Charles Schwab(SCHW) - 2025 Q2 - Quarterly Results

2Q25 Earnings Release The Charles Schwab Corporation reported record Q2 2025 results, driven by significant revenue and EPS growth, strong client asset accumulation, and effective capital management Performance Summary The Charles Schwab Corporation reported record results for the second quarter of 2025, driven by 25% year-over-year revenue growth. Key achievements include record quarterly GAAP EPS of $1.08 ($1.14 adjusted), a 31% increase in core net new assets to $80.3 billion, and total client assets reaching a new high of $10.76 trillion. The company also demonstrated effective balance sheet management by reducing higher-cost funding and returned $2.8 billion to stockholders through preferred equity redemption and common stock repurchases Q2 2025 Key Performance Indicators | Metric | Value | YoY Growth | Source | | :--- | :--- | :--- | :--- | | Revenue | $5.9 billion (Record) | 25% | President & CEO Rick Wurster | | GAAP EPS | $1.08 (Record) | 64% | The Charles Schwab Corporation | | Adjusted EPS | $1.14 (Record) | 56% | The Charles Schwab Corporation | | Core Net New Assets (NNA) | $80.3 billion | 31% | President & CEO Rick Wurster | | Total Client Assets | $10.76 trillion (Record) | 14% | The Charles Schwab Corporation | - Client Growth: Opened over 1.1 million new brokerage accounts, an 11% increase YoY, bringing total active brokerage accounts to 37.5 million[1][3][9] - Asset Gathering: Year-to-date core net new assets reached $218.0 billion, up 39% YoY[1][3][9] - Trading Volume: Daily average trading volume was robust at 7.6 million, a 38% increase compared to Q2 2024[1][3][9] - Balance Sheet Management: Reduced higher-cost bank supplemental funding by $10.4 billion during the quarter[1][3][9] - Capital Return: Returned approximately $2.8 billion to stockholders via $2.5 billion in preferred equity redemption and over $350 million in common stock repurchases[1][3][9] Financial Highlights Summary (vs. Prior Year) | Financial Metric | Three Months Ended June 30, 2025 | YoY Change | Six Months Ended June 30, 2025 | YoY Change | | :--- | :--- | :--- | :--- | :--- | | Net Revenues | $5,851 million | 25% | $11,450 million | 21% | | GAAP Net Income | $2,126 million | 60% | $4,035 million | 50% | | Adjusted Net Income | $2,222 million | 52% | $4,230 million | 44% | | GAAP Diluted EPS | $1.08 | 64% | $2.07 | 54% | | Adjusted Diluted EPS | $1.14 | 56% | $2.17 | 48% | Financial Results The company's detailed financial statements show significant year-over-year growth in net revenues and net income for Q2 2025. Net revenues rose 25% to $5.9 billion, driven by a 31% increase in net interest revenue and a 14% rise in asset management fees. Total expenses saw a modest 4% increase, leading to a substantial expansion in the pre-tax profit margin to 47.9% from 37.2% in the prior year Consolidated Statements of Income The consolidated income statement for Q2 2025 shows substantial year-over-year growth in net revenues and net income, driven by increased interest and asset management fees Q2 2025 Consolidated Statement of Income (in millions) | Line Item | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Total net revenues | $5,851 | $4,690 | 25% | | Net interest revenue | $2,822 | $2,158 | 31% | | Asset management and administration fees | $1,570 | $1,383 | 14% | | Trading revenue | $952 | $777 | 23% | | Total expenses excluding interest | $3,048 | $2,943 | 4% | | Income before taxes on income | $2,803 | $1,747 | 60% | | Net Income | $2,126 | $1,332 | 60% | | Net Income Available to Common Stockholders | $1,977 | $1,211 | 63% | | Diluted EPS | $1.08 | $0.66 | 64% | Financial and Operating Highlights (Quarterly) Quarterly trends reveal consistent growth in net revenues, net income, and diluted EPS from Q2 2024 to Q2 2025, alongside stable total assets Quarterly Performance Trends (Q2-24 to Q2-25) | Metric (in millions, except per share) | Q2 2025 | Q1 2025 | Q2 2024 | YoY Change | QoQ Change | | :--- | :--- | :--- | :--- | :--- | :--- | | Total net revenues | $5,851 | $5,599 | $4,690 | 25% | 5% | | Net interest revenue | $2,822 | $2,706 | $2,158 | 31% | 4% | | Total expenses excluding interest | $3,048 | $3,144 | $2,943 | 4% | (3)% | | Net Income | $2,126 | $1,909 | $1,332 | 60% | 11% | | Diluted EPS | $1.08 | $0.99 | $0.66 | 64% | 9% | | Total assets (billions) | $458.9 | $462.9 | $449.7 | 2% | (1)% | Net Interest Revenue Information Net interest margin expanded significantly in Q2 2025 due to a notable reduction in interest expense on funding sources, despite a slight decrease in average yield on interest-earning assets - Net interest margin for Q2 2025 expanded to 2.65%, up from 2.03% in Q2 2024[9][19] This was driven by a significant reduction in interest expense on funding sources, particularly a lower average rate paid on bank deposits (0.55% vs. 1.31% YoY) and Federal Home Loan Bank borrowings (4.48% vs. 5.42% YoY)[9][19] Net Interest Revenue Breakdown - Q2 2025 vs Q2 2024 (in millions) | Category | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Total Interest Revenue | $3,787 | $3,817 | | Average Interest-Earning Assets | $422,729 | $418,968 | | Average Yield | 3.56% | 3.62% | | Total Interest Expense | $965 | $1,659 | | Average Interest-Bearing Liabilities | $384,748 | $388,751 | | Average Rate | 1.00% | 1.71% | | Net Interest Revenue | $2,822 | $2,158 | | Net Interest Margin | 2.65% | 2.03% | Asset Management and Administration Fees Information Asset management and administration fees saw a 13.5% increase in Q2 2025, primarily driven by growth in Schwab money market funds and managed investing solutions Asset Management & Administration Fees - Q2 2025 vs Q2 2024 (in millions) | Category | Revenue Q2 2025 | Revenue Q2 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Schwab money market funds | $442 | $357 | 23.8% | | Schwab equity and bond funds, ETFs, CTFs | $122 | $112 | 8.9% | | Mutual Fund OneSource® | $218 | $214 | 1.9% | | Managed investing solutions (Fee-based) | $589 | $510 | 15.5% | | Total Fees | $1,570 | $1,383 | 13.5% | Client Metrics and Business Growth Schwab demonstrated strong client growth in Q2 2025, with total client assets increasing 14% YoY to a record $10.76 trillion. The company attracted $73.6 billion in total net new assets for the quarter. Both the Investor Services and Advisor Services segments saw double-digit percentage growth in client assets compared to the prior year Client Asset Growth (at quarter end, in billions) | Asset Category | Q2 2025 | Q2 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Total client assets | $10,757.3 | $9,407.5 | 14% | | Investor Services | $6,069.9 | $5,317.5 | 14% | | Advisor Services | $4,687.4 | $4,090.0 | 15% | | Total mutual fund assets | $2,823.9 | $2,535.0 | 11% | | Total ETF assets | $2,615.3 | $2,088.2 | 25% | Account and Net New Asset Growth (for the quarter ended) | Metric | Q2 2025 | Q2 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Total net new assets (billions) | $73.6 | $74.2 | (1)% | | Investor Services (billions) | $31.2 | $40.1 | (22)% | | Advisor Services (billions) | $42.4 | $34.1 | 24% | | New brokerage accounts (thousands) | 1,098 | 985 | 11% | | Active brokerage accounts (thousands) | 37,476 | 35,612 | 5% | Growth in Client Assets and Accounts Client assets and accounts demonstrated robust growth in Q2 2025, with significant increases in total client assets and new brokerage accounts across both Investor and Advisor Services - Client assets in proprietary money market funds grew 22% YoY to $653.5 billion, and assets in proprietary ETFs grew 26% YoY to $439.7 billion, indicating strong client demand for Schwab's own products[24] Monthly Activity Report (June 2025) June 2025 monthly activity highlights continued growth in total client assets and core net new assets, with strong client net buy activity in equities, bonds, and ETFs June 2025 Monthly Highlights | Metric | June 2025 | MoM Change | YoY Change | | :--- | :--- | :--- | :--- | | Total Client Assets (billions) | $10,757.3 | 4% | 14% | | Net New Assets (billions) | $38.9 | 16% | 17% | | Core Net New Assets (billions) | $42.6 | 22% | 46% | | New Brokerage Accounts (thousands) | 323 | (4)% | 4% | Client Net Buy/(Sell) Activity - June 2025 (in millions) | Asset Class | Net Activity | | :--- | :--- | | Equities | $8,987 | | Bonds | $6,050 | | Mutual Funds | ($5,351) | | Exchange Traded Funds (ETFs) | $19,350 | | Money Market Funds | $5,814 | Non-GAAP Financial Measures The company provides non-GAAP measures to offer additional transparency into its ongoing operations by excluding items like amortization of acquired intangibles ($128 million in Q2) and other acquisition or restructuring costs. Key non-GAAP metrics include an adjusted net income of $2.2 billion, an adjusted pre-tax profit margin of 50.1%, and a return on tangible common equity of 35%. The preliminary Adjusted Tier 1 Leverage Ratio, which includes the impact of AOCI, was 7.2% at quarter-end - The company uses non-GAAP measures to provide transparency into ongoing operations by excluding acquisition-related costs, amortization of acquired intangible assets, and restructuring costs[28][30] These measures are used to evaluate operating performance and facilitate period-over-period comparisons[28][30] Reconciliation of GAAP to Non-GAAP Net Income (Q2 2025, in millions) | Line Item | Amount | | :--- | :--- | | Net income (GAAP) | $2,126 | | Amortization of acquired intangible assets | $128 | | Income tax effects | ($32) | | Adjusted net income (non-GAAP) | $2,222 | Reconciliation of GAAP to Non-GAAP Diluted EPS (Q2 2025) | Line Item | Amount | | :--- | :--- | | Earnings per common share — diluted (GAAP) | $1.08 | | Amortization of acquired intangible assets | $0.07 | | Income tax effects | ($0.01) | | Adjusted diluted EPS (non-GAAP) | $1.14 | Key Non-GAAP Ratios (Q2 2025) | Ratio | Value | | :--- | :--- | | Return on tangible common equity (non-GAAP) | 35% | | Adjusted Tier 1 Leverage Ratio (non-GAAP, Preliminary) | 7.2% | Forward-Looking Statements and Company Information This section contains standard disclaimers regarding forward-looking statements related to the company's revenue, scale, efficiency, and capital ratios, noting they are subject to risks and uncertainties. It also provides a general overview of The Charles Schwab Corporation as a leading financial services provider with $10.76 trillion in client assets, detailing its range of services across brokerage, banking, and asset management - The press release contains forward-looking statements regarding the company's revenue model, scale, efficiency, and capital ratios, which are subject to risks and uncertainties detailed in SEC filings (Form 10-K and 10-Q)[10] - The Charles Schwab Corporation is a leading provider of financial services with 37.5 million active brokerage accounts, 5.6 million workplace plan participant accounts, and $10.76 trillion in client assets[11]