Charles Schwab SCHW posted record net revenues of $6.48 billion for the first quarter of 2026. The metric was up 16% year over year, with strength across all major revenue streams. The top line, however, missed the Zacks Consensus Estimate of $6.52 billion.
This weaker-than-expected revenue performance was the main reason behind 7.6% fall in Schwab shares during yesterday’s trading.
Nonetheless, supported by massive revenues and manageable expenses, SCHW’s adjusted earnings per share soared 38% from the prior-year quarter to $1.43. It surpassed the consensus estimate of $1.39.
The Charles Schwab Corporation Price, Consensus and EPS Surprise
The Charles Schwab Corporation price-consensus-eps-surprise-chart | The Charles Schwab Corporation Quote
Primary Drivers of Schwab’s Q1 Revenue Growth
Solid net new assets: Schwab attracted $139.9 billion in core net new assets during the quarter. Excluding a planned mutual fund clearing client deconversion, assets gathered were $158 billion, marking an annualized growth of 5.4%. The surge was driven by organic client growth and sustained transfers from competitors. This lifted the total client assets to $11.77 trillion.
Trading activity spike: Daily average trading volumes surged 34% from the prior-year quarter to 9.9 million trades, fueling an increase in trading revenues as clients responded to market volatility and opportunity. Schwab opened 1.3 million new brokerage accounts, highlighting persistent client engagement. Driven by these factors, the company’s trading revenues rose 20% to $1.1 billion. This marks the fourth straight quarter in which trading revenues exceeded $1 billion.
Higher net interest revenues (NIR): A favorable interest rate environment continued to benefit Schwab, with net interest margin rising 35 basis points year over year to 2.88%. Client sweep cash balances grew $7.8 billion to $461.5 billion, supporting both profitability and funding costs. At the end of the first quarter, Schwab’s average interest-earning assets were up 2% at $437.7 billion. Hence, NIR (SCHW’s biggest revenue source) increased 16% year over year to $3.14 billion.
Asset management fee growth: Revenues from asset management and administration rose 15% to $1.76 billion, supported by record adoption of wealth solutions and organic expansion. This was partly offset by weak equity market performance. At the end of March client assets receiving ongoing advisory services totaled $6.04 billion, up 19.4% year over year.
Other Factors That Influenced Schwab’s Q1 Earnings
Total non-interest expenses (GAAP basis) increased 5% to $3.29 billion. Excluding non-recurring items, adjusted total expenses were $3.15 billion, up 5% year over year.
As of March 31, 2026, the company had 39.1 million active brokerage accounts, 2.3 million banking accounts and 5.8 million corporate retirement plan participants.
At present, 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 who have yet to release quarterly numbers.
Interactive Brokers IBKR is scheduled to announce quarterly numbers on April 21.
In the past 30 days, the Zacks Consensus Estimate for Interactive Brokers’ quarterly earnings has been revised 1.6% upward to 62 cents. This indicates a 31.9% jump from the prior-year reported number.
Robinhood Markets HOOD is slated to announce first-quarter 2026 numbers on April 28.
In the past month, the Zacks Consensus Estimate for Robinhood’s quarterly earnings has moved 14.8% lower to 46 cents. This implies a 24.3% increase from the prior-year reported number.
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The Charles Schwab Corporation (SCHW): Free Stock Analysis Report
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Robinhood Markets, Inc. (HOOD): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).