Charles Schwab Corporation (NYSE:SCHW) reported third-quarter adjusted earnings above analysts’ expectations on Thursday, supported by higher trading activity, growth in client assets and increased net interest income.
However, revenue fell slightly short of market forecasts, contributing to a decline in the company’s shares during pre-market trading.
Adjusted earnings per share reached $1.69, exceeding the consensus estimate of $1.66 by $0.03.
Quarterly revenue increased 17% year-on-year to $7.17 billion, compared with $6.14 billion in the third quarter of 2025. The result was marginally below analysts’ expectations of $7.2 billion.
Schwab shares fell approximately 2.6% in pre-market trading following the announcement, although another reported indication put the decline at around 1.3%.
The company reported GAAP net income of $2.9 billion, equivalent to $1.62 per share. Excluding $151 million in pre-tax transaction-related costs, adjusted net income reached $3.0 billion.
Charles Schwab reported record core net new assets of $190.4 billion during the third quarter, representing an increase of 38% compared with the same period last year.
The inflows corresponded to an annualised growth rate of 5.8%, reflecting continued additions to the company’s investment and brokerage platforms.
Clients opened approximately 1.2 million new brokerage accounts during the quarter, bringing the total number of client accounts to 48.6 million.
Total client assets increased 15% year-on-year to $13.33 trillion.
The growth in assets and accounts provides a broader base for Schwab’s brokerage, investment management and financial services businesses.
It also supports the company’s ability to generate revenue from asset-based fees, trading activity and cash balances held within client accounts.
Chief Financial Officer Mike Verdeschi attributed the company’s revenue performance to increased client engagement across Schwab’s financial services platform.
“Deeper client engagement across Schwab’s platform continues to broaden and strengthen our revenue model, helping our third-quarter revenue increase 17% year-over-year to a record $7.2 billion,” Verdeschi said.
The executive’s reference to $7.2 billion reflects the company’s rounded revenue figure, compared with the reported total of $7.17 billion.
Schwab’s third-quarter results demonstrated growth across several revenue-generating activities, including trading, asset management and interest income.
The company’s net interest margin expanded to 3.04%, reflecting improved profitability from interest-earning assets relative to associated funding costs.
The increase in net interest margin contributed to earnings growth during the period.
Charles Schwab recorded a substantial increase in client trading activity during the third quarter.
Daily average trading volume reached 10.7 million transactions, representing growth of 44% compared with the previous year.
The higher activity supported trading revenue of $1.2 billion, an increase of 16% year-on-year.
Margin lending also expanded, with margin loan balances increasing 14% from the previous quarter to $187.9 billion.
Margin loans allow clients to borrow against eligible securities held in their investment accounts, generating interest income for the brokerage.
The increase in margin balances reflected greater use of borrowing facilities by Schwab’s clients during the quarter.
However, margin lending also introduces exposure to market volatility and changes in the value of securities used as collateral.
The growth in trading and margin borrowing contributed to the company’s broader revenue expansion.
Schwab’s banking operations also recorded growth during the third quarter.
Bank loan balances reached $72.3 billion at the end of September, representing a 35% increase from the previous year.
Meanwhile, asset management and administration fees rose 14% year-on-year to $1.9 billion.
The increase reflected the contribution from Schwab’s investment management and client asset servicing activities.
Client transactional sweep cash balances totalled $492.8 billion at the end of September, an increase of $7.1 billion from the previous quarter.
Sweep arrangements generally involve moving uninvested client cash into designated accounts or other cash management products.
These balances are an important component of Schwab’s financial model because they can support interest-related revenue, depending on prevailing rates and funding arrangements.
The combination of higher loan balances, growing asset management fees and increased client cash contributed to the company’s diversified revenue performance.
Charles Schwab reported a preliminary consolidated Tier 1 leverage ratio of 8.9% at the end of the third quarter.
The ratio is a regulatory measure of capital strength, comparing qualifying Tier 1 capital with a bank’s leverage exposure.
The reported level provides an indication of Schwab’s capital position as the company continues to expand lending, brokerage and asset management activities.
Despite the earnings beat, the company’s shares declined in pre-market trading as investors assessed the modest revenue shortfall against expectations.
Overall, the third-quarter results showed continued growth in client assets, brokerage accounts, trading activity and lending balances.
Looking ahead, Schwab’s performance will remain influenced by client investment activity, interest rate conditions, trading volumes and its ability to convert asset growth into sustainable revenue and earnings.
Charles Schwab stock price
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