(Bloomberg) --Capital One Financial Corp. posted a first-quarter profit that missed Wall Street estimates as soured credit-card loans increased.
Net income rose 33% to $1.28 billion, or $3.21 a share, the McLean, Virginia-based company said Thursday in a
The bank announced in February that it agreed to buy rival Discover Financial Services in a $35 billion deal that would create the largest US credit-card issuer by loan volume. The acquisition, which would also give Capital One a valuable payments network that could challenge the dominance of Visa Inc. and Mastercard Inc., is subject to antitrust review and shareholder approval.
"The acquisition of Discover is a singular opportunity that creates a consumer banking and global payments platform with the capabilities, technology, brands, and customer franchise to create significant value for merchants, consumers, small businesses and shareholders," Chief Executive Officer Richard Fairbank said in the statement.
Shares of Capital One were little changed in extended trading at 4:20 p.m. in New York. The stock had climbed 11% this year through the close of regular trading Thursday, outpacing the 8.6% advance for the 71-company S&P 500 Financials Index.
Capital One, like Discover, is showing signs of greater stress in its loan portfolio. Credit-card write-offs totaled $2.2 billion in the first quarter, a 61% increase from a year earlier. Card loans at least 30 days overdue climbed to 4.5% from 3.68% in last year's first quarter.
Other first-quarter highlights:
- Revenue fell 1% to $9.4 billion, narrowly beating estimates
- Net interest income climbed 4% to $7.49 billion, and net interest margin, the difference between what banks earn on loans and what they pay for deposits, expanded to 6.69%, up from 6.6% a year earlier
