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November 8, 2025 • 4 min read
Charles Schwab Corporation (SCHW), a titan in the brokerage and financial services industry, recently released its financial results for the third quarter of 2025. For anyone following the company or the broader financial sector, a deep dive into its latest 10-Q filing reveals a story of robust growth and savvy financial management. Let's break down the key numbers and what they tell us about the health of Schwab's business.
For the quarter ending September 30, 2025, Schwab reported a significant uptick in performance. Total net revenues surged 27% year-over-year, hitting $6.1 billion compared to $4.8 billion in the same period last year. This impressive revenue growth translated directly to the bottom line, with net income jumping a remarkable 67% to $2.4 billion. For shareholders, this meant diluted earnings per share of $1.26, a 77% increase from $0.71 a year prior.
To better understand how Schwab generated these results, the following flow diagram visualizes the company's quarterly revenues and expenses.
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A primary driver of this quarter's success was a 37% increase in Net Interest Revenue (NIR), which climbed to $3.05 billion. NIR is a crucial metric for firms like Schwab that have significant banking operations; it represents the difference between the interest earned on assets (like client margin loans and investment securities) and the interest paid on liabilities (like client cash deposits).
Interestingly, the growth wasn't fueled by earning more interest—in fact, total interest revenue was roughly flat. The real story lies in a dramatic 47% reduction in interest expense, which fell from $1.7 billion in Q3 2024 to just $906 million in Q3 2025. This was achieved by lowering the rates paid on bank deposits and paying down more expensive funding sources, like Federal Home Loan Bank borrowings. This sharp drop in funding costs significantly widened Schwab's net interest margin and supercharged its profitability.
Beyond interest-based income, Schwab's other revenue streams also showed healthy growth, reflecting strong underlying business momentum.
Asset Management and Administration Fees: This segment grew 13% to $1.67 billion. This is a direct result of the company's success in attracting and retaining client assets. Total client assets reached a staggering $11.6 trillion at the end of the quarter, up 17% from the previous year. The company also brought in $134.4 billion in net new client assets during the quarter, a 48% increase year-over-year.
Trading Revenue: Revenue from trading activities rose 25% to nearly $1 billion. This was powered by a 30% increase in Daily Average Trades (DATs), which hit 7.4 million. While the revenue per trade saw a slight dip, the sheer volume of activity more than compensated, highlighting an engaged client base.
Schwab's impressive earnings weren't just about revenue growth; they also demonstrated disciplined expense management. While total net revenues grew 27%, total expenses (excluding interest) rose by a modest 4% to $3.1 billion. This disparity showcases strong operating leverage, meaning the company is generating more profit from each dollar of revenue. The pre-tax profit margin expanded significantly to 49.2%, up from 38.0% in the same quarter last year.
Schwab’s capital position remains solid, with its Consolidated Tier 1 Leverage Ratio—a key measure of financial strength—holding steady at 9.7%. Furthermore, the company demonstrated confidence in its valuation by repurchasing nearly 29 million shares for approximately $2.8 billion during the quarter, returning a substantial amount of capital to its shareholders.
In conclusion, Charles Schwab's third-quarter performance paints a picture of a company firing on all cylinders. By skillfully managing its balance sheet to lower funding costs, attracting a massive inflow of client assets, and keeping a tight rein on expenses, Schwab delivered exceptional growth in both revenue and profit. In a competitive financial services landscape, these results underscore the strength and scale of its integrated brokerage and banking model.
Last updated: November 8, 2025