Capital One Profit Drops on Higher Provision for Credit Losses

By Lauren Pollock 

Capital One Financial Corp. said its profit fell a bigger-than-expected 12% in the first quarter, hurt by a higher provision for credit losses and an increase in expenses.

Shares declined 2.6% after hours.

As one of the country's largest credit-card lenders, Capital One's results are often considered a gauge of consumer sentiment. The company also offers traditional bank accounts, mortgages, auto loans and commercial loans.

The bank's provision for credit losses rose to $1.53 billion from $935 million a year earlier and $1.38 billion in the previous quarter.

Analysts, ahead of the report, warned about potentially higher credit-loss provisions at Capital One. Oppenheimer, for one, cited the company's subprime-borrower exposure in downgrading the firm's stock to underperform earlier this month.

In all, Capital One reported a profit of $1.01 billion, or $1.84 a share in the quarter, down from $1.15 billion, or $2 a share, in the same period a year earlier. Revenue improved to $6.22 billion from $5.65 billion, driven by increases in net interest and non-interest income.

Analysts polled by Thomson Reuters expected a per-share profit of $1.91 on revenue of $6.16 billion.

Non-interest expenses increased to $3.22 billion from $3.05 billion a year earlier.

Write to Lauren Pollock at [e-mail]

(END) Dow Jones Newswires

April 26, 2016 16:37 ET (20:37 GMT)

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