Charles Schwab Overview
Charles Schwab is the scale utility of American retail investing. Fifty-five years after it helped invent discount brokerage, it sits at the intersection of four businesses that most competitors run separately: a self-clearing broker-dealer, a savings-and-loan holding company with three chartered banks, an asset manager, and the largest custodian for independent registered investment advisors. That combination is the whole thesis. Client cash swept into Schwab's banks funds an interest-earning balance sheet; client assets generate management and administration fees; client engagement generates trading revenue; and the same platform serves both channels, spreading fixed costs across USD 13.08 trillion of client assets and 48.0 million accounts as of 30 June 2026. Management estimates U.S. investable wealth exceeds USD 80 trillion, framing Schwab's roughly 15% share as an incumbency rather than a ceiling. The model's strength — and its principal vulnerability — is that revenue is levered to interest rates, market levels, and client cash behaviour, none of which Schwab controls.
The company's own description
The FY2025 Form 10-K states that CSC "is a savings and loan holding company" that "engages, through its subsidiaries, in wealth management, securities brokerage, banking, asset management, custody, and financial advisory services." At 31 December 2025 the company reported USD 11.90 trillion in client assets, 38.5 million active brokerage accounts, 5.7 million workplace plan participant accounts, and 2.2 million banking accounts.
The three principal operating subsidiaries named in the 10-K are Charles Schwab & Co., Inc. (CS&Co), a securities broker-dealer incorporated in 1971; Charles Schwab Bank, SSB (CSB), the principal banking entity; and Charles Schwab Investment Management, Inc. (CSIM), investment advisor to the proprietary Schwab Funds and Schwab ETFs. Two further depository institutions — Charles Schwab Premier Bank, SSB (CSPB) and Charles Schwab Trust Bank — are Texas- and Nevada-chartered savings banks respectively. Charles Schwab Futures and Forex LLC (CSFF) is registered as a futures commission merchant and forex dealer member with the CFTC.
Management's stated strategy is described in the filings as "Through Clients' Eyes," summarised in the 2026 proxy as offering a broad product range "with a focus on transparency, value, service, and trust," combining scale with expense discipline, and building stockholder value over time.
Independent characterisation
Schwab is not primarily a brokerage in economic terms; it is a spread lender wrapped in a distribution franchise. In FY2025 net interest revenue of USD 11,750 million represented 49.1% of total net revenues, and in the first half of FY2026 net interest revenue of USD 6,501 million represented 48.0%. The company's principal funding source is uninvested client cash — a liability it obtains at an average rate of 0.19% on bank deposits in Q2 2026 — deployed into securities, margin receivables, and bank loans yielding 3.47% on average. That spread, not commissions, is the profit engine.
The distribution franchise makes the funding cheap and sticky. Because clients hold assets at Schwab for custody, advice, trading, and banking, the cash balance is a by-product of a relationship rather than a rate-shopped deposit. This is why the 10-K identifies "Operating Structure — Providing bank, wealth, and asset management services to broker-dealer clients" as a stated competitive advantage.
Revenue model composition
| Revenue line | FY2023 | FY2024 | FY2025 |
|---|---|---|---|
| Interest revenue (gross) | — | 15,537 | 15,504 |
| Interest expense | — | -6,393 | -3,754 |
| Net interest revenue | 9,427 | 9,144 | 11,750 |
| Asset management and administration fees | 4,756 | 5,716 | 6,506 |
| Trading revenue | 3,230 | 3,264 | 3,921 |
| Bank deposit account fees | 705 | 729 | 977 |
| Other revenue | 719 | 753 | 767 |
| Total net revenues | 18,837 | 19,606 | 23,921 |
| Revenue line | FY2023 | FY2024 | FY2025 |
|---|---|---|---|
| Net interest revenue (% of total) | 50.0 | 46.6 | 49.1 |
| Asset management and administration fees (% of total) | 25.2 | 29.2 | 27.2 |
| Trading revenue (% of total) | 17.1 | 16.6 | 16.4 |
| Bank deposit account fees (% of total) | 3.7 | 3.7 | 4.1 |
| Other revenue (% of total) | 3.8 | 3.8 | 3.2 |
Schwab reports four principal revenue lines plus "other." The mix is a useful map of the business model: roughly half spread income, a quarter recurring asset-based fees, a sixth transactional, and the remainder off-balance-sheet deposit fees and miscellaneous items.
Revenue by category (USD millions)
Revenue mix as percentage of total net revenues
There is no subscription or licensing revenue of material scale. Bank deposit account fees are earned under the Second Amended and Restated Insured Deposit Account Agreement (the "2023 IDA agreement") with TD Bank USA, N.A. and TD Bank, N.A., under which eligible uninvested client cash is swept off balance sheet to deposit accounts at those institutions and Schwab receives recordkeeping and support fees.
Value chain position, customers, and end-markets
Schwab occupies the custody-and-distribution layer of the U.S. wealth value chain. It manufactures proprietary product (Schwab Funds, Schwab ETFs, collective trust funds, managed portfolio strategies), distributes third-party product (Mutual Fund Marketplace, third-party ETFs, alternative investments), and provides the plumbing (self-clearing, custody, settlement, banking, trust).
Customer types are three: (i) individual retail investors from beginners to ultra-high-net-worth, served through the Investor Services segment; (ii) employers and their employees, served through Workplace Services within Investor Services; and (iii) independent registered investment advisors, independent retirement advisors, and recordkeepers, served through the Advisor Services segment. RIAs are notable because Schwab charges them no custody fee — the economics are earned on the underlying client assets through spread and asset-based fees.
End-markets served are essentially domestic. The 10-K describes more than 380 domestic branch offices across 48 states and the District of Columbia, plus locations in Puerto Rico, the United Kingdom, Hong Kong, and Singapore. Cross-jurisdictional activity at 31 December 2025 was approximately USD 31 billion against total consolidated assets of approximately USD 491 billion — under 7%.
Strategy
Stated strategy — verbatim themes
The 2026 proxy statement and FY2025 10-K articulate the strategy as "Through Clients' Eyes," built on the principle that "developing trusted relationships will translate into more assets from both new and existing clients, ultimately driving more revenue and, along with expense discipline and thoughtful capital management, will generate earnings growth and build long-term stockholder value."
The three stated pillars are: offering a broad range of products with a focus on transparency, value, service, and trust; combining scale and resources with expense discipline to keep operating costs low; and building stockholder value over time. Management describes the combination as a "no trade-offs" approach.
The 2026 proxy adds a four-pillar operating framework used in 2025: "offering new products and tools to meet the unique needs of our clients, executing brilliantly on the basics, seeking continuous improvements to scale and efficiency, and attracting talent and empowering that talent to best serve our clients."
The FY2025 10-K frames the market opportunity explicitly: management estimates U.S. investable wealth "currently exceeds USD 80 trillion, which means the Company's USD 11.90 trillion in client assets leaves substantial opportunity for growth."
The May 2026 Investor Day framework
At the 14 May 2026 Institutional Investor Day, management set out a multi-year plan. The stated themes were: a mission of democratising investing, omnichannel client experiences, and expanding access, with an ambition to significantly increase client accounts and assets over the next decade. Four industry themes were identified as shaping the future: next-generation investor engagement; a "bull market for convenience"; emerging asset classes; and the transformative impact of AI.
Forward-looking topics enumerated in the presentation's safe-harbour statement — a useful list of what management considers strategically live — were: winning new clients, deepening client relationships and monetisation; innovation; spot crypto offering; private markets investing offering; artificial intelligence capabilities; the Global Capabilities Center; a diversified acquisition model; expense discipline; targeted investments; balance sheet management and capital return; revenue growth and diversification; funding diversification; earnings growth through the cycle; and positive operating leverage through the cycle.
Announced strategic initiatives, last 24 months
| Date | Initiative | Detail and target |
|---|---|---|
| Late 2025 | Schwab Private Issuer Equity Services | Equity management for late-stage private companies pre-IPO |
| 2,025 | Schwab Advisor ProDirect | Membership programme for RIA firms: structured guidance, peer learning, operational best practices |
| 6 Nov 2025 | Forge Global acquisition announced | Entry into private-market secondaries; approximately USD 660 million |
| 24 Jul 2025 | USD 20 billion share repurchase authorisation | Replaced the prior USD 15 billion authorisation; no expiration date |
| 29 Jan 2026 | Technology, operations and data consolidated under one executive | Operating model simplification; CISO reports into this function |
| 2 Mar 2026 | Forge Global closed | USD 636 million |
| 22 Apr 2026 | Series L preferred issued (USD 1.5 billion); Series I redeemed (USD 2.1 billion) | Preferred capital refinancing at lower net cost |
| Q2 2026 | Schwab Crypto launched | Direct spot Bitcoin and Ethereum for retail, 0.75% per transaction |
| Q2 2026 | Portfolio Insights launched | Generative-AI portfolio performance narrative |
| Q2 2026 | Cboe Global Markets collaboration | Binary options tied to financial and economic events. Management has publicly stated that sports-related prediction markets "have no place in clients' financial lives" |
| May and Aug 2026 | Senior note issuances totalling approximately USD 4.85 billion | Funding diversification (see Section 21) |
Medium-term financial targets
| Target | Guidance |
|---|---|
| Revenue growth through the cycle | High-single to low-double-digit percentage |
| EPS growth through the cycle | Mid-teens percentage |
| Operating leverage | Positive through the cycle |
| Organic net new asset growth assumption | Approximately 5% per annum |
| Adjusted Tier 1 Leverage Ratio long-term operating objective | 6.75%–7.00% |
| Metric | Winter Update (Jan 2026) | Investor Day (14 May 2026) | Q2 2026 Update (21 Jul 2026) |
|---|---|---|---|
| Total revenue growth (%) | — | 14.0 to 15.0 | 17.5 to 18.5 |
| Adjusted expense growth (%) | — | 8.5 to 9.5 | 9.5 to 10.5 |
| Full-year net interest margin (%) | — | 3.00 to 3.10 | 3.00 to 3.10 |
| Q4 exit net interest margin (%) | — | — | 3.25 to 3.30 |
| Implied operating leverage (basis points) | 400 | — | 800 |
| Full-year adjusted EPS (USD) | 5.70 to 5.80 | — | — |
| Daily average trades assumption (millions) | — | 7.4 | — |
FY2026 scenario, as revised through the year:
The FY2026 guidance assumes one 25-basis-point rate increase in December 2026, which management states would have no impact on 2026 but would benefit 2027. Note the daily average trades assumption of approximately 7.4 million set at the May Investor Day against actual Q2 2026 daily average trades of 11.92 million — the single largest source of upside in the guidance revision, and a warning that the trading line is being modelled conservatively for good reason.
Sustainability and ESG commitments
Disclosed commitments are modest relative to peers. The 10-K states that Schwab "incorporates sustainable practices to guide our facilities' design, materials, and building technologies" as part of a real estate energy management programme. The company measures and reports Scope 1 and Scope 2 greenhouse gas emissions for corporate facilities, branch locations, and data centres. No net-zero target, Scope 3 inventory, or science-based target was verified in the sources reviewed.
Products & Services
Investor Services — Retail Investor
Brokerage accounts. Full-feature brokerage accounts supporting equity and fixed income trading, margin lending, options, futures and forex, and cash management including money market funds and certificates of deposit. Online U.S. equity and ETF commissions have been zero since October 2019. Revenue per trade across the firm was USD 1.64 in Q2 2026, down from USD 2.03 in Q2 2025 — a function of mix shift as daily average trades rose 57% to a record 11.92 million.
Schwab Stock Slices. Fractional-share purchases of S&P 500 constituents. Target customer: new and small-balance investors. Pricing: no commission on the equity purchase.
Schwab Starter Kit. Onboarding package for first-time investors bundling a brokerage account with introductory equity exposure and education. Target: beginners.
Schwab Trading Powered by Ameritrade. The retained thinkorswim platform suite (desktop, web, mobile) plus specialised education and 24/7 support, carried over from TD Ameritrade. Target: active and derivative traders. Derivative trades were 17.7% of total trades in June 2026, down from 20.8% a year earlier — the mix shift reflects the surge in outright equity volume rather than a decline in options activity.
International investing. Access to U.S. markets for non-U.S. clients, multicurrency trading for U.S.-based investors, and trading in foreign securities.
Schwab Crypto. Launched in Q2 2026, providing direct spot Bitcoin and Ethereum trading for retail clients at a disclosed 0.75% per transaction. This sits alongside pre-existing access to cryptocurrency exchange-traded products, options on select crypto ETPs, and cryptocurrency futures. The FY2025 10-K flagged in advance that "expanded access to select cryptocurrencies [is] expected to be offered to clients beginning in 2026" and devoted a dedicated risk factor to the launch.
Portfolio Insights. Introduced Q2 2026. A generative-AI capability producing a narrative snapshot of a portfolio's day-change performance, a recap of news on the top S&P 500 movers affecting the portfolio (up to five securities), and curated Schwab Center for Financial Research content. Explicitly disclaimed as not investment advice, with acknowledgement that output may be inaccurate or stale.
Relationship tiers. Financial Consultants, Active Trader Financial Consultants, and Wealth Consultants provide guidance across planning, managed investing, trading, trust, equity compensation, and lending. Schwab Private Client Services serves clients with USD 1 million to USD 10 million in qualifying assets; Schwab Private Wealth Services serves clients above USD 10 million, with dedicated service teams, expedited processing, pricing advantages, and exclusive product access.
Advisory solutions. Discretionary and non-discretionary, with minimum investments starting at USD 5,000. Flagship: Schwab Wealth Advisory, providing a dedicated Wealth Advisor and a supporting team. Net flows into Schwab Wealth Advisory grew 80% year over year in Q2 2026. Other named managed investing solutions disclosed in the earnings releases: Schwab Managed Portfolios, Managed Account Select, Schwab Advisor Network, Windhaven Strategies, ThomasPartners Strategies, Wasmer Schroeder Strategies, Schwab Index Advantage advised retirement plan balances, Schwab Intelligent Portfolios, Institutional Intelligent Portfolios, Schwab Intelligent Portfolios Premium, Schwab Wealth Portfolios, AdvisorDirect, Essential Portfolios, Selective Portfolios, and Personalized Portfolios, plus legacy non-fee solutions including Schwab Advisor Source.
Managed investing solutions economics are disclosed with unusual precision: average fee-based client assets of USD 763,716 million in Q2 2026 generating USD 707 million of revenue, an average fee of 0.37% (down from 0.40% in Q2 2025 — evidence of ongoing fee compression within the mix).
Education and research. Articles, videos, podcasts, interactive courses, live events, Schwab Equity Ratings, the Schwab Network broadcast channel, and the Schwab Trading Activity Index (STAX), a published retail-sentiment index that stood at 59.1 in June 2026 versus 40.7 a year earlier.
Investor Services — Workplace Services
Retirement Plan Services. Bundled defined-contribution plans with investment options, trustee or custodial services, and participant-level recordkeeping. Plan-design features include automatic enrolment, automatic fund mapping at conversion, and automatic contribution increases. Open-architecture investment platform plus a managed investing service for participants.
Retirement Business Services. Trust, custody, and software services to independent retirement plan advisors and independent recordkeepers. Includes the Schwab Personal Choice Retirement Account (PCRA), a self-directed brokerage window for retirement plans. Transferred from Advisor Services to Investor Services in Q4 2024.
Stock Plan Services. Full-service recordkeeping for stock plans, stock options, restricted stock, performance shares, and stock appreciation rights, with participant education and investing services, plus specialised services for executive transactions and reporting, corporate actions, and grant acceptance tracking.
Schwab Private Issuer Equity Services. Introduced in late 2025. A complete equity management solution for private companies in the late stages before an IPO. Strategically adjacent to the Forge acquisition.
Designated Brokerage Services. Employee brokerage account surveillance (trading and reporting) for regulated employers, with direct outbound data feeds to proprietary or third-party compliance systems.
Workplace plan participant accounts totalled 5.89 million at 30 June 2026, up 5% year over year.
Investor Services — Mutual Fund Clearing Services and Off-Platform Sales
Mutual Fund Clearing Services. Open-end mutual fund trading, settlement, and related transactional services to banks, brokerage firms, and trust companies. Client assets USD 334.3 billion at 30 June 2026.
Off-Platform Sales. Proprietary mutual funds, ETFs, and collective trust funds sold outside Schwab and not held on the Schwab platform. At 30 June 2026, off-platform equity and bond funds, CTFs, and ETFs were USD 53.8 billion, USD 5.0 billion, and USD 208.5 billion respectively.
Advisor Services
Custody and clearing for RIAs. Schwab charges the RIA and end client no custody fee; economics are earned on the underlying client assets through net interest revenue and asset-based fees. Advisor Services client assets reached USD 5,741.9 billion at 30 June 2026, up 22% year over year, on which the segment generated USD 4,922 million of net revenues in FY2025.
Schwab Advisor Portfolio Connect. Portfolio management solution provided free of charge to advisors managing Schwab accounts; delivers core capabilities without data download and reconciliation.
thinkpipes. Trading platform for advisors with real-time charting, efficient trading, and allocation.
iRebal. Customisable portfolio rebalancing engine.
Advisor Services website. Core operational platform: account opening, money movement, transfer of assets, trading, status checking, service-team communication, multiyear archiving of statements, trade confirms and tax reports with document search, and integrations with third-party CRM, portfolio management, trade order management, and financial planning platforms.
Schwab Advisor ProDirect. Launched 2025. Membership-based programme to help independent RIA firms accelerate growth through structured guidance, peer learning, and operational best practices.
Practice management and events. Business, technology, and operations consulting; an annual RIA benchmarking study; transition consultants and technology engineers for advisors going independent; and the annual IMPACT conference.
Cross-segment product shelf
| Product family | Description | Scale disclosure (30 June 2026 unless noted) |
|---|---|---|
| Schwab money market funds | Proprietary money funds | USD 690.5 billion; average fee 0.27% |
| Schwab Funds and Laudus Funds (equity and bond) and CTFs | Proprietary mutual funds and collective trusts | USD 311.2 billion; average fee 0.07% (combined with proprietary ETFs) |
| Schwab ETFs | Proprietary exchange-traded funds, launched 2009 | USD 583.7 billion |
| Mutual Fund OneSource and other NTF funds | No-transaction-fee third-party funds | USD 485.7 billion; average fee 0.23% |
| Other third-party mutual funds | Open-architecture shelf | USD 1,366.0 billion |
| Other third-party ETFs | Open-architecture shelf | USD 2,959.7 billion |
| Alternative investments | Third-party private equity, real estate and similar via Schwab Alternative Investment OneSource and Alternative Investment Select | Reclassified into third-party fund reporting from Q1 2026; standalone balance not separately disclosed |
| Digital assets | Crypto ETPs, options on select crypto ETPs, crypto futures, and from Q2 2026 direct spot BTC/ETH | Balances not separately disclosed |
| Banking — deposits | Checking and savings accounts | 2.35 million banking accounts; bank deposits USD 249.7 billion |
| Banking — lending | First lien residential mortgages, HELOCs, and Pledged Asset Lines (PAL) | Bank loans USD 67.0 billion, up 33% YoY; PAL balances USD 33.4 billion, up 59% YoY |
| Margin lending | Securities-backed margin | USD 165.1 billion at 30 June 2026, up 98% YoY (includes USD 42.1 billion of RIA long/short strategy debits) |
| Trust | Trust custody, personal trust reporting, administrative trustee services | Included in other balance-based fees |
| Private markets | Forge Global platform and marketplace | Acquired March 2026 for USD 636 million |
| Event contracts | Binary options tied to financial and economic events, in development with Cboe Global Markets | Announced 2026; management has publicly declined to pursue sports-related prediction markets |
Financial Narrative
Methodological note. Schwab reports "total net revenues" already net of interest expense. There is no cost of goods sold, so "gross profit" is not a meaningful reported concept and is marked not applicable. EBITDA is likewise not a metric Schwab or its peers report, and it is not meaningful for a savings and loan holding company whose interest expense is an operating cost. An EBITDA proxy (pre-tax income plus depreciation and amortisation including amortisation of acquired intangibles) is shown for completeness and clearly labelled as a derived proxy.
Income statement
Preferred dividends for FY2021–FY2023 are derived as net income less net income available to common. Depreciation and amortisation used in the EBITDA proxy is the cash-flow-statement total (FY2021 1,164; FY2022 1,248; FY2023 1,338; FY2024 1,435; FY2025 1,362) per S&P Global Market Intelligence, cross-checked against the FY2025 and FY2024 income statements where the components sum exactly.
Margin analysis (%)
"na" = not applicable to this business model.
Revenue growth and CAGR
Revenue CAGR FY2021→FY2025: 6.6%. Revenue CAGR FY2023→FY2025 (from the cyclical trough): 12.7%. Net income CAGR FY2021→FY2025: 10.9%. Diluted EPS CAGR FY2021→FY2025: 13.2% — the gap to net income CAGR is the buyback.
Balance sheet
Balance sheet figures are from S&P Global Market Intelligence's standardised presentation, cross-checked where possible against the company's own quarterly financial condition table (FY2025 total assets USD 491.0 billion, stockholders' equity USD 49.4 billion, long-term debt USD 22.2 billion — the difference in the long-term debt line reflects the aggregator's separation of current portion, USD 4,124 million, and finance leases). Working capital is not a meaningful measure for a savings and loan holding company whose client payables are core funding; it is reported here only because it was requested.
Cash flow
Operating cash flow for a broker-dealer is dominated by movements in client receivables and payables and is therefore volatile and low in information content; FY2023's USD 19.6 billion figure reflects balance-sheet contraction during the cash-sorting cycle, not earnings quality.
Ratios
"nc" = not calculable, the company is in a net cash position. "nm" = not meaningful. Return on invested capital is a trailing-twelve-month figure from S&P Global Market Intelligence as of September 2026. Interest coverage is derived as (pre-tax income + interest expense) / interest expense. Cash conversion cycle is not applicable — there is no inventory or trade cycle.
Commentary: trends, inflections, and drivers
FY2021 — the TD Ameritrade year. Net revenues grew 58% to USD 18.5 billion, of which USD 7.6 billion came from TD Ameritrade, acquired in October 2020. Reported ROCE of 11% is depressed by the enormous equity base created by the stock-funded acquisition, and by an AOCI position that was still close to par.
FY2022 — peak spread, hidden fragility. Revenue rose 12% to USD 20.8 billion and pre-tax margin reached 45.2% as the Federal Reserve's tightening cycle widened the spread on a securities portfolio bought at low yields. Beneath that, the balance sheet was deteriorating: AOCI swung from negative USD 1.1 billion to negative USD 22.6 billion, tangible book value collapsed from USD 25.0 billion to USD 6.2 billion, and total assets fell USD 115 billion as clients moved cash out of sweep. This is the inflection that matters most in the five-year record.
FY2023 — the trough. Net revenues fell 9.3% and net income fell 29.5%. Two forces combined: cash sorting forced Schwab to replace zero-cost sweep deposits with Federal Home Loan Bank borrowings and other supplemental funding at market rates, compressing net interest revenue by 12%; and the Ameritrade integration plus restructuring pushed expenses excluding interest up 10% to USD 12.5 billion. Pre-tax margin fell to 33.9%. S&P downgraded the senior unsecured rating from A to A-. Bank supplemental funding peaked in this period.
FY2024 — repair. Revenue recovered 4.1% and net income 17.3%. The mechanism was deleveraging of expensive funding rather than revenue growth: FHLB borrowings fell to USD 16.7 billion at year-end from far higher levels, and total debt declined from USD 65.4 billion to USD 59.0 billion. Expenses excluding interest fell 4.4% as restructuring benefits landed. Net interest margin was 2.12%.
FY2025 — the payoff year. Every driver aligned. Net revenues rose 22% to a record USD 23.9 billion; net income rose 49% to USD 8.85 billion; diluted EPS rose 55.5% to USD 4.65. The drivers, in order of contribution:
Net interest revenue +28% to USD 11,750 million: Net interest margin expanded 62 basis points to 2.74%, reaching 2.90% in Q4. This was almost entirely a liability-side story: total funding cost fell from 1.49% to 0.88% as bank supplemental funding was run down to USD 5.1 billion at year-end from USD 14.8 billion at Q3. Average interest-earning assets were essentially flat at USD 424 billion.
- Asset management and administration fees +14% to USD 6,506 million, driven by average client assets, not by pricing — the blended fee on mutual funds, ETFs and CTFs held at 0.15% and the managed-investing fee actually slipped from 0.33% to 0.32%.
Trading revenue +20% to USD 3,921 million: on daily average trades rising to 8.27 million in Q4, up 31% year over year, partly offset by revenue per trade falling from USD 2.20 to USD 2.05.
Bank deposit account fees +34% to USD 977 million: Expense discipline held: total expenses excluding interest rose only 4.6% against 22% revenue growth, producing roughly 1,740 basis points of operating leverage. Capital return totalled USD 11.8 billion, including USD 7.3 billion of buybacks.
H1 2026 — acceleration, with a mix shift. Net revenues of USD 13,554 million were up 18.4%; net income of USD 5,279 million was up 30.8%. Q2 2026 alone produced net revenues of USD 7,072 million (+21%) and pre-tax margin of 51.9% (54.3% adjusted). Three things changed character:
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The margin story moved to the asset side. Net interest margin reached 3.00% in Q2 2026 with average interest-earning assets up 5% to USD 445.0 billion — growth, not just repricing. Bank loans grew 33% to USD 67.0 billion and receivables from brokerage clients grew 48% to USD 122.8 billion.
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Trading became a much larger swing factor. Daily average trades hit a record 11.92 million, up 57%, driving trading revenue up 28% to USD 1,215 million. Management attributes this to structural drivers — younger investors, options adoption, AI-assisted engagement — rather than a cycle. Revenue per trade fell 19% to USD 1.64, so this is a volume phenomenon with declining unit economics.
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Expense growth turned up sharply. Q2 2026 expenses excluding interest rose 12% year over year (11% adjusted), against 4% in Q4 2025. Compensation and benefits alone rose 17%. Capital expenditure in Q2 2026 was USD 792 million, of which USD 633 million related to a multi-year software licence agreement recognised with a corresponding long-term debt liability — a material change in the shape of technology spending that also inflates the reported capex line.
The AOCI overhang is closing but not closed. Accumulated other comprehensive loss narrowed from negative USD 22.6 billion at end-2022 to negative USD 11.0 billion at end-2025. The gap between the GAAP Tier 1 Leverage Ratio (8.7% at 30 June 2026) and the adjusted ratio including AOCI (6.8%) is the residual. Management's long-term operating objective for the adjusted ratio is 6.75%–7.00%, and at 6.8% the company is at the bottom of its own range — a constraint on the pace of buybacks that is easy to miss.
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Revenue by Segment and Segment Assets & Liabilities
| Metric | FY2023 | FY2024 | FY2025 |
|---|---|---|---|
Net interest revenue (USD Mn) | 7,193 | 7,317 | 9,328 |
Asset management and administration fees (USD Mn) | 3,492 | 4,146 | 4,756 |
Trading revenue (USD Mn) | 2,821 | 2,895 | 3,525 |
Bank deposit account fees (USD Mn) | 546 | 568 | 766 |
Other revenue (USD Mn) | 598 | 632 | 624 |
Total net revenues (USD Mn) | 14,650 | 15,558 | 18,999 |
Revenue by Segment and Segment Assets & Liabilities — Net interest revenue
| Metric | FY2023 | FY2024 | FY2025 |
|---|---|---|---|
Net interest revenue (USD Mn) | 2,234 | 1,827 | 2,422 |
Asset management and administration fees (USD Mn) | 1,264 | 1,570 | 1,750 |
Trading revenue (USD Mn) | 409 | 369 | 396 |
Bank deposit account fees (USD Mn) | 159 | 161 | 211 |
Other revenue (USD Mn) | 121 | 121 | 143 |
Total net revenues (USD Mn) | 4,187 | 4,048 | 4,922 |
Revenue by Segment and Revenue by Segment (%)
| Metric | FY2023 | FY2024 | FY2025 |
|---|---|---|---|
Investor Services net revenues (USD Mn) | 14,650 | 15,558 | 18,999 |
Advisor Services net revenues (USD Mn) | 4,187 | 4,048 | 4,922 |
Total net revenues (USD Mn) | 18,837 | 19,606 | 23,921 |
Investor Services share of total (%) | 77.8 | 79.4 | 79.4 |
Advisor Services share of total (%) | 22.2 | 20.6 | 20.6 |
Investor Services YoY growth (%) | — | 6.2 | 22.1 |
Advisor Services YoY growth (%) | — | -3.3 | 21.6 |
Segment Assets & Liabilities
| Metric | FY2023 | FY2024 | FY2025 | H1 2026 |
|---|---|---|---|---|
Investor Services client assets (USD Bn) | — | 5,721.6 | 6,707.5 | 7,343.0 |
Advisor Services client assets (USD Bn) | — | 4,379.7 | 5,195.5 | 5,741.9 |
Total client assets (USD Bn) | 8,520 | 10,101.3 | 11,903.0 | 13,084.9 |
Group Entities
| Entity | Type | Regulator(s) | Role |
|---|---|---|---|
The Charles Schwab Corporation (CSC) | Delaware savings and loan holding company; elected Financial Holding Company | Federal Reserve | Parent; issuer of listed equity and senior notes |
Charles Schwab & Co., Inc. (CS&Co) | Broker-dealer and registered investment advisor, incorporated 1971 | SEC, FINRA, MSRB, 50 states, DC, USVI, Puerto Rico | Core brokerage, self-clearing |
Charles Schwab Bank, SSB (CSB) | Texas state savings bank | Federal Reserve, TDSML, CFPB, FDIC | Principal depository; banking and lending |
Charles Schwab Premier Bank, SSB (CSPB) | Texas state savings bank | Federal Reserve, TDSML, CFPB, FDIC | Depository |
Charles Schwab Trust Bank | Nevada state savings bank, main office Westlake, TX | Federal Reserve, Nevada FID, CFPB, FDIC | Retirement plan trust and custody |
Charles Schwab Investment Management, Inc. (CSIM) | Registered investment advisor | SEC | Advisor to Schwab Funds and Schwab ETFs |
Charles Schwab Investment Advisory, Inc. | Registered investment advisor | SEC | Managed portfolio advisory |
Charles Schwab Futures and Forex LLC (CSFF) | FCM and forex dealer member | CFTC, NFA | Futures and forex |
Forge Global Holdings, Inc. | Private-markets platform and trading marketplace | SEC/FINRA (broker-dealer subsidiaries) | Acquired 2 March 2026 |
Income Statement and Per-Share Data
| Metric | FY2021 | FY2022 | FY2023 | FY2024 | FY2025 |
|---|---|---|---|---|---|
Total net revenues (USD Mn) | 18,520 | 20,762 | 18,837 | 19,606 | 23,921 |
Net interest revenue (USD Mn) | 8,030 | 10,682 | 9,427 | 9,144 | 11,750 |
Total expenses excluding interest (USD Mn) | 10,807 | 11,374 | 12,459 | 11,914 | 12,462 |
Income before taxes (USD Mn) | 7,713 | 9,388 | 6,378 | 7,692 | 11,459 |
Taxes on income (USD Mn) | 1,858 | 2,205 | 1,311 | 1,750 | 2,607 |
Net income (USD Mn) | 5,855 | 7,183 | 5,067 | 5,942 | 8,852 |
Preferred dividends and other (USD Mn) | 495 | 548 | 418 | 464 | 435 |
Net income available to common (USD Mn) | 5,360 | 6,635 | 4,649 | 5,478 | 8,417 |
Adjusted net income, non-GAAP (USD Mn) | — | 7,934 | 6,159 | 6,433 | 9,242 |
EBITDA proxy, derived (USD Mn) | 8,877 | 10,636 | 7,716 | 9,127 | 12,821 |
Basic EPS (USD) | 2.84 | 3.52 | 2.55 | 3.00 | 4.67 |
Diluted EPS (USD) | 2.83 | 3.50 | 2.54 | 2.99 | 4.65 |
Adjusted diluted EPS, non-GAAP (USD) | — | 3.90 | 3.13 | 3.25 | 4.87 |
Dividends declared per common share (USD) | 0.72 | 0.84 | 1.00 | 1.00 | 1.08 |
Weighted-average diluted shares (millions) | 1,897 | 1,894 | 1,831 | 1,834 | 1,809 |
Margin Analysis (%)
| Metric | FY2021 | FY2022 | FY2023 | FY2024 | FY2025 |
|---|---|---|---|---|---|
Pre-tax profit margin, GAAP (%) | 41.6 | 45.2 | 33.9 | 39.2 | 47.9 |
Pre-tax profit margin, adjusted non-GAAP (%) | — | 50.0 | 41.5 | 42.5 | 50.0 |
EBITDA-proxy margin, derived (%) | 47.9 | 51.2 | 41.0 | 46.6 | 53.6 |
Net profit margin (%) | 31.6 | 34.6 | 26.9 | 30.3 | 37.0 |
Effective tax rate (%) | 24.1 | 23.5 | 20.6 | 22.8 | 22.7 |
Expenses excluding interest as % of average client assets | — | — | — | 0.12 | 0.11 |
Margin Analysis (%) — Total net revenue YoY growth
| Metric | FY2021 | FY2022 | FY2023 | FY2024 | FY2025 |
|---|---|---|---|---|---|
Total net revenue YoY growth (%) | 58.0 | 12.1 | -9.3 | 4.1 | 22.0 |
Net income YoY growth (%) | — | 22.7 | -29.5 | 17.3 | 49.0 |
Diluted EPS YoY growth (%) | — | 23.7 | -27.4 | 17.7 | 55.5 |
Balance Sheet and Per-Share Data
| Metric | FY2021 | FY2022 | FY2023 | FY2024 | FY2025 |
|---|---|---|---|---|---|
Total assets (USD Mn) | 667,270 | 551,772 | 493,178 | 479,843 | 490,995 |
Cash and cash equivalents (USD Mn) | 62,975 | 40,195 | 43,337 | 42,083 | 46,030 |
Short-term investments (USD Mn) | 56,115 | 45,120 | 35,312 | 41,459 | 50,890 |
Investments in debt and equity securities (USD Mn) | 390,116 | 319,971 | 268,585 | 226,431 | 197,843 |
Goodwill (USD Mn) | 11,952 | 11,951 | 11,951 | 11,951 | 11,951 |
Other intangible assets, net (USD Mn) | 9,379 | 8,789 | 8,260 | 7,743 | 7,233 |
Property, plant and equipment, net (USD Mn) | 4,284 | 4,608 | 4,320 | 3,929 | 3,796 |
Short-term debt incl. current LTD (USD Mn) | 13,819 | 22,050 | 42,000 | 37,992 | 38,019 |
Long-term debt (USD Mn) | 17,014 | 19,960 | 22,393 | 20,154 | 18,038 |
Total debt (USD Mn) | 31,859 | 43,072 | 65,370 | 59,011 | 56,997 |
Net cash (debt) position (USD Mn) | 87,231 | 42,243 | 13,279 | 24,531 | 39,923 |
Total liabilities (USD Mn) | 611,009 | 515,164 | 452,220 | 431,468 | 441,570 |
Total stockholders' equity (USD Mn) | 56,261 | 36,608 | 40,958 | 48,375 | 49,425 |
Common stockholders' equity (USD Mn) | 46,307 | 26,902 | 31,767 | 39,184 | 42,662 |
Tangible book value (USD Mn) | 24,976 | 6,162 | 11,556 | 19,490 | 23,478 |
Accumulated other comprehensive income/(loss) and other (USD Mn) | -1,109 | -22,621 | -18,131 | -14,848 | -10,983 |
Working capital (USD Mn) | -340,786 | -294,107 | -234,683 | -190,375 | -155,941 |
Book value per common share (USD) | 24.46 | 14.52 | 17.42 | 21.40 | 24.26 |
Tangible book value per share (USD) | 13.19 | 3.33 | 6.34 | 10.64 | 13.35 |
Dividends & Capital Returns
| Metric | FY2021 | FY2022 | FY2023 | FY2024 | FY2025 |
|---|---|---|---|---|---|
Net cash provided by operating activities (USD Mn) | 2,118 | 2,057 | 19,587 | 2,670 | 9,311 |
Capital expenditures (USD Mn) | 916 | 971 | 700 | 620 | 548 |
Free cash flow, derived (USD Mn) | 1,202 | 1,086 | 18,887 | 2,050 | 8,763 |
Investing cash flow (USD Mn) | -75,663 | 32,048 | 57,411 | 35,431 | 24,538 |
Financing cash flow (USD Mn) | 96,323 | -68,723 | -61,245 | -47,060 | -29,702 |
Total dividends paid (USD Mn) | 1,822 | 2,110 | 2,276 | 2,275 | 2,329 |
Common dividends paid (USD Mn) | 1,366 | — | — | 1,838 | 1,958 |
Preferred dividends paid (USD Mn) | 456 | — | — | 437 | 371 |
Common stock repurchased (USD Mn) | 0 | 3,395 | 2,842 | 0 | 7,346 |
Cash interest paid (USD Mn) | 501 | 1,355 | 5,623 | 6,655 | 4,557 |
Cash income taxes paid (USD Mn) | 2,053 | 2,130 | 1,620 | 1,491 | 1,575 |
Margin Analysis (%) and Financial Ratios (x)
| Metric | FY2021 | FY2022 | FY2023 | FY2024 | FY2025 |
|---|---|---|---|---|---|
Return on average common stockholders' equity, as reported (%) | 11 | 18 | 16 | 15 | 21 |
Return on tangible common equity, non-GAAP (%) | — | 42 | 54 | 35 | 38 |
Return on average assets, derived (%) | 0.96 | 1.18 | 0.97 | 1.22 | 1.82 |
Return on invested capital (%) | — | — | — | — | 8.61 |
Total debt / total equity (x) | 0.57 | 1.18 | 1.60 | 1.22 | 1.15 |
Total equity / total assets (%) | 8.4 | 6.6 | 8.3 | 10.1 | 10.1 |
Net debt / EBITDA proxy (x) | nc | nc | nc | nc | nc |
Interest coverage, derived (x) | 17.2 | — | — | 2.20 | 4.05 |
Asset turnover (net revenues / average assets, x) | 0.030 | 0.034 | 0.036 | 0.040 | 0.049 |
Current ratio (x) | — | — | — | — | 0.66 |
Consolidated Tier 1 Leverage Ratio (%) | — | — | — | 9.9 | 9.3 |
Adjusted Tier 1 Leverage Ratio, non-GAAP (%) | — | — | — | 7.1 | 7.1 |
Net interest margin (%) | — | — | — | 2.12 | 2.74 |
Region Assets & Liabilities and Revenue by Region
| Metric | FY2025 |
|---|---|
Total consolidated assets (USD Bn) | 491 |
Cross-jurisdictional activity (USD Bn) | 31 |
Cross-jurisdictional activity as % of total assets | 6.3 |
Domestic branch offices (number) | 380 |
U.S. states with branch presence (number) | 48 |
Non-U.S. / territory locations | Puerto Rico, United Kingdom, Hong Kong, Singapore |
Region Margins & Growth (%) and Region Assets & Liabilities (%)
| Metric | FY2024 | FY2025 |
|---|---|---|
Investor Services net revenue growth (%) | 6.2 | 22.1 |
Advisor Services net revenue growth (%) | -3.3 | 21.6 |
Investor Services client asset growth (%) | — | 17.2 |
Advisor Services client asset growth (%) | — | 18.6 |
Capital Markets
| Index | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|---|
The Charles Schwab Corporation | 100 | 160 | 160 | 135 | 147 | 201 |
S&P 500 | 100 | 129 | 105 | 133 | 166 | 196 |
Dow Jones U.S. Investment Services Index | 100 | 140 | 126 | 143 | 183 | 231 |
Valuation Snapshot
| Metric | Value |
|---|---|
Share price (USD) | 107.33 |
Market capitalisation (USD Bn) | 185.61 |
Enterprise value (USD Bn) | 165.03 |
52-week price change (%) | 14.58 |
50-day moving average (USD) | 106.02 |
200-day moving average (USD) | 97.66 |
Beta (5-year) | 0.75 |
Average daily volume, 20 days (shares) | 7,406,877 |
Short interest as % of shares outstanding | approximately 0.00 |
Consensus rating | Buy |
Number of analysts | 22 |
Average price target (USD) | 124.95 |
Implied upside from USD 107.33 (%) | 16.4 |
Revenue growth forecast, 3-year (%) | 12.77 |
EPS growth forecast, 3-year (%) | 22.42 |
FY2026 consensus revenue (USD Bn) | approximately 28.09 |
FY2026 consensus EPS (USD) | approximately 6.29 |
Q3 2026 consensus revenue (USD Bn) | approximately 7.00 |
Financial Ratios (x) and Returns & Leverage Ratios (%)
| Metric | Schwab (Sep 2026) |
|---|---|
Trailing P/E (x) | 19.55 |
Forward P/E (x) | 14.85 |
PEG ratio (x) | 0.72 |
Price / sales (x) | 7.13 |
Forward price / sales (x) | 6.14 |
Price / book (x) | 4.22 |
Price / tangible book (x) | 7.62 |
Price / free cash flow (x) | 17.20 |
EV / sales (x) | 6.34 |
EV / free cash flow (x) | 15.30 |
Dividend yield (%) | 1.19 |
Buyback yield (%) | 3.36 |
Shareholder yield (%) | 4.55 |
Earnings yield (%) | 5.24 |
Free cash flow yield (%) | 5.81 |
Dividends & Capital Returns (USD) and Margin Analysis (%)
| Metric | FY2021 | FY2022 | FY2023 | FY2024 | FY2025 | FY2026 (annualised) |
|---|---|---|---|---|---|---|
Dividends declared per common share (USD) | 0.72 | 0.84 | 1.00 | 1.00 | 1.08 | 1.28 |
YoY growth (%) | — | 16.7 | 19.0 | 0.0 | 8.0 | 18.5 |
Total dividends paid, common and preferred (USD Mn) | 1,822 | 2,110 | 2,276 | 2,275 | 2,329 | — |
Payout ratio on GAAP diluted EPS (%) | 25.4 | 24.0 | 39.4 | 33.4 | 23.2 | 22.4 |
Capital Markets — Prior authorisation
| Item | Detail |
|---|---|
Prior authorisation | USD 15 billion, terminated 24 July 2025 |
Current authorisation | USD 20 billion, approved 24 July 2025, no expiration date |
Remaining at 31 Dec 2025 | USD 14,505 million |
FY2025 repurchases | USD 7,346 million total: USD 1.5 billion (19.2 million nonvoting shares from TD at USD 77.982) plus USD 351 million (3.9 million shares) under the old authorisation, plus 58.2 million shares under the new authorisation |
Q4 2025 repurchases | 29.191 million shares at an average USD 94.01 |
Q1 2026 repurchases | USD 2.4 billion |
Q2 2026 repurchases | USD 1.0 billion (11.2 million shares) |
Share count change | Weighted-average diluted shares fell from 1,897 million (FY2021) to 1,809 million (FY2025) to 1,739 million (Q2 2026), a cumulative reduction of 8.3% |
Management framing | CFO Verdeschi, Q2 2026 call: capital priorities centre on supporting organic client growth, particularly lending, with buybacks "opportunistic rather than routine" |
Series Details
| Series | Terms | Status |
|---|---|---|
Series D | 5.95% non-cumulative; depositary shares at 1/40th interest, NYSE: SCHW PrD | Outstanding |
Series J | 4.450% non-cumulative; depositary shares at 1/40th interest, NYSE: SCHW PrJ | Outstanding |
Series I | USD 2.1 billion | Redeemed Q2 2026 |
Series L | USD 1.5 billion | Issued 22 April 2026 |
Credit Ratings
| Agency | Long-term senior unsecured | Outlook | As of |
|---|---|---|---|
Moody's | A2 | Stable | August 2026 |
S&P Global | A- | Positive | August 2026 |
Fitch | A | Stable | August 2026 |
Capital Markets (2)
| Item | Detail |
|---|---|
CSC senior notes outstanding at 31 Mar 2026 | USD 20,519 million par, maturities 2026–2036, weighted-average interest rate 3.89% (excluding derivative impact) |
Ameritrade Holding LLC senior notes at 31 Mar 2026 | USD 81 million par, maturities 2027–2029, weighted-average rate 3.13% |
Long-term debt at 30 Jun 2026 | USD 22.7 billion (includes the USD 633 million software licence liability) |
Other short-term borrowings at 30 Jun 2026 | USD 13.9 billion |
Federal Home Loan Bank borrowings at 30 Jun 2026 | USD 0.5 billion (down from USD 16.7 billion at end-2024) |
Total debt at 30 Jun 2026 | USD 75.8 billion (S&P Global standardised, includes payables classified as short-term debt) |
Net cash position at 30 Jun 2026 | USD 20.6 billion, or USD 11.90 per share |
Pricing Date Details
| Pricing date | Instrument | Amount (USD Mn) | Maturity |
|---|---|---|---|
18 May 2026 | 4.744% fixed-to-floating senior notes | 1,000 | 21 May 2030 |
18 May 2026 | 5.493% fixed-to-floating senior notes | 1,250 | 21 May 2037 |
Mid-2026 | 4.603% fixed-to-floating senior notes | 1,000 | 27 Jul 2029 |
10 Aug 2026 | 5.108% fixed-to-floating senior notes | 1,250 | 2032 |
10 Aug 2026 | 5.655% fixed-to-floating senior notes | 1,350 | 2037 |
Total 2026 issuance to date | — | 5850 | — |
Analyst Conclusions
Management guidance
| Metric | FY2026 guidance (as of 21 July 2026) |
|---|---|
| Total revenue growth (%) | 17.5 to 18.5 |
| Implied FY2026 net revenues (USD B) | 28.1 to 28.3 |
| Adjusted expense growth (%) | 9.5 to 10.5 |
| Implied operating leverage (basis points) | 800 |
| Full-year net interest margin (%) | 3.00 to 3.10 |
| Q4 2026 exit net interest margin (%) | 3.25 to 3.30 |
| Rate assumption | One 25 bp increase in December 2026 — no 2026 impact, benefits 2027 |
Through-the-cycle targets: high-single to low-double-digit revenue growth; mid-teens EPS growth; positive operating leverage; approximately 5% organic net new asset growth; adjusted Tier 1 Leverage Ratio of 6.75%–7.00%.
Consensus expectations
Consensus is for FY2026 revenue of approximately USD 28.09 billion and EPS of approximately USD 6.29, with three-year forecast revenue growth of 12.77% and EPS growth of 22.42%. Twenty-two analysts carry a Buy consensus with an average target of USD 124.95, 16.4% above the 10 September 2026 price. Note that consensus revenue sits at the low end of management's own guidance range — the sell side has not fully marked to the July upgrade, or is discounting the trading-volume assumption.
Bull case
1. The trading volume assumption is far too conservative, and the gap is pure upside. Management modelled 7.4 million daily average trades for FY2026 at the May Investor Day. Actual Q2 2026 daily average trades were 11.92 million, and June alone ran at 13.62 million. Even at a declining revenue per trade of USD 1.64, the volume delta is worth billions of revenue annually versus plan. CEO Wurster's framing — that younger investors, options adoption and AI represent "a more sustained period of high levels of trading" — has now been supported by five consecutive quarters of acceleration, with the Schwab Trading Activity Index rising from 40.7 to 59.1 year over year.
2. Lending is a structurally new, high-return growth engine that barely existed three years ago. Bank loans grew 33% year over year to USD 67.0 billion at a 4.35% yield; Pledged Asset Line balances grew 59% to USD 33.4 billion; margin balances grew 98% to USD 165.1 billion. These are loans secured by assets Schwab already custodies, with essentially zero customer acquisition cost and low credit risk. The shift means net interest margin expansion is now being driven by asset-side growth (average interest-earning assets +5% in Q2 2026) rather than the liability repricing that drove 2025 — a more durable source.
3. Capital return capacity is large and the dividend is under-levered. USD 14.5 billion remained on the USD 20 billion buyback authorisation at end-2025, with no expiration. The payout ratio is 22.4% against a 19% dividend increase in Q1 2026. Share count has fallen 8.3% since FY2021 and 3.36% in the last year. At a 5.24% earnings yield and 5.81% free cash flow yield, buybacks are accretive at current prices, and the 4.55% total shareholder yield is a meaningful component of prospective return.
Bear case
1. The entire guidance framework assumes rates go up, and roughly half the revenue depends on it. FY2026 guidance embeds one 25 bp increase in December. Net interest revenue was 48.0% of H1 2026 revenue and bank deposit account fees another 4.6%. The 10-K states explicitly that a rate decline hits both simultaneously, and may additionally force money market fund fee waivers "as we experienced in 2020 and 2021" — a third hit to the asset management line. A cutting cycle in 2027 would attack more than half the revenue base at once. The FY2023 experience quantifies the damage: revenue down 9.3%, net income down 29.5%, pre-tax margin down 1,130 basis points.
2. Expense growth has more than doubled while the capital buffer has thinned. Adjusted expense growth guidance rose from 8.5%–9.5% to 9.5%–10.5%; Q2 2026 GAAP expenses were up 12% with compensation up 17%. Meanwhile the adjusted Tier 1 Leverage Ratio fell from 7.1% at end-2025 to 6.8% at 30 June 2026 — the floor of management's own objective — after USD 3.4 billion of H1 buybacks. If revenue growth decelerates from 21% toward the through-cycle 8%–11% target while expenses run at 10%, operating leverage inverts and there is limited capital flexibility to offset it with buybacks. The USD 633 million software licence recognised as capex with an offsetting debt liability suggests a step-up in committed technology spend that will not easily reverse.
3. The fee base is eroding continuously and the demographic base is being contested. Every asset-based fee rate Schwab discloses is falling: managed investing 0.39% to 0.37%; Mutual Fund OneSource 0.26% to 0.23%; revenue per trade USD 2.03 to USD 1.64, a 19% decline in a single year. Growth is therefore entirely volume-dependent. Simultaneously, Robinhood grew FY2025 revenue 51.6% with a 42.1% net margin, and Interactive Brokers added over one million accounts with client equity up 37% and a 77% pre-tax margin. Schwab is responding — Schwab Crypto, Cboe event contracts, Portfolio Insights — but it is responding, not leading, and it is doing so with a cost structure that includes 380 branches. Layer on the cash-sweep class actions, which have survived dismissal and are approaching class certification with quantified exposure undisclosed, and the downside scenarios have both an operating and a legal leg.
Catalysts and monitorables for the next twelve months
| Date / trigger | Item | What to watch |
|---|---|---|
| 15 Oct 2026 (est.) | Q3 2026 results | Whether daily average trades hold above 11 million; net interest margin progress toward the 3.25%–3.30% Q4 exit rate; expense growth versus the 9.5%–10.5% guide |
| Dec 2026 | FOMC decision | The guidance assumes one 25 bp increase. A cut instead would invalidate the 2027 setup |
| Jan 2027 | Q4/FY2026 results and Winter Business Update | FY2027 scenario; whether through-cycle targets are reaffirmed |
| Ongoing monthly | Monthly Activity Report | Transactional sweep cash (USD 485.7 billion at June 2026), client cash as a percentage of client assets (9.0% at June 2026, down 90 bp YoY), margin balances, core net new assets |
| Ongoing | Adjusted Tier 1 Leverage Ratio | Whether it recovers above 6.8% or buybacks are throttled |
| Ongoing | Total consolidated assets | Progress toward the USD 700 billion Category II threshold; USD 517.3 billion at 30 June 2026 |
| Ongoing | Cash sweep litigation | Class certification rulings; any disclosed accrual in Note 15 |
| 2026–2027 | Schwab Crypto adoption | Whether the 0.75% fee holds and what balances accumulate; first separate disclosure would be significant |
| 2026–2027 | Forge integration | Revenue contribution and whether private markets is disclosed as a distinct line |
| 2026–2027 | Cboe event contracts launch | Regulatory clearance and client uptake |
| 2,027 | Federal Reserve capital rules | Final rules on AOCI in regulatory capital and long-term debt requirements for large banking organisations |
| Ongoing | S&P outlook | A positive outlook resolving to an upgrade back to A would lower funding costs |
Analyst verdict
Schwab enters late 2026 in the strongest operating position of its history and, simultaneously, at the point of maximum cyclical flattery. The numbers are unambiguous: record FY2025 revenue of USD 23.9 billion and EPS of USD 4.65, followed by two record quarters, USD 13.08 trillion of client assets, 48.0 million client accounts, and a Q2 2026 adjusted pre-tax margin of 54.3%. The balance sheet damage of 2022–2023 has been substantially repaired — AOCI loss halved, supplemental funding all but eliminated, tangible book value quadrupled from the trough. The TD overhang is gone.
The difficulty is that almost every tailwind currently blowing is one Schwab does not control. Net interest margin expansion came first from liability repricing and now from a lending book growing 33% because equity markets are up 27% since end-2024. Trading revenue is running 60% above the company's own May 2026 assumption. Asset management fees are growing on asset appreciation while every disclosed fee rate falls. This is a business with excellent operating leverage into good conditions and, as FY2023 demonstrated, symmetrical leverage out of them.
Two things would change the assessment. First, evidence that the trading step-change is structural rather than cyclical — Wurster's thesis, currently supported but not yet tested through a drawdown. Second, restoration of capital headroom above the 6.8% adjusted Tier 1 Leverage floor without slowing buybacks, which requires the earnings to keep compounding.
At 19.55x trailing and 14.85x forward earnings, with a 4.55% shareholder yield, a PEG of 0.72, and a consensus target 16% above spot, the shares are not expensive for the growth being delivered. They are, however, priced for that growth continuing. The prudent framing: a high-quality, well-run, structurally advantaged franchise whose next twelve months are more likely to be determined by the Federal Reserve and the S&P 500 than by anything management does.
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Interest revenue and interest expense components for FY2022 and FY2023.
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Line-item Summary Compensation Table components (salary, bonus, stock awards, option awards) for all five named executive officers; totals for four of five NEOs are from a secondary compilation.
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The definitive beneficial ownership table (2026 DEF 14A page 68), including precise insider and founder stakes — aggregator estimates conflict by an order of magnitude.
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CEO pay ratio (2026 DEF 14A page 64).
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Note 15 legal proceedings detail, including any litigation accruals and the Corrente settlement amount.
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Revenue by geography, country-level revenue, and segment-by-geography cross-tabulation — not disclosed by the company.
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R&D expenditure and patent portfolio size — not disclosed by the company.
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Quantitative Scope 1, Scope 2 and Scope 3 emissions figures; emissions reduction targets; MSCI and CDP ratings; quantitative workforce diversity data.
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Year-by-year senior note maturity ladder.
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FY2021 full-time equivalent headcount.
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FY2024 and FY2025 year-end closing share prices (approximated from adjacent disclosures).
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Fidelity Investments and Vanguard financial and client asset figures (private entities).
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Interactive Brokers FY2025 total revenue and net income — secondary sources conflicted.
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View Subscription PlansExecutive Leadership
Executive Leadership Team
| Name | Title (at 31 Dec 2025) | Tenure in role | Prior roles | 2025 total compensation (USD) |
|---|---|---|---|---|
Richard A. Wurster | President and Chief Executive Officer | CEO since 1 Jan 2025; President since 2021 | President and director, CS&Co (2021–2024); EVP and Head of Schwab Asset Management Services (2021); CEO, CSIM (2019–2021); CEO, Charles Schwab Investment Advisory (2018–2021); CEO, ThomasPartners and Windhaven (2016–2018); previously Wellington Management and McKinsey & Company | 18,755,222 |
Michael D. Verdeschi | Managing Director and Chief Financial Officer | CFO since October 2024 | Treasurer, Citigroup | approximately 8,100,000 |
Walter W. Bettinger II | Co-Chairman of the Board | Co-Chairman since 2022; CEO 2008–Dec 2024; President 2008–2021; COO 2007–2008 | Joined Schwab 1995 via acquisition of The Hampton Company, which he founded in 1983 | approximately 6,300,000 |
Charles R. Schwab | Co-Chairman of the Board | Co-Chairman since 2022; Chairman 1986–2022; CEO 1986–1997 and 2004–2008; Co-CEO 1998–2003 | Founder of CS&Co, 1971 | approximately 8,500,000 |
Jonathan M. Craig | Managing Director and Head of Investor Services | Head of Investor Services since 2022 | Long-tenured Schwab executive | approximately 6,300,000 |
Executive Leadership Team (Age at 2026 AGM)
| Name | Age at 2026 AGM | Director since | Independent | Committees | Principal occupation / background |
|---|---|---|---|---|---|
Charles R. Schwab | 88 | 1986 | No | — | Founder; Co-Chairman |
Walter W. Bettinger II | 65 | 2008 | No | — | Co-Chairman; former CEO |
Richard A. Wurster | 53 | 2025 | No | — | President and CEO |
John K. Adams, Jr. | 70 | 2015 | Yes | Audit (Chair) | Former Managing Director, Financial Institutions Group, UBS Investment Bank (2002–2013); Credit Suisse (1985–2002) |
Marianne C. Brown | 67 | 2020 | Yes | Risk (Chair) | Former Co-COO, Fidelity National Information Services; former CEO, Omgeo; boards of Akamai, Northrop Grumman, IBM |
Joan T. Dea | 62 | 2017 | Yes | Compensation; Nominating and Corporate Governance | Managing Director, Beckwith Investments; former EVP, BMO Financial Group; former partner, Boston Consulting Group |
Christopher V. Dodds | 66 | 2014 | Yes | Nominating and Corporate Governance; Risk | Co-founder, Crown Oak Advisors; operating partner, The Cynosure Group; Schwab CFO 1999–2007 |
Stephen A. Ellis | 63 | 2012 | Yes | Audit; Nominating and Corporate Governance | Managing Partner, TPG Inc.; former CEO, Asurion; former Worldwide Managing Director, Bain & Company |
Frank C. Herringer | 83 | 1996 | Yes | Compensation; Nominating and Corporate Governance (Chair) | Retired Chairman and CEO, Transamerica Corporation |
Charles A. Ruffel | 70 | 2018 | Yes | Audit (from 31 March 2026) | Managing Partner, Kudu Investment Management; founder and former CEO, Asset International |
Arun Sarin | 71 | 2009 | Yes | Nominating and Corporate Governance; Risk | Former CEO, Vodafone Group Plc; lead independent director, Accenture plc |
Carolyn Schwab-Pomerantz | 66 | 2022 | No | Risk | Former Chair and President, Charles Schwab Foundation; daughter of Charles R. Schwab |
Paula A. Sneed | 78 | 2002 | Yes | Compensation (Chair) | Chairman and CEO, Phelps Prescott Group; former EVP, Kraft Foods |
Major Shareholders
| Holder category | Approximate stake | Source and date |
|---|---|---|
Institutions (aggregate) | 84.7% | S&P Global Market Intelligence, September 2026 |
Insiders (aggregate) | 1.1% (S&P Global) / 6.3% (MarketBeat, March 2026) / 12.9% (WallStreetZen, June 2026) | Conflicting — see note |
The Vanguard Group | approximately 7.1%–8.5% | Simply Wall St (March 2025) and secondary compilation (July 2026) |
BlackRock, Inc. | approximately 5.8% | Simply Wall St, March 2025 |
Dodge & Cox | approximately 4.9% | Simply Wall St, March 2025 |
Charles R. Schwab (individual) | approximately 6% (brandsownedby.com, July 2026) to 12.21% / 212.27 million shares (WallStreetZen, June 2026) | Conflicting — see note |
TD Bank / TD Group US Holdings | 0% — fully exited 12 February 2025 | FY2025 10-K |
Float | approximately 1.63 billion shares | S&P Global Market Intelligence |
Competitive Landscape
Key Competitors
| Competitor | Primary battleground | Ownership | Scale indicator | Positioning versus Schwab |
|---|---|---|---|---|
Fidelity Investments | Investor Services and Advisor Services (custody) | Private (FMR LLC) | — | The only competitor that matches Schwab across retail, workplace, and RIA custody simultaneously. Private status means no pay or margin disclosure — Schwab removed Fidelity from its compensation peer group in 2026 for exactly this reason |
The Vanguard Group | Investor Services; asset management | Client-owned mutual structure | Among the largest asset managers globally | Competes on cost in funds and ETFs, less so on service breadth, banking, or trading |
Morgan Stanley (incl. E*TRADE) | Investor Services; high-net-worth wealth | Public (NYSE: MS) | Over USD 5 trillion in client assets (secondary source) | The most direct wirehouse threat at the top of the wealth pyramid; E*TRADE competes in self-directed |
Merrill / Bank of America | Investor Services; high-net-worth | Public (NYSE: BAC) | — | Bank-integrated wealth management |
Interactive Brokers Group | Active traders; sophisticated and international clients | Public (Nasdaq: IBKR) | Client equity USD 780 billion at end-2025, +37%; FY2025 commissions USD 2.1 billion (+27%); FY2025 net interest income USD 3.6 billion; FY2025 pre-tax margin approximately 77% | Structurally higher margin on a smaller, wealthier, more active base. Expanding into prediction markets (ForecastEx) and has filed for a National Trust Charter |
Robinhood Markets | Younger self-directed retail; crypto | Public (Nasdaq: HOOD) | FY2025 revenue approximately USD 4.5 billion (+51.6%); FY2025 net income approximately USD 1.9 billion; Gold subscribers approximately 4.3 million in early 2026 | The fastest-growing threat to Schwab's next generation of clients, and the reference point for crypto and event contracts |
LPL Financial Holdings | Independent advisor platform | Public (Nasdaq: LPLA) | More than 23,000 advisors; approximately USD 1.5 trillion advisory and brokerage assets (secondary source, 2025) | Competes for the same independent-advisor economics, but as an affiliation model rather than a pure custodian |
Raymond James Financial | Advisor platform; private client | Public (NYSE: RJF) | FY2025 (Sept year-end) net revenues USD 14.07 billion; net income to common USD 2.13 billion; diluted EPS USD 10.30; client assets under administration USD 1.73 trillion | Advisor-first hybrid; approximately 140 consecutive profitable quarters |
Ameriprise Financial | Advice-led wealth | Public (NYSE: AMP) | — | Competes in advice-heavy retail |
Edward Jones | Branch-based retail advice | Private partnership | — | Competes on local branch presence |
Empower, Principal, Voya | Workplace retirement | Public and private | — | Compete with Workplace Services |
BNY Pershing, Altruist, Fidelity Institutional | RIA custody | Mixed | — | Altruist is the fintech insurgent in RIA custody; the 10-K's reference to "fintech custodians" is a direct acknowledgement |
Peer Comparison FY2025
| Metric | Schwab FY2025 | Interactive Brokers FY2025 | Robinhood FY2025 | Raymond James FY2025 (Sept YE) |
|---|---|---|---|---|
Total net revenues (USD Mn) | 23,921 | — | 4,500 | 14,070 |
Revenue growth YoY (%) | 22.0 | — | 51.6 | — |
Net income (USD Mn) | 8,852 | — | 1,900 | 2,130 |
Net margin (%) | 37.0 | — | 42.1 | 15.1 |
Pre-tax margin (%) | 47.9 | 77.0 | — | — |
Client assets / equity (USD Bn) | 11,903 | 780 | — | 1,730 |
Diluted EPS (USD) | 4.65 | — | — | 10.30 |
Capex intensity (% of revenue) | 2.3 | — | — | — |
Recent Developments
Litigation, regulatory actions, restructurings, and layoffs in the period: No new restructuring programmes or layoffs were announced between March 2025 and September 2026 — indeed, headcount rose from 32.1 thousand at end-2024 to 33.7 thousand at 30 June 2026, and FY2025 saw zero restructuring costs against USD 9 million in FY2024.
