73.8 billion the total net
inflows for the first four months of 2011, equal to annualized
growth of 4.7 percent -- below the company's 2011 target of 8
to 10 percent growth, Sandler O'Neill analyst Richard Repetto
wrote in a note to clients.
"The results were mixed, with negative core net new assets
but better-than-expected client trading activity," Fischer, of
CLSA Credit Agricole Securities, wrote.
Schwab's daily average client trades for the month fell by
1 percent from a year ago to 435,000. March volumes, by
comparison, had jumped 16 percent from the previous year.
The San Francisco company also opened 83,000 new accounts
in April, down 7 percent from a year earlier but a 1 percent
increase from March.
Schwab said the asset outflow reflected cash payments for
U.S. income taxes. "Tax season took a bite out of flows,
turning negative for the first time in a decade, though
management noted that things likely returned to normal in May,"
Schwab, one of the largest sellers of mutual funds, also
noted investors yanked a net $3.3 billion from money market
funds, while pouring money into taxable bond and "hybrid" stock
and bond funds.
Investors last month also pulled $521 million from large
company stock funds and $195 million from municipal and other
tax-free bond funds.
Schwab's stock fell 32 cents, or 1.8 percent, to $17.66 on
the New York Stock Exchange, the second-worst performer on the
11-member NYSE Arca Securities Broker/Dealer Index. Shares of
Schwab had risen 5.1 percent this year before Friday's client
(Reporting by Joseph A. Giannone and Philipp Gollner; Editing
by Matthew Lewis, Gunna Dickson, Gary Hill)