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SCHWAB CHARLES CORP (SCHW)·Q3 2025 Earnings Summary

Executive Summary

  • Record quarter: Net revenues $6.135B (+27% y/y) and GAAP diluted EPS $1.26; adjusted EPS $1.31 (+70% y/y), with adjusted pre-tax margin 51.3% .
  • Broad-based strength: Net interest revenue +37% y/y to $3.050B, asset management fees +13% to $1.673B, trading revenue +25% to $0.995B .
  • Strong client engagement and asset gathering: Core NNA $137.5B (+44% y/y), total client assets $11.594T (+17% y/y), DATs 7.421M (+30% y/y), margin balances $97.2B (+16% vs YE24) .
  • Balance sheet progress: Transactional sweep cash +$13.5B q/q to $425.6B; bank supplemental funding reduced by $12.9B q/q to $14.8B, now within the firm’s business-as-usual range .
  • Versus estimates: Revenue beat ($6.135B vs $6.017B*) and EPS beat ($1.31 vs $1.245*) for Q3; beats also in Q1 and Q2 (see Estimates Context). Values retrieved from S&P Global.

What Went Well and What Went Wrong

What Went Well

  • “Record revenue and earnings per share” driven by “strengthening organic growth trends, increasing adoption of wealth solutions, and favorable macroeconomic tailwinds” (CEO) .
  • Net interest margin expanded 21 bps q/q to 2.86% on lower-cost liability reduction, strong securities lending, and increased lending utilization (CFO) .
  • Client growth and engagement: Core NNA $137.5B (+44% y/y), >1M new brokerage accounts for the 4th straight quarter; DATs 7.4M (+30% y/y) .
  • Ameritrade cohort improving: CEO cited rising satisfaction (CPS +11 points YTD) and increasing contributions to Managed Investing flows, with Thinkorswim adoption up sharply among legacy Schwab clients .

What Went Wrong

  • Expenses up: GAAP opex +4% y/y; adjusted opex +5% y/y as the firm invests in branches, hiring, and modernization; volume-related costs tied to elevated client activity (CFO) .
  • “Other” revenue declined 15% y/y to $0.170B and 35% q/q, a drag within the revenue mix .
  • Bank deposit account fee dynamics shifting: While BDA fees rose y/y, the firm is actively transferring balances (e.g., $3B in Q3) to its balance sheet to accelerate high-cost funding paydown, requiring continued ALM optimization .

Financial Results

Headline P&L vs prior periods and estimates

MetricQ3 2024Q2 2025Q3 2025
Total Net Revenues ($B)$4.847 $5.851 $6.135
GAAP Diluted EPS ($)$0.71 $1.08 $1.26
Adjusted Diluted EPS ($)$0.77 $1.14 $1.31
GAAP Pre-tax Margin (%)38.0% 47.9% 49.2%
Adjusted Pre-tax Margin (%)41.2% 50.1% 51.3%
Net Interest Margin (NIM, %)2.08% 2.65% 2.86%
Revenue vs S&P Global Consensus ($B)—$5.851 vs $5.735*$6.135 vs $6.017*
EPS vs S&P Global Consensus ($)—$1.14 vs $1.098*$1.31 vs $1.245*

Note: Values with * retrieved from S&P Global.

Revenue Mix

Net Revenues ($B)Q3 2024Q2 2025Q3 2025
Net Interest Revenue$2.222 $2.822 $3.050
Asset Mgmt & Admin Fees$1.476 $1.570 $1.673
Trading Revenue$0.797 $0.952 $0.995
Bank Deposit Account Fees$0.152 $0.247 $0.247
Other$0.200 $0.260 $0.170
Total Net Revenues$4.847 $5.851 $6.135

Operating Expenses and Profitability

Opex & ProfitabilityQ3 2024Q2 2025Q3 2025
Total Expenses ex-Interest ($B)$3.005 $3.048 $3.114
Adjusted Expenses ($B)$2.852 $2.920 $2.987
GAAP Net Income ($B)$1.408 $2.126 $2.358
Net Income to Common ($B)$1.299 $1.977 $2.277

KPIs

KPIQ3 2024Q2 2025Q3 2025
Core Net New Assets ($B)90.8 73.6 137.5
Total Client Assets ($T)9.921 10.757 11.594
New Brokerage Accounts (000s)972 1,098 1,143
DATs (000s)5,697 7,571 7,421
Margin Balances ($B, EOP)73.0 83.4 97.2
Sweep Cash ($B, EOP)—412.1 425.6
Bank Supplemental Funding ($B, EOP)—27.7 14.8
Common Repurchases ($B)—$0.351 $2.7
Tier 1 Leverage (GAAP, %)—9.8% 9.7%
Adjusted Tier 1 Leverage (%)—7.2% 7.3%

Other relevant Q3 press release datapoint

  • STAX score rose to 46.12 in September, signaling continued retail engagement and net equity buying amidst AI-adjacent rotation .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Corporate tax rateOngoing—~23%–24% forward (note: Q3 EPS had ~$0.03 state tax benefit) Established
Net Interest MarginQ4 2025—~2.8% expected New
Expense growth (adjusted)FY 2025Top-end ~5.25% (July scenario) “Up against that or a bit above” depending on volumes Tilted higher (volume-driven)
BDA operating rangeOngoing—$60–$90B; flexibility to move balances between BDA and balance sheet Established
Supplemental funding (banks)Ongoing—Business-as-usual range ~$5–$15B; Q3 at $14.8B Within range
Capital objectiveOngoingAdjusted Tier 1 leverage target 6.75%–7% “Slightly above” upper bound in Q3; continue capital return while prioritizing flexibility Above target (positive)
DividendOngoing$0.27/qtr (raised in Q1) $0.27 declared in Q3 (maintained) Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2)Current Period (Q3)Trend
Organic asset gathering & accountsQ1: Core NNA $137.7B; >1.2M new accounts . Q2: Core NNA $80.3B; >1.1M new accounts .Core NNA $137.5B; >1.14M new accounts; total client assets $11.594T .Strengthening; back to “historic range” trajectory .
Ameritrade integration & cohortQ1/Q2: Ongoing integration; Thinkorswim within Schwab’s offer .CPS +11 pts YTD; Ameritrade cohort contributing ~30% of managed investing flows; adoption of Thinkorswim up sharply .Improving satisfaction and NNA contribution.
Trading engagementQ1: DATs +17% q/q . Q2: DATs 7.571M (+38% y/y) .DATs 7.421M (+30% y/y); clients “sell the rip/buy the dip” behavior supports sustained activity .Elevated and broad-based.
Balance sheet & fundingQ1: Supplemental funding $38.1B; NIM 2.53% . Q2: Supplemental funding $27.7B; NIM 2.65% .Supplemental funding $14.8B; NIM 2.86%; BDA range $60–$90B and transfers to balance sheet to reduce funding .Material progress; entering BAU ranges.
Lending growth (PAL & margin)Q1/Q2: Margin balances ~83–84B; PAL momentum .PAL $23.4B (+37% y/y); margin $97.2B; hedging used to manage rate profile .Strong growth; diversified ALM toolkit.
AI/technology enablementQ1/Q2: Service modernization backdrop .“Service AI Assistant” and “Schwab Knowledge Assistant” to improve efficiency and service outcomes .Scaling AI in operations.
Crypto strategyQ1/Q2: Crypto ETP participation .~20% share of spot crypto ETPs; plan to launch spot crypto in 2026, building custody/books/records; profitability opportunity with competitive pricing (CEO) .Strategically expanding with long-term build.
Macro rates & depositsQ1: Sweep cash $407.8B; tax seasonality . Q2: Sweep cash $412.1B .Sweep cash $425.6B; lower-rate trajectory expected to add cash; October engagement likely to lift EPS ~2% vs July scenario top-end .Supportive macro tailwinds.

Management Commentary

  • “Strengthening organic growth trends, increasing adoption of wealth solutions, and favorable macroeconomic tailwinds powered another quarter of record revenue and earnings per share.” — President & CEO Rick Wurster .
  • “Client transactional sweep cash grew by $13.5 billion versus 2Q25, helping us to further reduce higher cost bank funding by $12.9 billion to $14.8 billion at quarter-end.” — CFO Mike Verdeschi .
  • “Adjusted pretax margins exceeding 51% and adjusted earnings per share of $1.31… third quarter EPS included a ~$0.03 benefit related to state tax matters.” — CFO Mike Verdeschi .
  • “We remain on track to launch spot crypto in 2026… with education, research, risk management, and service at great value.” — President & CEO Rick Wurster .
  • “We are using AI to supercharge our professionals… Service AI Assistant helps our client-facing professionals create post-call summaries and notes.” — President & CEO Rick Wurster .

Q&A Highlights

  • Advisor Services outperformance: NNA acceleration across existing advisor growth, new client wins, and transitions; improved transfer-of-asset ratios; Ameritrade advisors embracing combined platform .
  • Deposits trajectory: Normal seasonal behavior; lower-rate path tends to pick up cash, supporting earnings; sweep cash likely to continue building .
  • Crypto: Strategy balances profitability and client value; competitive pricing feasible given industry spreads; goal is broad custody integration and long-term capability .
  • ALM & reinvestment: Target duration ~2–4 years; BDA provides flexibility (floating or fixed buckets) to manage capital/liquidity/IR risk; continued securities reinvestment lift as legacy <2% yields roll .
  • FY25 scenario update: October engagement implies potential ~2% EPS lift vs July scenario top-end; expenses could approach or slightly exceed 5.25% top-end due to volume; NIM ~2.8% expected in Q4 .

Estimates Context

Results versus S&P Global consensus:

MetricQ1 2025Q2 2025Q3 2025
Revenue ($) Actual$5,599,000,000 $5,851,000,000 $6,135,000,000
Revenue ($) Consensus Mean$5,538,443,920*$5,735,337,510*$6,017,309,740*
Primary EPS Actual ($)1.04 1.14 1.31
Primary EPS Consensus Mean ($)1.00804*1.09818*1.24507*
  • Q3: Revenue and EPS both beat; Q2 and Q1 also modest beats on revenue and EPS. Values retrieved from S&P Global.

Key Takeaways for Investors

  • Momentum inflection: Four straight quarters of double-digit growth across major revenues, with NIM expansion and funding normalization driving earnings power; expect NIM ~2.8% in Q4 (supportive to NII) .
  • Deposit and cash dynamics: Seasonal and macro tailwinds (lower rates) likely to continue adding sweep cash, providing funding optionality and supporting reinvestment at higher yields than legacy book .
  • Engagement underpins operating leverage: Elevated DATs, record margin balances, and expanding Managed Investing flows support diversified top line; expense growth is volume-driven but margins remain strong .
  • Capital flexibility: With adjusted Tier 1 leverage slightly above the 6.75%–7% objective and supplemental funding in BAU range, Schwab can balance client-driven balance sheet growth with opportunistic buybacks (e.g., $2.7B in Q3) .
  • Ameritrade cohort upside: Rising satisfaction and deeper product adoption suggest continued convergence toward legacy Schwab growth rates, sustaining NNA trajectory .
  • Strategic catalysts: AI-enabled service improvements and the planned 2026 spot crypto launch expand capabilities and potential revenue pools; watch regulatory/timing milestones and early client adoption .
  • Trading implications: Near-term EPS trajectory benefited by October engagement; beats vs consensus and visible NIM tailwinds are positive; monitor “Other” revenue softness and volume-driven expense as balances shift toward securities and PAL .