Capital One Profit Rises On Lower Loss Provision

(RTTNews) - Credit card lender Capital One Financial Corp (COF), Wednesday reported an increase in first-quarter profit, helped mainly by a decline in loan-loss provisions even as revenue came under pressure. Earnings for the quarter topped Wall Street estimates, but revenue fell short of expectations.

Capital One specializes in credit cards, home and auto loans, among other activities. While the company has consistently performed well on the back of higher consumer loans, this quarter saw a slump.

The McLean, Virginia-based company posted first-quarter net income to common shares of $1.14 billion or $1.96 per share, compared with $1.04 billion or $1.77 per share last year.

On average, 26 analysts polled by Thomson Reuters expected earnings of $1.69 per share for the quarter. Analysts' estimates typically exclude special items.

Results for the recent quarter were mainly helped by loan-loss provision that decreased to $735 million from $885 million last year.

The quarter also included a gain from discontinued operations of $30 million, compared with a loss of $78 million a year ago.

Meanwhile, revenue for the first quarter slid to $5.37 billion from $5.55 billion a year ago. Twenty analysts had a consensus revenue estimate of $5.44 billion for the quarter.

Revenue from domestic card business for the quarter declined to $2.96 billion from $3.3 billion a year ago, and Consumer Banking revenue dropped to $1.58 billion from $1.66 billion.

Net interest margin for the quarter dropped to 6.62 percent from 6.71 percent a year ago.

At the end of the quarter, Capital One had loans held for investment of $191.3 billion, compared with $192.9 billion last year.

In March, Capital One said the Federal Reserve completed its 2014 Comprehensive Capital Analysis and Review and did not object to the company's proposed capital plan.

The company expects to maintain its quarterly dividend of $0.30 per share and its board has authorized the repurchase of up to $2.5 billion of its shares through the end of the first quarter of 2015.

Capital One has ramped up its loan portfolio by the $2.6 billion purchase of HSBC U.S. Credit Card business in May 2012 and shored up deposits through the $9 billion purchase of ING Direct USA from ING Groep in February that year.

The company also had closed the sale of Best Buy's U.S. credit card portfolio to Citigroup Inc. (C).

Capital One closed Wednesday at $75.16, up $0.64 or 0.86%, on a volume of 3.6 million shares on the NYSE. In after hours, the stock dropped 0.08%. In the past year, the stock traded in the range of $52.34 - $78.49.