Schwab’s Customer Stock Trading Falls 7%

Charles Schwab Corp., the largest U.S. discount brokerage, Tuesday said customer stock trading in May fell 7%, compared with April, as a lack of market volatility damped clients’ desire to trade.

But the company has seen trading activity improve slightly in June, Chief Financial Officer Chris Dodds said.

“May trading activity was a bit more subdued than April’s levels, in part due to some relatively sideways market conditions,” Dodds said.

The company is comfortable with analysts’ estimates that the discount brokerage will earn 13 cents a share in the second quarter, Dodds said, adding that he does not see any reason to back off from the company view that it will earn 50 cents a share in 2005.

Wall Street analysts had forecast the company would earn 53 cents a share on average in 2005, according to Reuters Estimates.

Daily average revenue trades totaled 169,400 in May, down 7% from April, but up 25% from a year earlier, Schwab said.

Fox-Pitt, Kelton analyst David Trone wrote in a research note that asset inflows and trading activity were modestly lower than his expectations.

“The trends are slightly worse than expected, but with equity markets still down on the year, this is not too surprising,” he wrote.

Net new assets brought to the company by new and current clients in May 2005 totaled $3.9 billion, compared with $4.4 billion a year earlier, as its mutual fund clearing and 401(k) businesses slowed.

Last week, Schwab rival Ameritrade Holding Corp. said its average client trades per day during May fell to their lowest monthly level since September.

Shares of San Francisco-based Schwab fell 23 cents to $11.57.