2Q26 Follow-Up: Setting the Bar Higher

Research evidence excerpt

2Q26 Follow-Up: Setting the Bar Higher

et and Capital Return – Payables to brokers, dealers, and clearing organizations rose

to $43.8B, up +$15.7B q/q (+56%), reflecting elevated client activity and funding needs across client

margin lending and L/S balances. Meanwhile ex-L/S strategies, transactional sweep cash increased

to $442.0B from $433.5B in May (+2% m/m), while margin balances rose to $123.0B, up from

$117.2B in May (+5% m/m), highlighting ongoing client engagement. Bank loans rose to $67.0B,

up +16% vs. YE25. SCHW remained within its target adj tier 1 leverage capital ratio range - albeit

nearing the lower bound - while repurchasing $1.0B of stock and reducing pref balances by ~$0.6B

net ($1.5B issued, $2.1B redeemed). Going forward, capital priorities remain supporting growth and

client activity, followed by opportunistic buybacks (we estimate ~$2.1B in 2H).

Additional Growth Areas – SCHW continues investing in several growth initiatives. Strong demand

for L/S strategies contributed to higher NII and margin balances, while mgmt highlighted continued

client demand significant growth potential ahead. Investments in the trading platform continue to

drive engagement. On ETF monetization, mgmnt expects revenue contribution to increase over

time as its strategy aligns with industry trends. Crypto expansion remains on track, with BTC and

ETH spot trading launched and crypto transfer functionality expected to begin piloting by late July.

The firm is also expanding its self-directed alternatives platform, while continuing the integration of

Forge's private-market capabilities following the deal's close.

Daniel T. Fannon * | Equity Analyst

+1 (415) 229-1523 | dfannon@jefferies.com

Ritwik Roy * | Equity Associate

(415) 229-1480 | rroy2@jefferies.com