Charles Schwab Corp. expects recent changes aimed at boosting its two-year-old retail bank to begin to bear fruit late this year, chief financial officer Christopher V. Dodds said Tuesday.
"We are not yet where we want to be in terms of that cross-sell or introducing more of our clients to the banking services that we offer," he said in a telephone interview.
Mr. Dodds spoke after Schwab reported average daily revenue trades in May were 169,400, down 7% from April though up 25% from a year earlier.
"It was very, very close to our estimate for the month," he said. "It is reflective of some market conditions that are certainly uninspiring."
June trading volume so far is "up a bit over May," he said, and "I don't think anything [that is] occurring is concerning or beyond fairly narrow expectations."
Schwab this year has changed its employee incentive program and training and branch operations to improve the cross-selling of banking and investment products. "The most obvious outcome of these changes is, our branch reps are going to focus on that which they know best," Mr. Dodds said. For now, these are investment products and services.
"As we move to the later part of '05 and into '06, we expect to do a lot better in the banking sphere," he added. "By then our branch people, financial consultants out there, will have sort of mastered the changes that have been wrought at the end of '04 and the beginning of '05, and they will be able to move some of their attention to the banking side." Mr. Dodds said that Schwab remains comfortable with the Wall Street estimate that it will earn 13 cents per share in this quarter.
Net new assets were $3.9 billion in May, up 255% from April but down 11% from a year earlier, which Mr. Dodds said was somewhat disappointing.
But he saw "bright spots" in the asset data. Net new assets in the individual investor business last month nearly doubled from a year earlier, he said, and Schwab's U.S. Trust unit reported its first positive month of net new assets this year.
