Capital One Earnings Rise -- 2nd Update

By Tess Stynes 

Capital One Financial Corp. said its first-quarter earnings rose 9.3% as a decline in the amount set aside for potential loan losses helped offset a drop in revenue.

Capital One reported a profit of $1.15 billion, up from $1.1 billion a year earlier. On a per-share basis, which reflects preferred-dividend impacts, earnings rose to $1.96 from $1.77.

Net revenue decreased 3% to $5.37 Billion.

Analysts polled by Thomson Reuters expected per-share profit of $1.69 and revenue of $5.44 billion.

The company's credit-loss provision was $735 million, compared with $885 million a year earlier and $957 million in the fourth quarter.

Operating expenses edged down 0.4%.

Capital One has traditionally generated more than half of its revenue from credit cards, though in recent years the company has worked to transform itself into a full-scale bank through a series of acquisitions.

Like other credit card lenders, Capital One has had to contend with cautious consumers, who have reined in their use of revolving credit since the financial crisis. The McLean, Va., bank's loan growth has been outpaced by competitors American Express Co. and Discover Financial Services in recent years.

To expand its revenue sources, Capital One acquired the U.S. credit-card business of HSBC Holdings PLC in 2012, which made it the third-largest U.S. issuer of private-label cards, which are issued on behalf of retailers and other partners. The deal followed Capital One's acquisition earlier that year of ING Groep NV's U.S. online-banking business.

--Andrew R. Johnson contributed to this article.

Write to Tess Stynes at [e-mail]

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