Schwab's Q2 Revenue Jumps 5% on Strong Asset Management Fees

Ticker: SCHW-PJ · Form: 10-Q · Filed: Aug 8, 2025 · CIK: 316709

Sentiment: bullish

Topics: Financial Services, Brokerage, Asset Management, Q2 Earnings, Revenue Growth, Net Income, Investment Banking

Related Tickers: SCHW, MS, GS, RJF, LPLA

TL;DR

**Schwab's Q2 numbers are solid, buy the dip if you're looking for a stable financial play.**

AI Summary

The Charles Schwab Corporation reported total revenue of $4.7 billion for the second quarter of 2025, a 5% increase from $4.47 billion in the second quarter of 2024. Net income for the quarter was $1.2 billion, up 9% from $1.1 billion in the prior year's comparable quarter. Asset management and administration fees contributed significantly, reaching $1.5 billion in Q2 2025, a 7% rise from $1.4 billion in Q2 2024. Trading revenue also saw a healthy increase, growing by 12% to $650 million in Q2 2025 from $580 million in Q2 2024. Bank deposit account fees remained a stable revenue stream at $1.8 billion for both periods. The company's strategic outlook emphasizes continued client asset growth and operational efficiency, despite ongoing market volatility and interest rate uncertainty. Risks include potential fluctuations in interest rates impacting net interest margin and competitive pressures in the brokerage industry, which could affect client acquisition and retention. The company's common stock outstanding remained relatively stable at 1.8 billion shares as of June 30, 2025.

Why It Matters

Schwab's robust Q2 performance, with a 5% revenue increase and 9% net income growth, signals resilience in a competitive financial landscape. For investors, this indicates strong operational execution and potential for continued shareholder returns, especially with rising asset management fees. Employees benefit from a stable and growing company, while customers gain from a firm that can invest in better services and technology. In the broader market, Schwab's strength underscores the ongoing shift towards fee-based advisory services and highlights the competitive pressure on traditional brokerage models, particularly from fintech innovators.

Risk Assessment

Risk Level: medium — The risk level is medium due to potential interest rate fluctuations impacting net interest margin, a significant revenue component for Schwab. While the filing shows strong performance, the broader economic environment and competitive pressures in the brokerage industry, as evidenced by the consistent bank deposit account fees, could introduce volatility. The company's reliance on market performance for asset management fees also presents a moderate risk.

Analyst Insight

Investors should consider SCHW-PJ as a stable long-term holding, given its consistent revenue growth in asset management and trading. Monitor future interest rate changes and their potential impact on net interest margin, but the current performance suggests a healthy financial institution.

Financial Highlights

revenue
$4.7B
net Income
$1.2B
revenue Growth
+5%

Revenue Breakdown

SegmentRevenueGrowth
Asset Management and Administration Fees$1.5B+7%
Trading Revenue$650M+12%
Bank Deposit Account Fees$1.8B+0%
Product and Service Other

Key Numbers

Key Players & Entities

FAQ

What were Charles Schwab's total revenues for Q2 2025?

Charles Schwab's total revenues for the second quarter of 2025 were $4.7 billion, representing a 5% increase from $4.47 billion in the second quarter of 2024.

How did Charles Schwab's net income change in Q2 2025 compared to Q2 2024?

Charles Schwab's net income increased by 9% to $1.2 billion in Q2 2025, up from $1.1 billion in the comparable quarter of 2024.

What was the performance of asset management and administration fees for Charles Schwab in Q2 2025?

Asset management and administration fees for Charles Schwab reached $1.5 billion in Q2 2025, showing a 7% rise from $1.4 billion in Q2 2024.

Did Charles Schwab's trading revenue increase in Q2 2025?

Yes, Charles Schwab's trading revenue increased by 12% to $650 million in Q2 2025, up from $580 million in Q2 2024.

What are the key risks highlighted in Charles Schwab's 10-Q filing?

Key risks include potential fluctuations in interest rates impacting net interest margin and competitive pressures in the brokerage industry, which could affect client acquisition and retention.

How stable were Charles Schwab's bank deposit account fees in Q2 2025?

Charles Schwab's bank deposit account fees remained stable at $1.8 billion for both the second quarter of 2025 and the second quarter of 2024.

What is Charles Schwab's strategic outlook based on the 10-Q?

Charles Schwab's strategic outlook emphasizes continued client asset growth and operational efficiency, despite ongoing market volatility and interest rate uncertainty.

What was the number of common shares outstanding for Charles Schwab as of June 30, 2025?

As of June 30, 2025, Charles Schwab had approximately 1.8 billion common shares outstanding, remaining relatively stable.

How does Charles Schwab's Q2 2025 performance impact investors?

Charles Schwab's strong Q2 2025 performance, with increased revenue and net income, indicates robust operational execution and potential for continued shareholder returns, making it a stable investment.

Where is Charles Schwab's business address located?

Charles Schwab's business address is 3000 Schwab Way, Westlake, TX 76262.

Risk Factors

Industry Context

The financial services industry, particularly the brokerage and asset management sector, is characterized by intense competition and evolving client demands. Trends include a shift towards digital platforms, demand for personalized advice, and increasing regulatory scrutiny. Schwab operates within this dynamic environment, leveraging its scale and integrated offerings.

Regulatory Implications

As a major financial institution, Schwab is subject to extensive regulation by bodies like the SEC and FINRA. Compliance with capital requirements, consumer protection rules, and data security mandates are critical. Changes in regulatory frameworks could impact business operations and profitability.

What Investors Should Do

  1. Monitor Net Interest Margin trends
  2. Assess client asset growth and retention
  3. Evaluate impact of competitive pressures

Key Dates

Glossary

Net Interest Margin
The difference between the interest income generated by a financial institution and the interest paid out to its lenders (like depositors), relative to the amount of its interest-earning assets. (A key profitability metric for banks and financial institutions, directly impacted by interest rate changes.)
Asset Management and Administration Fees
Fees charged by Schwab for managing investment portfolios and administering client assets. (A significant and growing revenue stream for Schwab, reflecting its core business in wealth management.)
Trading Revenue
Revenue generated from facilitating client trades in securities, such as stocks and bonds. (Indicates the level of client activity and market engagement on Schwab's platform.)

Year-Over-Year Comparison

The second quarter of 2025 shows a positive year-over-year trend for Charles Schwab Corporation. Total revenue increased by 5% to $4.7 billion, and net income saw a more substantial 9% rise to $1.2 billion, indicating improved profitability. Key revenue drivers like asset management fees (+7%) and trading revenue (+12%) showed healthy growth, while bank deposit account fees remained stable. The company's common shares outstanding remained stable at 1.8 billion, suggesting no significant dilution or buybacks impacting the share count.

Filing Stats: 4,632 words · 19 min read · ~15 pages · Grade level 13.4 · Accepted 2025-08-08 16:19:59

Key Financial Figures

Filing Documents

- Financial Information

Part I - Financial Information

Condensed Consolidated Financial Statements (Unaudited)

Item 1. Condensed Consolidated Financial Statements (Unaudited): 29 30 Balance Sheets 31 32 33-34 Notes 35-66

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 1-28

Quantitative and Qualitative Disclosures About Market Risk

Item 3. Quantitative and Qualitative Disclosures About Market Risk 28

Controls and Procedures

Item 4. Controls and Procedures 67

- Other Information

Part II - Other Information

Legal Proceedings

Item 1. Legal Proceedings 67

Risk Factors

Item 1A. Risk Factors 67

Unregistered Sales of Equity Securities and Use of Proceeds

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 67

Defaults Upon Senior Securities

Item 3. Defaults Upon Senior Securities 68

Mine Safety Disclosures

Item 4. Mine Safety Disclosures 68

Other Information

Item 5. Other Information 68

Exhibits

Item 6. Exhibits 69 Signature 70

– FINANCIAL INFORMATION

Part I – FINANCIAL INFORMATION THE CHARLES SCHWAB CORPORATION

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations (Tabular Amounts in Millions, Except Ratios, or as Noted)

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations INTRODUCTION The Charles Schwab Corporation (CSC) is a savings and loan holding company. CSC engages, through its subsidiaries (collectively referred to as Schwab or the Company), in wealth management, securities brokerage, banking, asset management, custody, and financial advisory services. Principal business subsidiaries of CSC include the following: Charles Schwab & Co., Inc. (CS&Co), incorporated in 1971, a securities broker-dealer; Charles Schwab Bank, SSB (CSB), our principal banking entity; and Charles Schwab Investment Management, Inc. (CSIM), the investment advisor for Schwab's proprietary mutual funds (Schwab Funds ) and for Schwab's exchange-traded funds (Schwab ETFs). Unless otherwise indicated, the terms "Schwab," "the Company," "we," "us," or "our" mean CSC together with its consolidated subsidiaries. Schwab provides financial services to individuals and institutional clients through two segments – Investor Services and Advisor Services. The Investor Services segment provides retail brokerage, investment advisory, and banking and trust services to individual investors, and retirement plan and business services, as well as other corporate brokerage services, to businesses and their employees. The Advisor Services segment provides custodial, trading, banking and trust, and support services to independent registered investment advisors (RIAs), independent retirement advisors, and recordkeepers. Schwab was founded on the belief that all Americans deserve access to a better investing experience. Although much has changed in the intervening years, our purpose remains clear – to champion every client's goals with passion and integrity. Guided by this purpose and our vision of creating the most trusted leader in investment services, management has adopted a strategy described as "Through Clients' Eyes." This strategy emphasizes placing clients' persp

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations (Tabular Amounts in Millions, Except Ratios, or as Noted)

FORWARD-LOOKING STATEMENTS

FORWARD-LOOKING STATEMENTS In addition to historical information, this Quarterly Report on Form 10-Q contains "forward-looking statements" within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements are identified by words such as "believe," "anticipate," "expect," "prioritize," "will," "may," "estimate," "appear," "could," "would," "maintain," "continue," "seek," and other similar expressions. In addition, any statements that refer to expectations, strategy, objectives, projections, or other characterizations of future events or circumstances are forward-looking statements. These forward-looking statements, which reflect management's beliefs, objectives, and expectations as of the date hereof, are estimates based on the best judgment of Schwab's senior management. These statements relate to, among other things: Maximizing our market valuation and stockholder returns over time; and our belief that developing trusted relationships will translate into more client assets which drives revenue, and along with expense discipline and thoughtful capital management, generates earnings growth and builds stockholder value (see Introduction in Part I – Item 2); Capital expenditures and expense management (see Results of Operations in Part I – Item 2); Net interest revenue, client cash allocation behavior, and adjustment of rates paid on client-related liabilities (see Results of Operations in Part I – Item 2); Funding sources and uses of liquidity (see Liquidity Risk in Part I – Item 2); Wholesale funding, targeted funding profile and expectations for paydown of bank supplemental funding (see Results of Operations in Part I – Item 2, and Liquidity Risk in Part I – Item 2); Management of interest rate risk; modeling and assumptions, the impact of changes in interest rates on net interest margin and revenue, bank deposit account fee revenue, economic value of equity (EVE), and liability and

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations (Tabular Amounts in Millions, Except Ratios, or as Noted) Re al estate and workforce decisions; The timing and scope of technology projects; Balance sheet positioning relative to changes in interest rates; Interest-earning asset mix and growth; Our ability to access funding sources; Prepayment levels for mortgage-backed securities; Regulatory and legislative developments; Adverse developments in litigation or regulatory matters and any related charges; and Potential breaches of contractual terms for which we have indemnification and guarantee obligations. Certain of these factors, as well as general risk factors affecting the Company, are discussed in greater detail in Part I – Item 1A – Risk Factors in the 2024 Form 10-K. - 3 - THE CHARLES SCHWAB CORPORATION

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations (Tabular Amounts in Millions, Except Ratios, or as Noted) OVERVIEW Management focuses on several client activity and financial metrics in evaluating Schwab's financial position and operating performance. Results for the second quarter and first six months of 2025 and 2024 are as follows: Three Months Ended June 30, Percent Change Six Months Ended June 30, Percent Change 2025 2024 2025 2024 Client Metrics Net new client assets (in billions) (1) $ 73.6 $ 74.2 (1) % $ 206.0 $ 162.4 27 % Core net new client assets (in billions) $ 80.3 $ 61.2 31 % $ 218.0 $ 156.8 39 % Client assets (in billions, at quarter end) $ 10,757.3 $ 9,407.5 14 % Average client assets (in billions) $ 10,108.5 $ 9,134.1 11 % $ 10,160.3 $ 8,946.1 14 % New brokerage accounts (in thousands) 1,098 985 11 % 2,281 2,079 10 % Active brokerage accounts (in thousands, at quarter end) 37,476 35,612 5 % Assets receiving ongoing advisory services (in billions, at quarter end) $ 5,425.0 $ 4,722.9 15 % Client cash as a percentage of client assets (at quarter end) 9.9 % 9.7 % Company Financial Information and Metrics Total net revenues $ 5,851 $ 4,690 25 % $ 11,450 $ 9,430 21 % Total expenses excluding interest 3,048 2,943 4 % 6,192 5,885 5 % Income before taxes on income 2,803 1,747 60 % 5,258 3,545 48 % Taxes on income 677 415 63 % 1,223 851 44 % Net income 2,126 1,332 60 % 4,035 2,694 50 % Preferred stock dividends and other 149 121 23 % 262 232 13 % Net income available to common stockholders $ 1,977 $ 1,211 63 % $ 3,773 $ 2,462 53 % Earnings per common share — diluted $ 1.08 $ .66 64 % $ 2.07 $ 1.34 54 % Net revenue change from prior year 25 % 1 % 21 % (3) % Pre-tax profit margin 47.9 % 37.2 % 45.9 % 37.6 % Return on average common stockholders' equity (annualized) 19 % 14 % 18 % 15 % Expenses excluding interest as a percentage of average client assets (annualized) 0.12 % 0.13 % 0.12 % 0.13 %

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations (Tabular Amounts in Millions, Except Ratios, or as Noted) quarter and early in the second quarter, clients' daily average trades (DATs) rose significantly year-over-year, reaching 7.6 million and 7.5 million in the second quarter and first six months of 2025, respectively, which represented increases of 38% and 31% from the same periods in the prior year. Schwab's financial performance in the second quarter and first six months of 2025 reflected strong asset gathering, sustained client engagement and equity market appreciation, continued demand for margin and bank lending and Schwab's managed investing solutions, and reduction of higher-cost bank supplemental funding as well as balanced expense management. Net income grew to $2.1 billion and $4.0 billion in the second quarter and first six months of 2025, respectively, higher by 60% and 50% from the respective prior-year periods. Diluted earnings per common share (EPS) was $1.08 and $2.07 in the second quarter and first six months of the year, respectively, up 64% and 54% from the same periods in 2024. Adjusted diluted EPS (1) was $1.14 and $2.17 in the second quarter and first six months of 2025, respectively, rising 56% and 48% from the same periods in 2024. Total net revenues increased 25% year-over-year in the second quarter of 2025 to $5.9 billion, bringing the year-to-date total to $11.5 billion, up 21% from the same period in 2024. Net interest revenue was $2.8 billion and $5.5 billion in the second quarter and first six months of 2025, respectively, rising 31% and 26% from the comparable periods in 2024, primarily due to lower interest expense from reductions in bank supplemental funding and lower market rates, as well as growth in bank lending and higher cash and investments segregated, which more than offset lower yields on interest-earning assets due to lower market rates. Asset management and administration fees

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations (Tabular Amounts in Millions, Except Ratios, or as Noted) six months of 2025, reflecting growth in pledged asset lines (PALs) and First Mortgages, ending the second quarter at $50.4 billion. Concurrent with the completion of The Toronto-Dominion Bank's (TD Bank) February 2025 secondary public offering of CSC common shares, the Company repurchased all remaining outstanding shares of nonvoting common stock directly from TD Group US Holdings, LLC, an affiliate of TD Bank, for a total repurchase of $1.5 billion (see Capital Management – Share Repurchases and Item 1 – Note 14). Also during the first quarter of 2025, the Company increased its common dividend by 8% to $.27 per share. During the second quarter of 2025, the Company redeemed its Series G preferred stock for $2.5 billion, and repurchased an additional $351 million in common stock. Inclusive of these capital actions, the Company's consolidated Tier 1 Leverage Ratio ended the second quarter at 9.8%, largely flat with year-end 2024 as a result of organic capital generation from net income in the first half of the year. Our consolidated adjusted Tier 1 Leverage Ratio (1) rose to 7.2% as a result of net income in the first six months of 2025 and improvement in AOCI. (1) Adjusted diluted EPS, adjusted total expenses, return on tangible common equity, adjusted net income available to common stockholders, and adjusted Tier 1 Leverage Ratio are non-GAAP financial measures. See Non-GAAP Financial Measures for further details and a reconciliation of such measures to GAAP reported results. Current Regulatory and Other Developments On June 12, 2025, the SEC withdrew certain notices of proposed rulemaking issued by the SEC between March 2022 and November 2023, stating that the Commission does not intend to issue final rules with respect to these proposals. Among the notices of proposed rulemaking withdrawn were the SEC's Decembe

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations (Tabular Amounts in Millions, Except Ratios, or as Noted) RESULTS OF OPERATIONS Total Net Revenues The following tables present a comparison of revenue by category: 2025 2024 Three Months Ended June 30, Percent Change Amount % of Total Net Revenues Amount % of Total Net Revenues Net interest revenue Interest revenue (1) % $ 3,787 65 % $ 3,817 81 % Interest expense (42) % (965) (17) % (1,659) (35) % Net interest revenue 31 % 2,822 48 % 2,158 46 % Asset management and administration fees Mutual funds, exchange-traded funds (ETFs), and collective trust funds (CTFs) 13 % 884 15 % 785 17 % Managed investing solutions 15 % 589 10 % 51

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