Capital One posts higher 2Q net income, revenue

AP News
Posted: Jul 18, 2013 5:53 PM

LOS ANGELES (AP) — Capital One Financial Corp. said Thursday that its second-quarter profit vaulted versus the same period last year, when the lender set aside $1.7 billion to cover bad loans.

The company benefited from higher revenue from its credit card and commercial banking businesses, and ended the April-June period with higher loan balances at its auto lending division. But retail banking and home loans declined.

All told, Capital One's net interest income, or money earned from loans, grew to $4.55 billion in the quarter from $4 billion a year earlier. Non-interest income, which includes service charges and other customer-related fees, rose to $1.09 billion from $1.05 billion.

Results bested analyst expectations, and the stock added 95 cents, or 1.4 percent, to $68 in aftermarket trading. Shares closed up 15 cents at $67.05 in regular trading and are up nearly 16 percent this year.

Capital One, based in McLean, Va., is best known for its namesake credit card business, but it has taken steps in recent years to increase its profile as a national bank. The acquisition of ING Direct, a deal that closed in February 2012, made Capital One the nation's sixth-biggest bank, based on deposits.

The U.S. economy has been showing more robust signs of growth, led by stronger job gains in the first half of the year versus the same period last year, and a housing recovery that appears to be gaining momentum.

That's helped boost consumer confidence, which rose last month to the highest level since January 2008, according to the Conference Board.

Those factors have made consumers feel wealthier and more willing to spend money and take on more debt for big purchases such as autos — all factors that can drive revenue for credit card issuers and lenders.

For the three months ended June 30, Capital One's net income after paying preferred dividends jumped to $1.1 billion, or $1.87 per share, in the three months ended June 30. That compares with net income of $92 million, or 16 cents per share, a year earlier.

Analysts polled by FactSet expected earnings of $1.73 per share.

The company set aside $762 million for credit losses, down from $1.7 billion a year earlier.

Revenue grew nearly 12 percent to $5.64 billion from $5.1 billion. Analysts forecast $5.53 billion.