Charles Schwab (NYSE:SCHW) executives said the company delivered record second-quarter results as client asset gathering, trading activity, lending demand and wealth management flows all strengthened.
President and CEO Rick Wurster said Schwab is benefiting from a financial services landscape that is “increasingly driven by investing,” with the company positioned at the “trusted center of the investing ecosystem.” He pointed to Schwab’s “true client size” strategy as a driver of growth across client acquisition, deeper relationships and diversified revenue.
Client Growth and Engagement Accelerate
Wurster said Schwab opened 2.7 million new brokerage accounts in the first half of the year and brought in $260 billion in core net new assets, representing nearly 20% year-over-year growth. He said the company remains confident in a long-term organic growth rate of 5% or higher.
During the question-and-answer session, Jefferies analyst Dan Fannon asked about the sustainability of net new asset trends. Wurster said Schwab remains “bullish” on net new assets, citing strength across Advisor Services, Investor Services and workplace-related businesses. He said clients are increasingly consolidating their financial lives with Schwab, including through wealth, lending and banking products.
Wurster also highlighted Schwab’s trading leadership, saying the firm is No. 1 in daily average trades and options contracts and executes about one-third of retail brokerage trades in the industry. CFO Mike Verdeschi said daily average trades reached 11.9 million in the quarter, contributing to a 28% increase in trading revenue to $1.2 billion.
Revenue, Margins and Balance Sheet
Verdeschi said total revenue rose 21% year over year to $7.1 billion. Net interest revenue increased 19%, helped by higher utilization of lending solutions, lower higher-cost borrowings at the banks and demand for long-short strategies. Asset management and administration fees rose 16% to $1.8 billion, supported by higher equity markets, asset gathering and client interest in Schwab’s wealth and asset management offerings.
Adjusted expenses increased 11% year over year, reflecting strong client engagement, the first full quarter of Forge and continued investment in growth initiatives, client experience, scale, efficiency and artificial intelligence. Schwab posted an adjusted pre-tax profit margin of 54.3%.
On the balance sheet, Verdeschi said total margin balances ended the quarter at $165.1 billion. Total bank loan balances reached $67 billion, up 33% from the prior-year period and 16% from year-end, led by new Pledged Asset Line originations. Transactional sweep cash increased by $24.2 billion in the quarter, driven largely by long-short demand and organic asset gathering.
Schwab’s adjusted Tier 1 leverage ratio finished the quarter at 6.8%, within the company’s 6.75% to 7% range. Verdeschi said the figure reflected support for business growth and client engagement, as well as net preferred equity redemption and $1 billion of common share repurchases.
Updated 2026 Outlook
Schwab raised its full-year 2026 financial scenario, with Verdeschi saying the company now expects total revenue growth of 17.5% to 18.5%. The company expects full-year net interest margin of 3.00% to 3.10%, with fourth-quarter net interest margin expected to finish in the 3.25% to 3.30% range.
The company now assumes approximately 13% full-year market appreciation and full-year daily average trades of 10.6 million, including a moderation from recent monthly levels due in part to a seasonal summer slowdown. Schwab also expects 5% organic growth for the year.
Annual expense growth is now expected to range from 9.5% to 10.5%. Verdeschi said underlying expenses remain in line with the 5.5% to 6.5% range Schwab discussed earlier in the year, with the higher total expense view driven by volume-related costs and Forge, which contributes about 100 basis points to year-over-year expense growth.
Wealth, Banking and New Capabilities
Wurster said Schwab is seeing a “bull market for advice,” benefiting both its RIA business and its proprietary retail advice offering, Schwab Wealth Advisory. He said Schwab Wealth Advisory has the highest client promoter score of any company offering and that flows into the product are growing strongly. Wurster said Schwab has only 2% share of the $37 trillion U.S. retail market, while just 5% of Schwab retail households use a fee-based advice solution.
Banking and lending were also emphasized as growth areas. Wurster said only 0.5% of Schwab clients currently use one of its lending products, compared with 4% across the industry. He said the digital Pledged Asset Line product is gaining adoption because clients can access liquidity without selling appreciated securities.
The company also discussed several product initiatives, including Schwab Crypto, private markets capabilities through Forge, expanded tax and estate services, and investments in artificial intelligence. Wurster said Schwab is on track to begin piloting crypto transfer capability by the end of the month and has invested in Paxos, a firm supporting Schwab Crypto.
On artificial intelligence, Wurster said Schwab launched Portfolio Insights in May and began an employee pilot of Schwab Assistant earlier this month. He said AI is helping personalize client experiences and improve productivity, noting that developer team productivity has improved by 15% to 20% over the past year.
Trading, Tokenization and Prediction Markets
In response to Piper Sandler analyst Patrick Moley, Wurster said Schwab believes elevated trading engagement is sustainable, citing growth among younger investors, increased options usage, AI-driven research and trading, and continued market interest around themes such as artificial intelligence and high-profile companies.
Asked about SpaceX-related activity, Wurster said there was “tremendous interest” from Schwab clients in participating in the IPO, but it did not meaningfully affect net new assets. Verdeschi said Schwab was not expecting much securities lending activity from SpaceX.
Wurster also addressed prediction markets, saying Schwab is working with Cboe on binary options but has not announced a timeline. He said Schwab is interested in prediction market information relevant to financial decisions and certain financial-related events, but not in sports or entertainment betting, which he characterized as gambling rather than investing.
On tokenization, Wurster said Schwab wants to support securities in whatever form clients prefer, while noting both benefits and drawbacks. He said the company is actively building and testing infrastructure, though it is not yet ready to disclose details of its wallet strategy.
About Charles Schwab (NYSE:SCHW)
Charles Schwab Corporation (NYSE: SCHW) is a diversified financial services firm that provides brokerage, banking, wealth management and advisory services to individual investors, independent investment advisors and institutional clients. Its primary offerings include retail brokerage accounts, online trading platforms, Schwab-branded mutual funds and exchange-traded funds (ETFs), retirement plan services, custodial services for independent Registered Investment Advisors (RIAs), and banking products through Charles Schwab Bank.
