Credit card, auto lending drive earnings growth at Capital One

Growth in its largest loan categories, coupled with higher interest rates, propelled first-quarter profit higher at Capital One Financial.

Net income at the $363 billion-asset company rose 71% to $1.3 billion from a year earlier. Earnings per share of $2.64 was 29 cents better than the mean estimate of analysts compiled by FactSet Research Systems.

Net interest income after the loan-loss provision jumped 16% to $4 billion. The provision declined 16% to $1.7 billion. Total loans held for investment increased 3% to $248 billion.

Capital One branch
The consent order between the Federal Reserve and Capital One required the bank to submit progress reports on its efforts to improve its risk management functions.
Michael Nagle/Bloomberg

The average balance of interest-earning assets grew 4% to $330 billion and the average yield on those assets improved 41 basis points to 8.04%.

Credit cards loans held for investment increased 8% to $108 billion. Auto loans rose 10% to $55 billion. Commercial real estate loans increased 1% to $27 billion. However, commercial and industrial loans dropped 4% to $38 billion and residential mortgages declined 20% to $17 billion. Capital One announced late last year that it was exiting the mortgage business.

The McLean, Va., bank’s domestic credit card charge-off rate increased 12 basis points to 5.26%.

The investment securities portfolio grew 4% to $70 billion.

Total deposits rose 4% to $251 billion, with deposits that pay customers interest increasing 5% to $225 billion. Non-interest-bearing deposits fell 1% to $26 billion.

Noninterest income increased 12% to $1.2 billion on improvements in both interchange fees and service charges.

Noninterest expenses jumped 4% to $3.6 billion on higher salaries and employee benefits, occupancy costs and marketing.

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Earnings Credit cards Consumer banking Commercial lending Capital One
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