Charles Schwab Q4 Earnings Call Highlights

Charles Schwab (NYSE:SCHW) executives highlighted 2025 as a “record year” at the firm’s 2026 Winter Business Update, pointing to strong organic growth, rising client engagement, and record financial results. President and CEO Rick Wurster and CFO Mike Verdeschi also outlined a 2026 scenario that assumes a meaningful decline in interest rates and modest equity market returns, while still calling for continued revenue and earnings growth.

Record client growth and engagement in 2025

Wurster said Schwab delivered growth “on all fronts” in 2025, supported by a “through-client-side strategy,” strong execution, and engaged clients. The firm attracted $519 billion in core net new assets (NNA), up 42% year over year, and clients opened 4.7 million new brokerage accounts, up 13% from 2024. Schwab ended 2025 with more than 46 million client accounts and nearly $12 trillion in total client assets.

Client activity was also elevated. Wurster cited 1.9 billion trades, more than 30 million calls to service centers, and about 2.2 billion digital logins, up approximately 18% from 2024. He said average call wait times were under 30 seconds.

Schwab also emphasized demographic breadth among new clients. Wurster said the average retail client is now in their 40s and the average new-to-firm retail client is in their 30s. Gen Z investors accounted for nearly a third of new retail accounts opened in 2025, and nearly 60% of new clients were under 40.

Deepening relationships: wealth, lending, trading, and alternatives

Management framed growth around two levers: acquiring new clients and doing more for existing clients. Wurster said that with nearly $12 trillion in assets, expanding relationships with existing clients is “as important a source of growth as acquiring new clients.”

• Wealth and managed investing: Managed investing net flows grew 36% over 2024 to a new record, and Wurster said managed investing net flows have nearly quadrupled since 2022. Schwab also highlighted a gap between adoption and stated demand: about 5% of retail households use managed investing solutions, while about 31% say they are willing to pay for advice. Wurster said client promoter scores in managed investing are among the highest at the firm, and noted return on client assets for managed investing is about two times that of retail.
• Bank lending: Bank lending balances reached a record $58 billion. Wurster highlighted improvements to the pledged asset line (PAL) process, saying average digital cycle times are about a day and nearly three-quarters of originations are completed in under a day. PAL balances have nearly doubled since 2023, though management described penetration as relatively low—about 9% among ultra-high net worth retail clients and 23% in advisor services.
• Trading: Schwab said it ranked No. 1 among peers by daily average trades, with 7.7 million daily average trades in 2025, and handled about 10% of total U.S. notional trading volume. About half of new-to-firm retail clients initiated access to thinkorswim in 2025. Wurster also said Schwab clients hold about a 20% share of spot crypto exchange-traded products and the firm remains on track to launch spot trading on Bitcoin and Ethereum in the first half of this year.
• Alternatives and private investing: Schwab reiterated plans around alternatives, including its agreement to acquire Forge, which Wurster said is expected to close “in the coming months.” He said Schwab is seeing more demand than expected, including a “real backlog” for alternative investment consultants, though the company is not disclosing asset figures yet because the rollout is early. Schwab also noted a strategic investment in Carta and described an ecosystem for administering private stock plans and providing liquidity for private company employees and investors.

Efficiency, AI initiatives, and cost management

Wurster and Verdeschi emphasized scale and efficiency as a competitive advantage. Wurster said Schwab is leveraging artificial intelligence across more than 220 use cases and is automating high-volume client requests, reducing paper usage, and lowering not-in-good-order errors. He said Schwab has decreased cost per account by 20% over the past five years.

On an adjusted basis, Wurster said expense on client assets (EOCA) has declined from about 15 basis points in 2020 to about 11 basis points “today.” In Q&A, Verdeschi said AI is already helping Schwab moderate growth in client-facing headcount while accounts and assets increase, and he pointed to EOCA and cost per account as key metrics management will continue to track.

Financial results: revenue, margins, and capital return

Verdeschi said Schwab converted business momentum into record 2025 financial results. Fourth-quarter total revenue rose 19% year over year to a record $6.3 billion, with net interest revenue up 25%. Asset management and administration fees increased 15%, while trading revenue rose 22% on daily average trades of 8.3 million.

Adjusted expenses for the fourth quarter were up 6%, and full-year adjusted expense growth was also 6%. Verdeschi said Schwab had expected moderation in trading later in the year, but activity accelerated, increasing volume-related costs and performance-based compensation; he said higher revenues more than offset the incremental expense.

Schwab reported an adjusted pre-tax profit margin of just over 52% in the fourth quarter and adjusted EPS of $1.39, up 38% year over year. For full-year 2025, Schwab posted:

• Total net revenues: $23.9 billion (up 22% vs. 2024)
• Adjusted pre-tax margin: 50% (nearly 800 basis points of expansion)
• Adjusted EPS: $4.87 (up 50% year over year)

On the balance sheet, Verdeschi said bank loan balances rose to $58 billion (up 28% year over year), and margin loan balances exceeded $112 billion at year-end (up 34%). Quarter-end cash totaled $453.7 billion, up $28.1 billion sequentially, which management said helped reduce high-cost bank funding to $5 billion, the low end of the firm’s $5–$15 billion business-as-usual range.

Schwab’s adjusted Tier 1 leverage ratio ended the year at 7.1%, slightly above its 6.75%–7% objective, reflecting share repurchases of $2.7 billion in the fourth quarter. Total capital return across all forms reached $11.8 billion for the year. In Q&A, management reiterated the capital framework and said the 2026 scenario’s implied earnings did not include buybacks.

2026 scenario: rate cuts assumed, operating leverage expected

For 2026, Verdeschi laid out a scenario assuming interest rates follow forward-curve expectations, including 225 basis points of Fed rate cuts to a 3.25% funds rate by the end of 2026, along with 6.5% equity market returns. Under that backdrop, Schwab expects to sustain momentum with “strong new account formation” and around 5% full-year organic asset growth.

The company’s scenario also assumes a slight pullback in trading to roughly 7.4 million daily average trades for 2026. With those assumptions, Schwab expects:

• Total revenue growth: 9.5%–10.5%
• Net interest margin: 2.85%–2.95% for full-year 2026 (with average 4Q2026 expected to finish above 2.9%)
• Expense growth: 5.5%–6.5%
• Adjusted EPS: approximately $5.70–$5.80 (upper-teens year-over-year growth)

Verdeschi also said Schwab implemented hedging actions in 2025 that reduced interest rate sensitivity by about one-third and added “a modest amount of income hedges” against its margin loan book in early 2026. He said that even if the Fed funds rate moved much lower than market expectations—approaching 2%—Schwab would still anticipate year-over-year earnings growth of at least 10%, holding other factors constant.

About Charles Schwab (NYSE:SCHW)

Charles Schwab Corporation (NYSE: SCHW) is a diversified financial services firm that provides brokerage, banking, wealth management and advisory services to individual investors, independent investment advisors and institutional clients. Its primary offerings include retail brokerage accounts, online trading platforms, Schwab-branded mutual funds and exchange-traded funds (ETFs), retirement plan services, custodial services for independent Registered Investment Advisors (RIAs), and banking products through Charles Schwab Bank.