A spike in loan delinquencies ate into first-quarter profits at Capital One Financial in McLean, Va.
The $349 billion-asset company’s net income fell 22% to $752 million while its earnings per share of $1.54 came in 39 cents below the average estimates of analysts compiled by FactSet Research Systems.
The first-quarter results included a $99 million addition to refund reserves for Capital One's payment protection insurance product in the United Kingdom. Without the item, net income would have been $910 million or $1.75 per share.
Net interest income after the loan-loss provision fell 1% to $3.5 billion. The company increased its provision by 30% year over year to $1.9 billion, as the 30-day plus delinquency rate climbed 28 basis points, to 2.92%. Meanwhile, net chargeoffs rose 28% to $1.5 billion and its rate of net chargeoffs to total loans increased 42 basis points to 2.5%.
Most of the delinquencies and chargeoffs were in the bank’s credit card and auto loan portfolios. Net chargeoffs in its commercial banking portfolio equaled 0.14% of total loans.
Capital One’s fees also took a hit. Noninterest income dropped 9% to $1.06 billion on lower deposit service charges, customer-related fees and interchange fees. Noninterest expense rose 7% to $3.4 billion due to higher salaries.
Shares of Capital One fell 5.4% to $81 in after-hours trading.
Separately, Capital One said it will consolidate about 2,200 workers in Wilmington, Del., in two buildings, after the company had previously suggested it might leave the city, the
