Charles Schwab Corp (NYSE: SCHW) said on Thursday that clients brought a record $190.4 billion in core net new assets to the Westlake, Texas-based brokerage in the third quarter, up 38% from a year earlier. The inflows helped lift quarterly revenue 17% to a record $7.2 billion, while GAAP earnings per share rose 29% to a record $1.62.
Core net new assets measure money clients move into Schwab, excluding large one-time flows such as acquisitions. The record came as markets weakened late in the quarter. Total client assets slipped 1% in September after $144.4 billion of net market losses, though Schwab still gathered $67.5 billion in core net new assets that month, up 46% from a year earlier.
Excluding $151 million of pre-tax acquisition-related costs and amortization of acquired intangible assets, adjusted earnings per share rose 29% to $1.69 from $1.31 a year earlier. Net income rose 23% to $2.9 billion, and the adjusted pre-tax profit margin widened to 54.8% from 51.3%.
"During the third quarter, clients opened 1.2 million new brokerage accounts and entrusted Schwab with $190.4 billion in core net new assets," President and CEO Rick Wurster said in the earnings release. He put the annualized growth rate of those inflows at 5.8%.
#Lending and Trading Lift Schwab Quarterly Revenue to a Record $7.2 Billion
Net interest revenue, Schwab's largest source of income, rose 14% to $3.48 billion, which the company attributed to higher lending balances and growth in long/short strategies. Net interest margin widened to 3.04% from 2.88% a year earlier. Bank loans rose 35% to $72.3 billion, and margin loans reached $187.9 billion, including $60.7 billion tied to long/short strategies used by independent advisers.
Schwab provides brokerage, banking, wealth management and custody services to individual investors and independent registered investment advisers. It had 40.3 million active brokerage accounts and $13.33 trillion in client assets at the end of September.
Asset management and administration fees rose 14% to $1.9 billion. Trading revenue rose 16% to $1.2 billion as daily average trades climbed 44% to 10.7 million. Expenses grew 9%, slower than revenue.
"Deeper client engagement across Schwab's platform continues to broaden and strengthen our revenue model," Chief Financial Officer Mike Verdeschi said in the release.
Trading activity cooled from the second quarter, however. Daily average trades fell 10% from 11.9 million, trading revenue slipped 5% from the prior quarter, and revenue per trade fell 20% from a year earlier to $1.69. Bank deposits declined 2% from the end of June to $244.1 billion.
#Schwab Rolls Out AI Assistant and Single Stock Futures as Advice Flows Grow 55%
Net flows into Schwab Wealth Advisory, its personalized advice service, rose 55% from a year earlier, and managed investing net flows grew 22%. Balances on the Pledged Asset Line, a credit line secured by a client's investment portfolio, rose 59% to $37.3 billion.
"As investing plays an increasingly central role in people's financial lives, clients continue to turn to Schwab for our broad set of wealth, trading, and banking capabilities," Wurster said in the release.
During the quarter Schwab introduced Charley, an AI assistant that gives U.S. retail clients conversational access to its tools, and partnered with Anthropic to offer Claude for Financial Advisors to the independent advisers it serves. It also announced single stock futures on its thinkorswim trading platform and plans to add more digital assets to Schwab Crypto.
Schwab bought back 4.7 million shares for $0.5 billion in the quarter, and its quarterly dividend of 32 cents was 19% higher than a year earlier. Its preliminary consolidated Tier 1 leverage ratio stood at 8.9%, or 7% on an adjusted basis.
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#Schwab Expects About 800 Basis Points of Operating Leverage in 2026
At its Fall Business Update for investors on Thursday, Schwab said it expects to deliver about 800 basis points of positive operating leverage for full-year 2026, meaning revenue growth outpacing expense growth by roughly 8 percentage points. The company said its 2027 outlook will be shaped by the economy, interest rates, market sentiment and client engagement.
Schwab also presented a longer-term financial framework that targets high-single-digit to low-double-digit revenue growth and mid-teens growth in earnings per share.
Results remain sensitive to interest rates and client behavior. Schwab estimated that each 25-basis-point move in the federal funds target rate would shift annualized net interest revenue by about $250 million to $300 million. Balances in its bank deposit account program, which places client cash at outside banks, fell 13% from a year earlier.
Management said it plans to keep investing in growth while generating positive operating leverage, though interest rates, client cash allocation, market volatility and regulatory developments remain key risks to that outlook.