Capital One Profit Surges On Revenue, Lower Provisions

(RTTNews) - Capital One Financial Corp. (COF) Thursday reported a surge in second-quarter profit as the card lender provided less for loan losses, and reaped gains in net interest income and margin.

"We delivered solid performance across each of our businesses during the quarter," said Chief Executive Richard Fairbank. He said the company will strive to manage costs and credit quality.

Capital One, which specializes in credit cards, home loans, auto loans, and banking products, has been gaining from higher consumer loans amid some improvement in the economy.

The McLean, Virginia-based company reported second-quarter net income to common shares of $1.10 billion or $1.87 per share, compared with $92 million or $0.16 per share last year.

On average, 27 analysts polled by Thomson Reuters expected earnings of $1.72 per share for the quarter.

Revenues for the quarter grew to $5.6 billion from $5 billion a year ago, topping analysts' estimates of $5.53 billion.

Net interest margin for the quarter improved to 6.83 percent from 6.04 percent a year ago.

Growth in domestic card business led to total credit card revenues jump to $3.6 billion from $3.1 billion a year ago.

Consumer Banking net revenues slid by $14 million to $1.667 billion, and Commercial Banking grew to $550 million from $509 million.

Results were beefed up by lower loan-loss provision of $762 million, compared with $1.68 billion in the same quarter a year ago.

Meanwhile, delinquencies were higher, with net charge-offs in the quarter climbing to $969 million from $738 million last year.

At the end of the quarter, Capital One had loans held for investment of $191.5 billion, compared with $202.7 billion last year.

The company 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.

Earlier this month, Capital One said it will repurchase shares of up to $1 billion after it closed the sale of its Best Buy Co Inc. portfolio in the third quarter. In February, Capital One agreed to sell to Citigroup Inc. (C) about $7 billion of label and co-branded card loans linked to Best Buy for undisclosed terms.

Capital One closed Thursday at $67.05, up 0.22%, on a volume of 3.8 million shares on the NYSE. In after hours, the stock gained $0.95 or 1.42%.