Charles Schwab’s SCHW second-quarter 2026 adjusted earnings of $1.62 per share outpaced the Zacks Consensus Estimate of $1.53. The bottom line soared 42% year over year.
Shares of the company lost more than 1.5% in pre-market trading despite posting better-than-expected results on the solid market volatility, rising client engagement and record asset growth.
Quarterly results benefited from the robust performance of the asset management business and record trading revenues. Higher net interest revenues (NIR) and solid brokerage account numbers were other positives. However, an increase in expenses was the undermining factor.
Results excluded transaction-related costs. After considering these, net income (GAAP basis) was $2.8 billion or $1.54 per share, up from $2.13 billion or $1.08 per share in the year-ago quarter.
SCHW’s Revenues at Record Level, Expenses Rise
Quarterly net revenues were a record $7.07 billion, jumping 21% year over year. The increase was driven by higher NIR (up 19%), trading revenue (28%), bank deposit account fees (35%) and asset management and administration fees (16%). The top line easily surpassed the Zacks Consensus Estimate of $6.89 billion.
Total non-interest expenses (GAAP basis) increased 12% to $3.4 billion. Excluding non-recurring items, adjusted total expenses were $3.23 billion, up 11% year over year.
The pre-tax profit margin (adjusted) increased to 54.3% from 50.1% in the prior-year quarter.
At the end of the second quarter, Schwab’s average interest-earning assets rose 5% to $445 billion.
As of June 30, 2026, the annualized return on equity was 25%, up from 19% in the prior-year quarter.
Schwab’s Other Business Metrics
As of June 30, 2026, Schwab’s total client assets reached a record $13.08 trillion (up 22% year over year). During the reported quarter, net new assets brought by new and existing clients were $118.7 billion.
Schwab added 1.4 million new brokerage accounts during the quarter. As of June 30, 2026, the company had 39.8 million active brokerage accounts, 2.4 million banking accounts and 5.9 million corporate retirement plan participants.
Schwab’s Share Repurchase Update
During the reported quarter, Schwab repurchased 11.2 million shares for $1 billion.
Our Take on Schwab
A steady decline in funding costs and relatively lower rates will support Schwab’s margins. Strategic acquisitions, a rise in advice solution fees 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 #2 (Buy). 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 are yet to come out with quarterly numbers.
Robinhood HOOD is slated to announce second-quarter 2026 numbers on July 29.
In the past week, the Zacks Consensus Estimate for Robinhood’s quarterly earnings has moved 2.5% lower to 39 cents. This implies a 7.1% decrease from the prior-year reported number.
LPL Financial LPLA is scheduled to announce quarterly numbers on July 30.
In the past seven days, the Zacks Consensus Estimate for LPL Financial’s quarterly earnings has remained unchanged at $5.39. This indicates a 19.5% jump from the prior-year reported number.
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The Charles Schwab Corporation (SCHW): Free Stock Analysis Report
LPL Financial Holdings Inc. (LPLA): Free Stock Analysis Report
Robinhood Markets, Inc. (HOOD): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).