Capital One's 4Q net income falls sharply

AP News
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Posted: Jan 19, 2012 5:24 PM
Capital One's 4Q net income falls sharply

Capital One Financial Corp. said Thursday that its net income fell 41 percent in the fourth quarter as expenses for marketing and operations rose sharply.

In the final three months of last year, the company earned $407 million, or 88 cents per share. That compares with $697 million, or $1.52 per share, in the year ago period.

Analysts on average expected a profit of $1.55 per share, according to FactSet.

Capital One, based in McLean, Va., agreed last year to buy the online bank ING Direct and HSBC's U.S. card business. It expects both deals to close by the second quarter.

In the fourth quarter Capital One's total revenue was $4.1 billion, up 2.5 percent from the same quarter of 2010.

Total non-interest expenses spiked to $2.62 billion, up from $2.09 billion a year ago. Salaries and benefits rose to $817 million, from $657 million; marketing expenses rose to $420 million, from $308 million. Other non-interest expenses included $90 million in litigation costs and $40 million in asset write downs.

Total non-interest income slipped to $868 million, from $939 million, primarily because of a drop in service charges and other customer fees.

Net interest income for the quarter rose to $3.18 billion, up from $3.02 billion a year ago. Purchase volumes in the credit card unit increased 17.8 percent from a year ago.

Shares of Capital One fell $2.47, or 5.1 percent, to $46.30 in after-hours trading. They closed down 36 cents at $48.76 in the regular session.