Capital One beats revenue and profit forecasts — CNBC
In the United States, Capital One Financial reported third-quarter results that exceeded analysts’ expectations: revenue rose 6.4% year-on-year to $16.34 billion, while adjusted earnings per share came to $6.69. Analysts surveyed by LSEG had expected revenue of $16.27 billion and earnings per share of $5.50, respectively. After the report was published, the company’s shares rose about 4% in after-hours trading to $210 per share, CNBC reports.
Interest income and credit metrics
Capital One’s net interest income rose by about 4% from the previous quarter and exceeded the FactSet consensus forecast by $134 million. At the same time, non-interest income declined 1% quarter-on-quarter and came in $30 million below expectations.
Net discount and interchange fee income increased 3.5% to $2.34 billion. Provisions for credit losses totaled $2.9 billion, while analysts had expected about $3.6 billion. An additional factor supporting profit was the release of $225 million from reserves for potential credit losses.
The net charge-off rate in the domestic card operations segment was 3.98%, compared with 4.71% in the second quarter and 4.63% a year earlier. In the consumer banking segment, the figure increased to 1.63% from 1.48% a quarter earlier, while net charge-offs in commercial banking were zero.
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Discover integration and expenses
Capital One’s total expenses amounted to $8.86 billion, exceeding the FactSet forecast of $8.75 billion. Operating expenses included $385 million in Discover and Brex integration costs, as well as $519 million in acquisition-related amortization expenses. At the same time, marketing expenses totaled $1.59 billion, below analysts’ forecast of about $1.71 billion.
Chief Executive Officer Richard Fairbank said that year-to-date results reflect about $1.8 billion in annualized synergies from the Discover integration, including cost savings and the effect of the payments network. When announcing the $35 billion deal to acquire Discover in February 2024, the company aimed to achieve $2.7 billion in total synergies in 2027.
During the quarter, Capital One repurchased 12.6 million of its own shares for $2.6 billion. Since the beginning of the year, share repurchases have reached $7.9 billion.
