The Charles Schwab Corporation · Q2 2026 call

In the second quarter of 2026, we delivered record results and growth on all fronts. We're attracting new clients and assets with 1.4 million new brokerage accounts and 120 billion in core net new assets, up nearly 50% over last year. We're continuing to deepen relationships. Managed investing net flows increased to 53% over last year. Bank lending balances reached 67 billion, up 33%.

Our Schwab Crypto rollout is going as planned, and we are on track to start piloting our crypto transfers capability by the end of this month. We believe this capability creates an attractive M&A opportunity over time.

61% of affluent clients ages 25-44 say they prefer to consolidate their wealth and banking relationship. Households with $1 million-$5 million in assets using only one financial services firm jumped 11 percentage points year-over-year to 22%, and we expect this to grow as more investors seek the convenience of one-stop shopping in all aspects of their life.

The U.S. retail market is $37 trillion and growing, and we have just 2% market share. At the same time, just 5% of Schwab retail households are on a fee-based advice solution. 31% of Schwab clients say they are willing to pay for advice.

Today at Schwab, 0.5% of clients use one of our lending products, versus 4% on average across the industry. With an average spread to securities north of 100 basis points on PALs, as an example, narrowing the lending penetration gap as more investors consolidate their financial lives at Schwab is a win for clients and a win for our economics.

Total revenue grew 21% year-over-year to $7.1 billion, including a 19% increase in net interest revenue versus the prior year period due to increased utilization of our lending solutions by clients, the reduction of higher cost borrowings at the banks, and demand for long-short strategies.

Record quarterly revenue combined with balanced expense management delivered adjusted pre-tax profit margin of 54.3%, as second quarter adjusted earnings per share reached a record $1.62, a year-over-year increase of 42%.

Following another quarter of strong trading volumes, we have taken full-year daily average trades up to 10.6 million. This trading assumption does include a pullback from recent monthly levels, reflecting an expected moderation in activity, in part due to the seasonal slowdown during the summer.

Using these updates, we would expect total revenue growth of 17.5%-18.5% in 2026.

Given our sustained business momentum, we now anticipate annual expense growth to range from 9.5%-10.5%. I would note that underlying expenses still remain in line with the 5.5%-6.5% range we shared at the January winter business update.

There was tremendous interest in SpaceX from our client base in participating in the IPO, and we obviously made as many shares available to them as we could get. It drove high levels of volume into our service centers, high levels of engagement with financial consultants, with RIAs and the like. It did not meaningfully impact our NNA in any way.

When we started the year in our financial scenario, that operating leverage in that first scenario was 400 basis points. The updated scenario has operating leverage of 800 basis points.

Again, while it's grown very quickly, it's still a very small percentage of our economics. It's roughly 1% of our revenue. We stand ready to support it. The expansion of the net interest margin is being driven by that lending activity and supported by our deposit base.

The three parts of prediction markets and where 90%-95% of the volume exists today is just really sports gambling. […] We have no interest in it. I think it's completely disingenuous for people to be out in the market calling this an asset class and a new way for young people to invest. It's gambling in another stripe.

The analogy I've used with our team is it's a little bit like gas and electric cars. We're not, as a company, going to make a huge bet in one direction. We're going to have the ability to support both and let the client choose the way they want to engage. I think there are some benefits to tokenization and some real drawbacks, and it's unclear how much it's going to take off.