Schwab's Q3 Earnings Soar 67% on Strong Client Growth, Lower Funding Costs

Ticker: SCHW-PJ · Form: 10-Q · Filed: Nov 7, 2025 · CIK: 316709

Sentiment: bullish

Topics: Wealth Management, Brokerage, Financial Services, Earnings Growth, Client Assets, Interest Rates, Expense Management

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

TL;DR

**Schwab absolutely crushed it this quarter, proving their 'no trade-offs' strategy is printing money, making them a solid buy.**

AI Summary

The Charles Schwab Corporation (SCHW) reported robust financial performance for the third quarter and first nine months of 2025, driven by strong client asset gathering and sustained engagement. Net income surged by 67% to $2.4 billion in Q3 2025 and by 56% to $6.4 billion for the first nine months, compared to the same periods in 2024. Total net revenues increased 27% year-over-year to $6.1 billion in Q3 2025, reaching $17.6 billion year-to-date, a 23% increase. This growth was primarily fueled by a 37% rise in net interest revenue to $3.1 billion in Q3, attributed to lower interest expense from reduced bank supplemental funding and growth in bank and margin lending. Asset management and administration fees grew 13% to $1.7 billion in Q3, while trading revenue increased 25% to $995 million due to higher trading volume. Expenses excluding interest rose moderately by 4% to $3.1 billion in Q3, reflecting ongoing investments. The company also saw a significant increase in core net new client assets, up 44% to $137.5 billion in Q3 2025, and a 6% increase in active brokerage accounts to 38.0 million.

Why It Matters

Schwab's impressive Q3 2025 results, particularly the 67% net income surge and 27% revenue growth, signal strong operational efficiency and client confidence in a dynamic market. For investors, this demonstrates Schwab's ability to monetize client assets effectively, even with a Federal Reserve rate cut. Employees benefit from a growing company making strategic investments, while customers gain from enhanced capabilities and competitive offerings. In the broader market, Schwab's performance underscores its competitive edge against rivals like Fidelity and Vanguard, solidifying its position as a dominant force in wealth management and brokerage services, especially with its 'no trade-offs' approach.

Risk Assessment

Risk Level: medium — While Schwab shows strong growth, the filing highlights risks such as 'General economic and market conditions, including the level of interest rates, equity market valuations and volatility' and 'Client cash allocations and sensitivity to deposit rates.' The Federal Reserve's 25 basis point rate cut in September 2025, the first since December 2024, indicates a potential shift in the interest rate environment which could impact net interest revenue, despite current gains from lower funding costs.

Analyst Insight

Investors should consider increasing their exposure to SCHW, given its robust client asset growth, significant net income increase, and effective expense management. The company's ability to reduce higher-cost bank supplemental funding while expanding lending offerings suggests strong financial discipline and strategic positioning for continued profitability, even with potential interest rate fluctuations.

Key Numbers

Key Players & Entities

FAQ

How did Charles Schwab's net income perform in Q3 2025?

Charles Schwab's net income for the third quarter of 2025 was $2.4 billion, representing a significant 67% increase compared to the same period in 2024.

What were the key drivers of Schwab's revenue growth in Q3 2025?

Total net revenues grew 27% to $6.1 billion in Q3 2025, primarily driven by a 37% increase in net interest revenue to $3.1 billion, a 13% rise in asset management and administration fees to $1.7 billion, and a 25% increase in trading revenue to $995 million.

How did Schwab's client assets and accounts grow in Q3 2025?

Core net new client assets totaled $137.5 billion in Q3 2025, up 44% year-over-year. Active brokerage accounts reached 38.0 million, a 6% increase, and 1.1 million new brokerage accounts were opened in the quarter, up 18%.

What was the impact of interest rate changes on Schwab's Q3 2025 performance?

The Federal Reserve reduced the target federal funds overnight rate by 25 basis points in September 2025. Schwab's net interest revenue benefited from lower interest expense due to reductions in bank supplemental funding and lower rates on funding sources, despite lower yields on interest-earning assets.

What is Schwab's strategy for maximizing stockholder returns?

Schwab's strategy, 'Through Clients' Eyes,' emphasizes placing clients' needs first, offering a broad range of products with transparency and value, and coupling scale with expense discipline. Management believes this approach maximizes market valuation and stockholder returns over time.

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

Key risks include general economic and market conditions, interest rate levels, equity market valuations and volatility, client cash allocations and sensitivity to deposit rates, and competitive pressure on pricing.

How did Schwab manage its expenses in Q3 2025?

Total expenses excluding interest increased moderately by 4% to $3.1 billion in Q3 2025. This reflects ongoing investments to support business growth and enhance client-serving capabilities, while driving incremental efficiencies.

What is Schwab's return on average common stockholders' equity for Q3 2025?

Schwab's return on average common stockholders' equity was 21% for the third quarter of 2025, a significant increase from 14% in the comparable prior-year period, driven by higher net income.

What is the significance of Schwab's acquisition of Forge Global Holdings, Inc.?

The acquisition of Forge Global Holdings, Inc. is expected to enhance Schwab's ability to meet the evolving needs of investors by incorporating Forge's private markets capabilities, expanding Schwab's product offerings.

What is Schwab's current market opportunity in the U.S.?

Management estimates that investable wealth in the U.S. exceeds $75 trillion. With Schwab's $11.59 trillion in client assets, there remains substantial opportunity for growth, which the company aims to capture through trusted client relationships.

Filing Stats: 4,596 words · 18 min read · ~15 pages · Grade level 13.4 · Accepted 2025-11-07 16:17:24

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 35-67

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 68

- Other Information

Part II - Other Information

Legal Proceedings

Item 1. Legal Proceedings 68

Risk Factors

Item 1A. Risk Factors 68

Unregistered Sales of Equity Securities and Use of Proceeds

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 68

Defaults Upon Senior Securities

Item 3. Defaults Upon Senior Securities 69

Mine Safety Disclosures

Item 4. Mine Safety Disclosures 69

Other Information

Item 5. Other Information 69

Exhibits

Item 6. Exhibits 70 Signature 71

– 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, funding strategy, 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 asset d

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 ability to close the acquisition of Forge on the anticipated terms and timing; required regulatory approvals and approval by Forge's stockholders; disruptions to Forge's business as a result of the announcement and pendency of the acquisition; and the ability and timeframe to integrate the business and realize the anticipated benefits; Our ability to monetize client assets; Our ability to support client activity levels; Increased compensation and other costs; 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 third quarter and first nine months of 2025 and 2024 are as follows: Three Months Ended September 30, Percent Change Nine Months Ended September 30, Percent Change 2025 2024 2025 2024 Client Metrics Net new client assets (in billions) (1) $ 134.4 $ 90.8 48 % $ 340.4 $ 253.2 34 % Core net new client assets (in billions) $ 137.5 $ 95.3 44 % $ 355.5 $ 252.1 41 % Client assets (in billions, at quarter end) $ 11,593.9 $ 9,920.5 17 % Average client assets (in billions) $ 11,151.9 $ 9,594.9 16 % $ 10,490.8 $ 9,162.4 14 % New brokerage accounts (in thousands) 1,143 972 18 % 3,424 3,051 12 % Active brokerage accounts (in thousands, at quarter end) 37,963 35,982 6 % Assets receiving ongoing advisory services (in billions, at quarter end) $ 5,809.2 $ 5,018.9 16 % Client cash as a percentage of client assets (at quarter end) 9.4 % 9.5 % Company Financial Information and Metrics Total net revenues $ 6,135 $ 4,847 27 % $ 17,585 $ 14,277 23 % Total expenses excluding interest 3,114 3,005 4 % 9,306 8,890 5 % Income before taxes on income 3,021 1,842 64 % 8,279 5,387 54 % Taxes on income 663 434 53 % 1,886 1,285 47 % Net income 2,358 1,408 67 % 6,393 4,102 56 % Preferred stock dividends and other 81 109 (26) % 343 341 1 % Net income available to common stockholders $ 2,277 $ 1,299 75 % $ 6,050 $ 3,761 61 % Earnings per common share — diluted $ 1.26 $ .71 77 % $ 3.33 $ 2.05 62 % Net revenue change from prior year 27 % 5 % 23 % (1) % Pre-tax profit margin 49.2 % 38.0 % 47.1 % 37.7 % Return on average common stockholders' equity (annualized) 21 % 14 % 20 % 14 % Expenses excluding interest as a percentage of average client assets (annualized) 0.11 % 0.12

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) Schwab's financial performance in the third quarter and first nine months of 2025 reflected strong asset gathering, sustained client engagement and equity market appreciation, continued demand for Schwab's lending offerings and managed investing solutions, as well as reduction of higher-cost bank supplemental funding and balanced expense management. Net income was $2.4 billion and $6.4 billion in the third quarter and first nine months of 2025, respectively, growing 67% and 56% from the same prior-year periods. Diluted earnings per common share (EPS) was $1.26 and $3.33 for the third quarter and first nine months of 2025, respectively, rising 77% and 62% from the same periods in 2024. Adjusted diluted EPS (1) was $1.31 and $3.49 for the third quarter and first nine months of 2025, respectively, increasing 70% and 55% from the same periods in 2024. Total net revenues grew 27% year-over-year in the third quarter of 2025 to reach $6.1 billion, resulting in a year-to-date total of $17.6 billion, an increase of 23% from the same period in 2024. Net interest revenue was $3.1 billion and $8.6 billion in the third quarter and first nine months of 2025, respectively, up 37% and 30% from the same periods in 2024, primarily due to lower interest expense from reductions in bank supplemental funding and lower rates on funding sources, as well as growth in bank and margin 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 were $1.7 billion and $4.8 billion in the third quarter and first nine months of 2025, respectively, increasing 13% from both prior-year periods, due primarily to continued growth in money market funds and also higher client asset balances, reflecting asset gathering, equity market appr

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) income in the first nine months of the year, the Company's consolidated Tier 1 Leverage Ratio was 9.7% at September 30, 2025, down slightly from year-end 2024. Our consolidated adjusted Tier 1 Leverage Ratio (1) increased to 7.3%, driven by net income in the first nine months of the 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. Subsequent Events On November 6, 2025, Schwab announced that it has entered into a definitive agreement to acquire Forge Global Holdings, Inc. (Forge), operator of a leading private market platform and trading marketplace, in a transaction valued at approximately $660 million. The Company anticipates that incorporating Forge's private markets capabilities will enhance Schwab's ability to meet the evolving needs of investors across our growing client base. The transaction is expected to close in the first half of 2026, subject to customary closing conditions, including approval by Forge's stockholders and regulatory approvals. Current Regulatory and Other Developments On June 12, 2025, the SEC withdrew certain notices of proposed rulemaking issued between March 2022 and November 2023, including the SEC's December 2022 equity market structure rule proposals, "Order Competition Rule" and "Regulation Best Execution", previously referenced in Part II – Item 7 – Current Regulatory and Other Developments in our 2024 Form 10-K. On March 3, 2025, the Federal Deposit Insurance Corporation (FDIC) withdrew certain notices of proposed rulemaking issued in 2023 and 2024, including the July 2024 prop

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 September 30, Percent Change Amount % of Total Net Revenues Amount % of Total Net Revenues Net interest revenue Interest revenue 1 % $ 3,956 64 % $ 3,928 81 % Interest expense (47) % (906) (14) % (1,706) (35) % Net interest revenue 3

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