Charles Schwab Corporation (NYSE: SCHW) shares edged lower on Tuesday morning, trading near $102.25, as the brokerage outlined a 2026 outlook that hinges on a moderate trading environment. The company projects revenue growth of approximately 18% for the full year, with adjusted expenses rising at a slower pace, signaling an improving profit margin.
In its second-quarter earnings report, Schwab posted adjusted earnings of $1.62 per share, topping the FactSet consensus estimate of $1.56. Net revenue reached $7.07 billion, exceeding the $6.9 billion analyst forecast. GAAP net income rose 32% to $2.8 billion, driven by strong growth across trading, net interest income, and asset management fees.
The company's 2026 guidance assumes daily average trades of roughly 10.6 million, but an initial projection for the second half of the year suggests activity closer to 10.3 million—about 14% below the record 11.9 million daily trades logged in the second quarter. This moderation is central to Schwab's strategy, as it plans to rely on more stable revenue streams such as net interest income and asset-based fees.
Trading revenue surged 28% year-over-year to $1.215 billion in Q2, but the revenue per trade fell 19% to $1.64, reflecting the impact of higher volume from lower-cost trades. Net interest revenue climbed 19% to $3.357 billion, supported by increased client borrowing and reduced wholesale funding costs. Asset management and administration fees rose 16% to $1.825 billion, benefiting from net inflows and market appreciation.
Schwab's adjusted pretax margin reached 51.9% in Q2, up 4.0 percentage points from a year ago, and the company expects it to advance further into the low-50% range in 2026. The margin expansion is a key focus for investors, as revenue growth is projected to outpace expense growth by about 8 percentage points at the midpoint of guidance.
Client assets totaled $13.08 trillion as of June 30, up 22% year-over-year. Core net new assets reached $119.8 billion, a 49% increase, providing a buffer for fee income if trading activity slows. Transactional sweep cash stood at $485.7 billion, up $24.2 billion from March. Bank loans rose 33% to $67 billion, while margin balances increased 30% to $165.1 billion.
Chief Financial Officer Mike Verdeschi said the company is positioned to "deliver robust results across a range of environments." Schwab repurchased 11.2 million shares for $1 billion during the quarter, reducing its diluted share count by 5% year-over-year and boosting earnings per share growth.
The stock traded between $98.20 and $105.11 on Tuesday, down 0.3% in early action. Schwab's Tier 1 leverage ratio slipped to 8.7% from 9.8% a year earlier. The company noted that a 25-basis-point shift in interest rates would impact annualized net interest revenue by roughly $250 million to $300 million.
Interactive Brokers Group (NASDAQ: IBKR) is scheduled to report earnings after the close on Tuesday, providing an additional read on brokerage trading trends. Its shares rose 3.0% in early trading.
