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Despite the earnings beat, Schwab’s shares are down more than 4.5% in pre-market trading, possibly reflecting investor disappointment over the revenue miss. The modest earnings surprise, coupled with concerns about the sustainability of revenue growth amid an uncertain interest rate environment, may have further weighed on investor sentiment.
Quarterly results benefited from higher net interest revenues (NIR), solid asset management fees and increased trading activity. Record core net new assets were another positive. However, rising expenses were a headwind.
Results excluded transaction-related costs. After considering these, net income (GAAP basis) was $2.91 billion or $1.62 per share, up from $2.36 billion or $1.26 per share in the year-ago quarter.
SCHW's Revenues Rise, Expenses Increase
Quarterly net revenues reached a record $7.17 billion, increasing 17% year over year. The top line marginally missed the Zacks Consensus Estimate of $7.19 billion. Revenue growth reflected higher NIR, asset management and administration fees, trading revenues and bank deposit account fees.
NIR rose 14% year over year to $3.48 billion, supported by higher average interest-earning assets and an improved net interest margin. Average interest-earning assets increased 8% to $451.5 billion. The net interest margin expanded to 3.04% from 2.88% a year ago.
Asset management and administration fees grew 14% to $1.91 billion, aided by organic growth and increased utilization of wealth and asset management solutions. Trading revenues jumped 16% to $1.16 billion, driven by higher client engagement. Bank deposit account fees surged 40% to $345 million, while other revenues increased 64% to $279 million.
Total non-interest expenses (GAAP basis) increased 9% year over year to $3.39 billion. Excluding acquisition and integration-related costs and amortization of acquired intangible assets, adjusted expenses were $3.24 billion, up 9%.
The adjusted pre-tax profit margin expanded to 54.8% from 51.3% in the prior-year quarter.
Schwab's Client Assets and Account Growth Remain Solid
As of Sept. 30, 2026, total client assets reached $13.33 trillion, increasing 15% year over year. Quarterly core net new assets were a record $190.4 billion, up 38%, representing an annualized organic growth rate of 5.8%.
Schwab added approximately 1.2 million new brokerage accounts during the quarter, up 9% year over year. The company ended September with 40.3 million active brokerage accounts, 2.4 million banking accounts and 5.9 million workplace plan participant accounts.
Daily average trading volume increased 44% year over year to approximately 10.7 million trades. Further, net flows into Schwab Wealth Advisory grew 55%, reflecting stronger client demand for advisory solutions.
SCHW's Lending and Capital Position Remain Strong
Bank loan balances increased 35% year over year to $72.3 billion as of Sept. 30, 2026. Margin loan balances reached $187.9 billion, rising 14% sequentially. These included $60.7 billion related to certain long/short strategies.
Client transactional sweep cash balances were $492.8 billion, increasing $7.1 billion sequentially. The preliminary consolidated Tier 1 leverage ratio was 8.9%, while the adjusted Tier 1 leverage ratio was 7%.
During the quarter, Schwab repurchased 4.7 million common shares for approximately $500 million, reflecting continued capital distributions.
Schwab's Product Expansion and Digital Initiatives
Schwab continued expanding its product capabilities during the reported quarter. The company announced Single Stock Futures on its thinkorswim trading platform and plans to broaden the digital assets available through Schwab Crypto.
It also introduced Charley, an artificial intelligence-powered assistant designed to provide U.S. retail clients with conversational access to Schwab's tools and insights. Additionally, Schwab partnered with Anthropic to bring Claude for Financial Advisors to the independent registered investment advisors it serves.
These initiatives complement the company's expanding wealth, trading and banking offerings as it focuses on deepening client relationships and broadening engagement across its platform.
Our Take on Schwab
A steady decline in funding costs and a favorable rate environment will likely support Schwab’s margins. Strategic acquisitions, expanding product line-up and sustainable capital distributions are other major positives. Rising expenses and near-term macroeconomic turmoil are headwinds.
The Charles Schwab Corporation Price, Consensus and EPS Surprise
Here are some of Schwab’s peers that have yet to report quarterly results.
Robinhood (HOOD - Free Report) is slated to announce third-quarter 2026 numbers on Oct. 27.
In the past week, the Zacks Consensus Estimate for Robinhood’s quarterly earnings has moved higher to 56 cents. This implies an 8.2% decrease from the prior-year quarter.
LPL Financial (LPLA - Free Report) is also scheduled to announce quarterly numbers on Oct. 27.
In the past seven days, the Zacks Consensus Estimate for LPL Financial’s quarterly earnings has been revised lower at $5.69. This indicates a 9.4% rise on a year-over-year basis.
View the Zacks #1 Rank List
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Schwab Q3 Earnings Beat on Higher NIR, Stock Slides on Revenue Miss
Key Takeaways
Charles Schwab’s (SCHW - Free Report) third-quarter 2026 adjusted earnings of $1.69 per share surpassed the Zacks Consensus Estimate of $1.66. The bottom line increased 29% year over year.
Despite the earnings beat, Schwab’s shares are down more than 4.5% in pre-market trading, possibly reflecting investor disappointment over the revenue miss. The modest earnings surprise, coupled with concerns about the sustainability of revenue growth amid an uncertain interest rate environment, may have further weighed on investor sentiment.
Quarterly results benefited from higher net interest revenues (NIR), solid asset management fees and increased trading activity. Record core net new assets were another positive. However, rising expenses were a headwind.
Results excluded transaction-related costs. After considering these, net income (GAAP basis) was $2.91 billion or $1.62 per share, up from $2.36 billion or $1.26 per share in the year-ago quarter.
SCHW's Revenues Rise, Expenses Increase
Quarterly net revenues reached a record $7.17 billion, increasing 17% year over year. The top line marginally missed the Zacks Consensus Estimate of $7.19 billion. Revenue growth reflected higher NIR, asset management and administration fees, trading revenues and bank deposit account fees.
NIR rose 14% year over year to $3.48 billion, supported by higher average interest-earning assets and an improved net interest margin. Average interest-earning assets increased 8% to $451.5 billion. The net interest margin expanded to 3.04% from 2.88% a year ago.
Asset management and administration fees grew 14% to $1.91 billion, aided by organic growth and increased utilization of wealth and asset management solutions. Trading revenues jumped 16% to $1.16 billion, driven by higher client engagement. Bank deposit account fees surged 40% to $345 million, while other revenues increased 64% to $279 million.
Total non-interest expenses (GAAP basis) increased 9% year over year to $3.39 billion. Excluding acquisition and integration-related costs and amortization of acquired intangible assets, adjusted expenses were $3.24 billion, up 9%.
The adjusted pre-tax profit margin expanded to 54.8% from 51.3% in the prior-year quarter.
Schwab's Client Assets and Account Growth Remain Solid
As of Sept. 30, 2026, total client assets reached $13.33 trillion, increasing 15% year over year. Quarterly core net new assets were a record $190.4 billion, up 38%, representing an annualized organic growth rate of 5.8%.
Schwab added approximately 1.2 million new brokerage accounts during the quarter, up 9% year over year. The company ended September with 40.3 million active brokerage accounts, 2.4 million banking accounts and 5.9 million workplace plan participant accounts.
Daily average trading volume increased 44% year over year to approximately 10.7 million trades. Further, net flows into Schwab Wealth Advisory grew 55%, reflecting stronger client demand for advisory solutions.
SCHW's Lending and Capital Position Remain Strong
Bank loan balances increased 35% year over year to $72.3 billion as of Sept. 30, 2026. Margin loan balances reached $187.9 billion, rising 14% sequentially. These included $60.7 billion related to certain long/short strategies.
Client transactional sweep cash balances were $492.8 billion, increasing $7.1 billion sequentially. The preliminary consolidated Tier 1 leverage ratio was 8.9%, while the adjusted Tier 1 leverage ratio was 7%.
During the quarter, Schwab repurchased 4.7 million common shares for approximately $500 million, reflecting continued capital distributions.
Schwab's Product Expansion and Digital Initiatives
Schwab continued expanding its product capabilities during the reported quarter. The company announced Single Stock Futures on its thinkorswim trading platform and plans to broaden the digital assets available through Schwab Crypto.
It also introduced Charley, an artificial intelligence-powered assistant designed to provide U.S. retail clients with conversational access to Schwab's tools and insights. Additionally, Schwab partnered with Anthropic to bring Claude for Financial Advisors to the independent registered investment advisors it serves.
These initiatives complement the company's expanding wealth, trading and banking offerings as it focuses on deepening client relationships and broadening engagement across its platform.
Our Take on Schwab
A steady decline in funding costs and a favorable rate environment will likely support Schwab’s margins. Strategic acquisitions, expanding product line-up and sustainable capital distributions are other major positives. Rising expenses and near-term macroeconomic turmoil are headwinds.
The Charles Schwab Corporation Price, Consensus and EPS Surprise
The Charles Schwab Corporation price-consensus-eps-surprise-chart | The Charles Schwab Corporation Quote
Currently, Schwab carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Earnings Dates & Expectations of Schwab's Peers
Here are some of Schwab’s peers that have yet to report quarterly results.
Robinhood (HOOD - Free Report) is slated to announce third-quarter 2026 numbers on Oct. 27.
In the past week, the Zacks Consensus Estimate for Robinhood’s quarterly earnings has moved higher to 56 cents. This implies an 8.2% decrease from the prior-year quarter.
LPL Financial (LPLA - Free Report) is also scheduled to announce quarterly numbers on Oct. 27.
In the past seven days, the Zacks Consensus Estimate for LPL Financial’s quarterly earnings has been revised lower at $5.69. This indicates a 9.4% rise on a year-over-year basis.