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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Capital One Financial Corporation | NYSE:COF | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 144.61 | 24 | 10:23:07 |
By AnnaMaria Andriotis
Capital One Financial Corp.'s second-quarter profit rose sharply as consumer card spending surged and credit losses fell.
Net income for the quarter surged 84% to $1.91 billion, or $3.71 a share, from $1.04 billion, or $1.94 a share, in the year-ago period. Revenue rose 7% to $7.2 billion from $6.7 billion.
Results beat analyst estimates, and shares were up 2% in after-hours trading Thursday.
The loan performance of the company, which has a large subprime card business, often serves as a gauge for consumers' willingness to spend and their ability to pay back their debts. After rising for many quarters on a year-over-year basis, the company's net charge-off rate for its domestic card business fell to 4.72% in the second quarter compared with 5.11% a year prior. That was the first year-over-year decline in this metric since the second quarter of 2015.
Richard Fairbank, Capital One's chief executive, said performance in the domestic card business has turned a corner
"We are now on the good side of growth math," he said on an earnings call Thursday. "Credit performance on the loans booked during our growth surge [between 2014 and 2016] has now turned and is improving year over year."
Also helping Capital One's loan performance is its recent acquisition of the credit-card portfolio of outdoor-gear retailer Cabela's, whose cardholders tend to have high credit scores.
Provisions for future credit losses in Capital One's domestic card business fell 18% from a year ago. Purchase card volume increased 17% from a year prior, while card balances rose 8%.
Non-interest expenses totaled $3.4 billion, mostly unchanged from a year prior as the company continues to invest in becoming more of a digital bank.
Capital One also is looking to become a bigger force in merchant card partnerships. The bank is in talks to become the issuer of Walmart Inc. credit cards, according to people familiar with the matter, a change that would be a major shakeup in the card industry. Synchrony Financial has been Walmart's exclusive card issuer since 1999.
Mr. Fairbank said Capital One is looking for a merchant partner with a strong brand and commitment to the card program as an avenue of growth.
Write to AnnaMaria Andriotis at annamaria.andriotis@wsj.com
(END) Dow Jones Newswires
July 19, 2018 19:35 ET (23:35 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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