Charles Schwab Q2 Revenue Rises 25%

Key Points

• Adjusted EPS were $1.14 in Q2 2025, exceeding the $1.10 estimate and up 56% year over year.

• Revenue reached $5.85 billion in Q2 2025, topping expectations and rising 25% year over year.

• Profit margin expanded by 10.7 percentage points to 47.9% in Q2.

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Leading brokerage and wealth management firm Charles Schwab (NYSE:SCHW) reported fiscal 2026 second-quarter results on Friday, July 18, 2025, that topped analysts' consensus expectations. Adjusted earnings per share of $1.14 came in ahead of the estimate of $1.10, and revenue of $5.85 billion beat the expected $5.73 billion. Both profit and revenue showed sharp gains from the prior year.

Overall, the quarter set new records for financial and operational results, supported by expanding client assets and high levels of new account growth.

Source: Charles Schwab. Note: Analysts' consensus estimates for the quarter provided by FactSet.

Business Overview and Success Factors

Charles Schwab is one of the United States' largest investment services firms. It provides brokerage, wealth management, banking, and financial advice for both individual and institutional clients. The company’s platform attracts retail investors, independent advisers, and workplace retirement plans through its broad product lineup, low-cost structure, and national branch footprint.

In recent years, Schwab has emphasized building scale, advancing operating efficiency, and integrating its 2020 acquisition of TD Ameritrade into its broader product family. Its core success factors include relentless attention to operating efficiency, intelligent capital management, responsiveness to regulatory changes, and innovation within its wealth management platform and trading technology.

Quarterly Drivers and Financial Developments

During Q2 2025, Schwab reported new records for total client assets, revenue, and net income. Total client assets finished the quarter at $10.76 trillion, a 14% year-over-year increase in total client assets. The company gathered $80.3 billion in core net new assets, up 31% year over year. New brokerage account openings increased 11% year over year to 1.1 million.

Revenue jumped 25% year over year, driven by a diverse set of income streams. Net interest revenue, which captures profit earned from lending and investments after funding costs, rose 31%. This was supported by an expansion in net interest margin to 2.65%, up 62 basis points year over year. Revenue from asset management and administration fees increased 14% year over year, and trading revenue, fueled by a robust average daily volume of 7.6 million trades, climbed 23%. Bank deposit account fee income also jumped 61%.

On the cost side, total expenses excluding interest grew 4% year over year, with adjusted total expenses up 5% relative to Q2 2024. Despite higher investments in branch openings and advisor hiring, expenses as a percentage of average client assets held steady at 0.12%. The pre-tax profit margin was 47.9%, growing by 10.7 percentage points compared to last year. Return on equity increased by 5 percentage points compared to Q2 2024.

The firm continued to manage its balance sheet actively, reducing supplemental funding -- a source of higher-cost bank borrowing -- by $10.4 billion during the quarter. The balance of this supplemental funding now stands at $27.7 billion, improving its funding mix and supporting higher profitability. Schwab returned $2.8 billion to shareholders through a $2.5 billion preferred stock redemption and $351 million in common stock buybacks. Its capital ratios exceeded internal targets, and liquidity remained robust, with sweep cash -- the cash automatically transferred by clients into Schwab bank -- rising to $412.1 billion.

On the product front, Managed Investing Solutions, Schwab’s suite of managed portfolios and advice-based services, posted net inflows up 37% year over year. Schwab also expanded alternative investments and digital offerings, such as its new digital estate planning partnership and AI-powered wealth management tools.

Looking Ahead

Management did not provide specific quarterly or annual earnings guidance in this release. However, it reiterated that ongoing business trends suggest performance near the upper end of the full-year 2025 financial scenario laid out earlier, targeting earnings per share in the $4.10–$4.20 range, excluding any impact from future share buybacks. Management noted that business activity and client engagement remain robust.

Investors and clients should watch several key trends in the coming quarters: the pace of expense growth as Schwab invests in advisor hiring and branch expansion, future changes in trading and margin revenue if market volatility shifts, and further progress in integrating legacy Ameritrade client assets. Shifts in interest rates or regulatory policies could also impact future profitability, given the company's sensitivity to these factors.

Note: Revenue and net income are presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.

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Charles Schwab is an advertising partner of Motley Fool Money. JesterAI is a Foolish AI, based on a variety of Large Language Models (LLMs) and proprietary Motley Fool systems. All articles published by JesterAI are reviewed by our editorial team, and The Motley Fool takes ultimate responsibility for the content of this article. JesterAI cannot own stocks and so it has no positions in any stocks mentioned. The Motley Fool recommends Charles Schwab and recommends the following options: short September 2025 $92.50 calls on Charles Schwab. The Motley Fool has a disclosure policy.