Charles Schwab Corporation (The)
SCHW · NYSE
Next quarter
Reports Oct 15, 2026.
Consensus is $1.67 EPS for Sep 2026 across 10 estimates, ranging $1.63 to $1.70.
SCHW Jun 2026
- 5.88%
- +0.84%
- $1.53
- $1.62
- —
- $7.07B
Reported results
- $7.07B
- $2.80B
- $1.54
Highlights
- Earnings beat: Adjusted diluted EPS was $1.62 versus consensus of $1.53, a 5.88% surprise; GAAP diluted EPS was $1.54, up 43% year over year and 12% from $1.37 in Q1.
- Record revenue: Net revenue reached $7.07 billion, up 21% from $5.85 billion a year ago and 9% from $6.48 billion in Q1.
- Asset gathering: Core net new assets totaled $119.8 billion, up 49% year over year, while June core net new assets reached a record $62.7 billion, up 47% year over year.
- Client engagement: Daily average trades rose 57% year over year to a record 11.9 million, although revenue per trade fell 19% to $1.64.
- Net interest revenue: Net interest revenue increased 19% year over year to $3.36 billion, with net interest margin expanding to 3.00% from 2.66% a year ago and 2.88% in Q1.
- Diversified fees: Asset management and administration fees grew 16% to $1.83 billion, while trading revenue climbed 28% to $1.22 billion and bank deposit account fees increased 35% to $333 million.
- Lending growth: Margin loans reached $165.1 billion, up 30% sequentially, and bank loans totaled $67.0 billion, up 33% year over year.
- Capital return and balance sheet: Schwab repurchased $1.0 billion of common stock, redeemed $2.1 billion of Series I preferred stock, issued $1.5 billion of Series L preferred stock, and ended the quarter with a 6.8% adjusted Tier 1 leverage ratio.
Analysis
Charles Schwab’s second quarter was a broad-based record print, led by strong client activity, lending growth and improving funding economics. Adjusted diluted EPS of $1.62 exceeded the $1.53 consensus estimate, while GAAP EPS of $1.54 rose 43% from $1.08 in Q2 2025 and 12% from $1.37 in Q1 2026. Net revenue reached a record $7.07 billion, up 21% year over year and 9% sequentially; net income was $2.80 billion, compared with $2.13 billion a year ago and $2.48 billion in the prior quarter.
The defining feature was operating momentum across both client acquisition and monetization. Core net new assets increased 49% year over year to $119.8 billion, total client assets reached $13.08 trillion, and trading activity hit a record 11.9 million daily average trades. Net interest revenue rose 19% to $3.36 billion as NIM expanded 12 basis points sequentially to 3.00%, supported by margin and bank lending and lower funding costs. Fee businesses also accelerated, with asset management fees up 16% and trading revenue up 28%. Expenses rose 12% year over year, including Forge-related costs and investment in growth, but the pre-tax margin improved to 51.9% from 47.9%.
Client asset gathering
Schwab sustained strong organic growth despite the quarter’s market volatility. Core net new assets were $119.8 billion, up 49% from Q2 2025, while total net new assets were $118.7 billion after $1.1 billion of outflows from off-platform brokered CDs. June alone produced a record $62.7 billion of core net new assets, equivalent to a 5.8% annualized organic growth rate. Total client assets increased 22% year over year to $13.08 trillion, aided by both asset gathering and market appreciation.
- Account growth: Schwab opened 1.4 million new brokerage accounts, up 26% year over year, bringing active brokerage accounts to 39.8 million, up 6%.
- Business mix: Investor Services generated $5.53 billion of revenue, up 19%, while Advisor Services generated $1.54 billion, up 27%; Advisor Services contributed $80.2 billion of net new assets versus $38.5 billion for Investor Services.
- Managed solutions: Assets receiving ongoing advisory services reached $6.67 trillion, up 23% year over year, and managed investing solutions net flows grew 53%.
Net interest and lending
Net interest revenue remained the largest contributor to the quarter, rising 19% year over year to $3.36 billion and 7% from Q1. Net interest margin expanded to 3.00%, up from 2.66% a year earlier and 2.88% in the first quarter. Management attributed the improvement to growth in margin and bank lending, lower aggregate wholesale borrowings and lower rates paid on most funding sources, which more than offset lower yields on floating-rate assets.
- Margin lending: Receivables from brokerage clients ended the quarter at $122.8 billion, up 16% sequentially and 48% year over year; month-end margin balances reached $165.1 billion, up 30% from Q1.
- Bank lending: Net bank loans totaled $67.0 billion, up 10% sequentially and 33% year over year, driven primarily by pledged asset lines and first mortgages.
- Cash funding: Transactional sweep cash rose $24.2 billion from the prior quarter-end to $485.7 billion, reflecting tax-seasonality, organic growth and client allocation decisions.
- Rate sensitivity: Schwab’s dynamically modeled 12-month net interest revenue sensitivity was positive 3.6% for a 100-basis-point rate increase and negative 1.6% for a 100-basis-point decrease.
Trading and fee growth
Revenue growth was diversified beyond interest income. Asset management and administration fees rose 16% year over year to $1.83 billion, driven by higher client assets, continued asset gathering and stronger use of managed investing solutions. Trading revenue increased 28% to $1.22 billion as elevated activity lifted commissions and order-flow revenue, though the mix shift and higher volumes reduced revenue per trade.
- Trading activity: Daily average trades reached a record 11.9 million, up 57% year over year and 20% from Q1.
- Trading composition: Order-flow revenue increased 34% to $624 million, including a 62% increase in options order-flow revenue to $434 million; commissions rose 23% to $528 million.
- Revenue efficiency: Revenue per trade declined 19% year over year to $1.64 from $2.03, reflecting the higher-volume trading mix.
- Bank deposit economics: Bank deposit account fees rose 35% to $333 million even as average balances fell 13% to $71.9 billion, because the average net yield improved to 1.83% from 1.19%.
Expenses and Forge
Expense growth accelerated with the business, but remained below revenue growth. GAAP expenses excluding interest increased 12% year over year to $3.40 billion, while adjusted expenses rose 11% to $3.23 billion after excluding $142 million of acquired-intangible amortization and $28 million of acquisition and integration costs. The resulting GAAP pre-tax margin improved to 51.9% from 47.9%, and adjusted margin reached 54.3% versus 50.1% a year earlier.
- Compensation: Compensation and benefits increased 17% to $1.79 billion, reflecting headcount growth, annual merit increases, higher incentive compensation and Forge.
- Forge contribution: Schwab completed the $636 million Forge acquisition on March 2; Forge contributed $40 million of second-quarter revenue and $33 million of net loss, while acquisition and integration costs totaled $28 million.
- Outlook: Schwab now expects full-year 2026 expenses excluding interest to increase approximately 10% to 11%, including volume-related costs and Forge operations and integration.
- Investment spending: Capital expenditures were $792 million in the quarter, including a $633 million multi-year software license agreement, pushing expected full-year capital spending slightly above the prior range of 3%-5% of revenue.
Capital and new products
Schwab continued to return capital while funding balance-sheet growth and product expansion. The company repurchased 11.2 million shares for $1.0 billion during the quarter and had $11.1 billion remaining under its $20.0 billion authorization at June 30. It also redeemed $2.1 billion of Series I preferred stock and issued $1.5 billion of Series L preferred stock.
- Capital ratios: The consolidated GAAP Tier 1 leverage ratio was 8.7%, down from 9.3% at year-end 2025; the adjusted ratio was 6.8%, within Schwab’s 6.75%-7.00% long-term operating objective.
- Returns: Return on average common equity improved to 25% from 19% a year earlier, while adjusted return on tangible common equity rose to 44% from 35%.
- Product expansion: Schwab launched phased retail access to Schwab Crypto, initially offering direct bitcoin and ether trading, and introduced Portfolio Insights, a generative AI-powered portfolio information feature.
