Charles Schwab (NYSE:SCHW) said its third-quarter results reached record levels as client account growth, net new assets, lending demand and trading activity supported higher revenue and earnings. The company also outlined new artificial-intelligence initiatives, expanded trading products and plans to broaden its offerings in prediction markets and long/short strategies.
President and CEO Rick Wurster said Schwab opened 1.2 million brokerage accounts during the third quarter and attracted $190 billion in core net new assets, a 38% increase from a year earlier. The company said the asset inflows represented an annualized organic growth rate of nearly 6%.
“We are growing our client base,” Wurster said, adding that clients are also bringing more of their financial lives to Schwab. Managed-investing net flows reached a quarterly record of $24 billion, while bank lending grew to $72 billion, up 35% year-over-year.
Record Revenue and Earnings
Chief Financial Officer Mike Verdeschi said third-quarter revenue rose 17% from a year earlier to a record $7.2 billion. Net interest revenue increased 14% to nearly $3.5 billion, supported by continued demand for secured lending programs, including margin loans and the bank’s Pledged Asset Line.
Asset-management and administration fees rose 14% to a record $1.9 billion, driven by equity-market appreciation, organic growth and adoption of wealth and asset-management offerings. Trading revenue totaled $1.2 billion, up 16% year-over-year, as daily average trades reached 10.7 million.
- Adjusted expenses were about $3.2 billion, up 9% from the third quarter of 2025.
- Adjusted pretax profit margin was 54.8%, expanding about 350 basis points year-over-year.
- Adjusted earnings per share increased 29% year-over-year to a record 69 cents.
- Total margin balances ended the quarter at $187.9 billion.
- Transactional sweep cash balances ended at $492.8 billion, up $7.1 billion from the prior quarter.
Verdeschi said lending growth has exceeded deposit growth this year, increasing the company’s use of diversified funding sources. He said Schwab expects continued cash buildup from net new assets and normal seasonal inflows through year-end.
The company ended the quarter with an adjusted Tier 1 leverage ratio of 7%, at the upper end of its stated 6.75% to 7% range. Through the first nine months of 2026, Schwab increased its common dividend, redeemed preferred stock and repurchased almost $4 billion of common shares, Verdeschi said.
Outlook Calls for Continued Margin Expansion
For the full year, Schwab expects revenue growth and net interest margin expansion toward the lower end of ranges provided at its summer business update. Expenses are expected to be at the low end of the prior range, reflecting efficiency gains alongside continued investment in strategic initiatives.
Verdeschi said Schwab expects about 800 basis points of positive operating leverage for 2026, roughly twice the level it expected at the start of the year. He also said the company expects net interest margin to expand by about 25 to 30 basis points in the fourth quarter compared with the fourth quarter of 2025, with further expansion anticipated in 2027.
Schwab remains asset sensitive, according to Verdeschi, who said higher interest rates are favorable for its financial performance. He also noted that the company has roughly $190 billion of securities yielding below 2%, which could be redeployed into lending or higher-yielding securities as the portfolio rolls down.
AI, Wealth and Trading Initiatives
Wurster said artificial intelligence is becoming an important part of Schwab’s client experience and internal productivity efforts. The company has introduced Charley, an AI-powered conversational assistant that is expected to become available to all clients in the coming months.
Initially, Charley will provide information and synthesis and handle certain administrative tasks, such as changing an address or naming a trusted contact. Wurster said it is intended eventually to become an important “front door” to Schwab, allowing clients to conduct a wider range of activity through text or voice interactions.
Schwab is blocking unauthorized AI agents from logging in on behalf of clients, Wurster said, citing security and authentication concerns. At the same time, the firm is enabling controlled connections between client-selected large language models and its Model Context Protocol servers. The company has started a pilot allowing traders to connect through Anthropic’s Claude and plans to expand access to additional clients and LLMs.
Wurster said internal AI tools have increased developer productivity by about 25%. He also said AI is helping client-facing professionals serve more clients and has contributed to improved call-center resolution and fewer calls per client.
In wealth management, Schwab said only about 5% of its retail households currently use an advice solution, while 31% indicate they are willing to pay for advice. The company estimated it has approximately 2% of the $37 trillion U.S. advice market. Schwab Wealth Advisory net flows rose 55% during the quarter, contributing to the company’s record managed-investing flows.
Long/Short and Prediction-Market Plans
Wurster said Schwab’s Advisor Services net new asset growth continued despite the company throttling long/short program growth in mid-September by changing minimums. The program had grown faster than anticipated after a competitor had less capacity to support similar activity, he said.
Schwab is working on multiple ways to meet demand for tax-focused long/short strategies in a sustainable manner, including an extended version of its existing direct-indexing capabilities. Wurster said the company expects to offer a proprietary long/short solution, though he did not provide a launch date.
The company also plans to expand its financial prediction-market offerings. Schwab currently provides limited binary options tied to the S&P, and Wurster said it expects over the next 12 to 18 months to introduce capabilities related to financial events, company key performance indicators and political events. He said the firm will avoid sports gambling.
Schwab also launched single-stock futures and financial-market binary options, made Schwab Crypto available to all clients and is rolling out crypto transfers to the platform. The company expects to add access to three additional coins by year-end.
About Charles Schwab (NYSE:SCHW)
Charles Schwab Corporation (NYSE:SCHW) is a financial services company that provides brokerage, investment, banking and wealth management services to individual investors, employers, institutions and independent investment advisors. Its offerings include online and mobile trading, securities brokerage, retirement accounts, financial planning, portfolio management, banking products, research and access to mutual funds and exchange-traded funds.
The company operates through businesses including Schwab Brokerage, Schwab Wealth Advisory, Schwab Asset Management and Charles Schwab Bank.
