Capital One Profit Falls On Lower Revenue, Costs

(RTTNews) - Credit card lender Capital One Financial Corp. (COF), Thursday reported a decline in third-quarter profit due to lower net interest income and higher costs, partly offset by a drop in loan-loss provisions. Nonetheless, results for the quarter topped Wall Street estimates.

Capital One specializes in credit cards, home loans, auto loans, and banking products. The company has consistently performed well on the back of higher consumer loans amid some improvement in the economy.

While the recent quarter saw a decline in Capital One's domestic card business, what comes as a macro-economic reprieve is the resolution of the federal shutdown and the debt ceiling issue.

McLean, Virginia-based Capital One reported third-quarter net income to common shares of $1.1 billion or $1.86 per share, compared with $1.2 billion or $2.01 per share last year.

On average, 26 analysts polled by Thomson Reuters expected earnings of $1.80 per share for the quarter. Analysts' estimates typically exclude special items.

Revenue for the third quarter slid to $5.65 billion from $5.78 billion a year ago, but topped analysts' estimates of $5.58 billion.

Net interest margin for the quarter dropped to 6.89 percent from 6.97 percent.

Revenue from domestic card business slipped to $3.24 billion from $3.44 billion a year ago and Consumer Banking revenue dipped $90 million to $1.67 billion.

Total non interest expenses climbed to $3.15 billion from $3.05 billion a year ago.

Loan-loss provision decreased to $849 million from $1.01 billion a year ago.

While delinquencies were unchanged from last year at 2.54 percent, net charge-offs increased to 1.92 percent from 1.75 percent.

At the end of the quarter, Capital One had loans held for investment of $259 billion, compared with $271 billion last year.

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 closed the sale of Best Buy's U.S. credit card portfolio to Citigroup Inc. (C). Capital One closed Thursday at $72.15, down $0.10 or 0.14%, on a volume of 4.5 million shares on the NYSE. In after hours, the stock gained $1.35 or 1.87% at $73.50. In the last 52- week period, the share traded in the range of $50.21 - $72.65.