Capital One earns $3.5 billion as margins improve and credit reserves fall

Capital One ($COF) reported net income of $3.5 billion and earnings of $5.61 per share, compared with $3 billion and $4.73 in the preceding quarter. Adjusted earnings were $6.69 per share. Revenue increased 3% sequentially to $16.3 billion, while net interest margin improved by 40 basis points to 8.41%. Loans reached $462.5 billion, up 1% from the previous quarter.

The provision for credit losses was $2.9 billion and included a $225 million reserve release, while net charge-offs totaled $3.1 billion. Adjusted earnings excluded items including $338 million of Discover integration costs, $47 million of Brex integration costs and $483 million of amortization. The results indicate stronger revenue and margins, but reserve releases and acquisition-related adjustments affect the earnings comparison. The preliminary common-equity Tier 1 capital ratio was 13.8%.

Sources:

• Capital One — SEC earnings exhibit
• Issuer release — timestamped reproduction