- Company name
- Charles Schwab
- Sector
- Brokerage & wealth management
- About
- Charles Schwab runs a large brokerage, banking, and wealth management business. Clients hold cash and investments at Schwab. Schwab earns net interest income on client cash, much of it held in bank deposit accounts. Schwab also earns asset-based fees on managed portfolios, mutual funds, and advisory accounts, plus trading and service fees.
- Thesis
- The market still prices Schwab as if client cash could sort back into money market funds and other higher-yielding alternatives, the way it did in 2023 when the industry worried about deposit outflows. That fear has faded in practice. Net interest margin has expanded for several straight quarters, and net new assets are growing faster than a year ago, showing clients are adding money rather than pulling cash out. Schwab also finished digesting the TD Ameritrade integration in 2024, removing a multi-year source of cost and platform uncertainty. A market still anchored to the old cash-sorting worry may be slow to re-rate the stock as these trends keep showing up in earnings.
- Risks
- Schwab holds a large fixed-income investment portfolio, built up when deposits were high. If the Federal Reserve cuts interest rates faster than expected, yields on this portfolio reprice down before deposit costs fall as much, which can compress net interest margin.
A large share of client cash sits in low-yielding bank sweep accounts. If money market fund yields pull further ahead of sweep rates, clients can move cash out of sweep and into higher-yielding funds. This lowers the low-cost deposit base Schwab lends against.
Schwab now competes directly with other platforms on commission-free trading, crypto trading, and cash yields. Its own crypto trading service only launched in 2026, so it is unproven against established crypto-focused competitors.
- Recent events
- 2026-07-21: Schwab reported Q2 2026 results. Total net revenue was $7.07 billion, a record. Net interest margin was 3.00%, and net new assets reached $62.7 billion in June alone.
2026-05-13: Schwab began rolling out direct spot trading in bitcoin and ether to retail clients.