• Net Income: $1.4 billion or $3.45 per diluted share; adjusted EPS of $4.06.
• Pre-Provision Earnings: $4.1 billion, flat compared to the fourth quarter; adjusted increase of 2%.
• Revenue: Declined 2% due to two fewer days in the quarter.
• Noninterest Expense: Decreased 5% on an adjusted basis.
• Provision for Credit Losses: $2.4 billion, a decrease of $273 million from the prior quarter.
• Allowance Release: $368 million, bringing the allowance balance to $15.9 billion.
• Total Liquidity Reserves: Increased to $131 billion, up $7 billion from last quarter.
• Cash Position: Approximately $49 billion, up $5 billion from the prior quarter.
• Net Interest Margin (NIM): 6.93%, a decrease of 10 basis points from last quarter.
• Common Equity Tier 1 Capital Ratio: 13.6%, up 10 basis points from the prior quarter.
• Domestic Card Purchase Volume Growth: 5% year-over-year; adjusted growth of 6% accounting for leap year.
• Domestic Card Revenue Margin: Increased 37 basis points to 18.2%.
• Charge-Off Rate: 6.19%, up 25 basis points year-over-year.
• Domestic Card Noninterest Expense: Up 13% year-over-year.
• Marketing Expense: $1.2 billion, up 19% year-over-year.
• Auto Originations: Up 22% from the prior year quarter.
• Consumer Banking Revenue: Down 2% year-over-year.
• Auto Charge-Off Rate: 1.55%, down 44 basis points year-over-year.
• Commercial Banking Revenue: Down 7% from the linked quarter.
• Commercial Banking Net Charge-Off Rate: 0.11%, down 15 basis points from the sequential quarter.

Release Date: April 22, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• $Capital One Financial Corp(COF-N)$ (NYSE:COF) reported strong first-quarter earnings with $1.4 billion in net income, translating to $3.45 per diluted share.
• The company achieved a 5% year-over-year growth in purchase volume in its Domestic Card business, with revenue up 7% from the first quarter of 2024.
• Capital One Financial Corp (NYSE:COF) saw a decrease in its provision for credit losses by $273 million compared to the prior quarter, driven by lower net charge-offs and larger reserve releases.
• The company's liquidity reserves increased by $7 billion from the previous quarter, ending at $131 billion, supported by strong deposit growth.
• Capital One Financial Corp (NYSE:COF) received regulatory approval for its acquisition of Discover, which is expected to create a leading consumer banking and payments platform with significant strategic and economic upside.

Negative Points

• Revenue in the linked quarter declined by 2%, attributed to two fewer days in the quarter.
• The net interest margin decreased by 10 basis points from the previous quarter, impacted by fewer days in the quarter.
• Noninterest expense increased by 27% year-over-year in the Consumer Banking segment, driven by higher marketing and technology investments.
• The charge-off rate in the Domestic Card business increased by 25 basis points year-over-year, partly due to the end of the Walmart loss-sharing agreement.
• Capital One Financial Corp (NYSE:COF) faces heightened uncertainty due to economic conditions, including potential impacts from tariffs and inflation, which could affect future credit performance.

Q & A Highlights

Q: Rich, given the market concerns about tariffs and consumer health, what data within Capital One gave you confidence to release reserves? A: Richard Fairbank, CEO: The U.S. consumer remains strong, with low unemployment and stable debt servicing. Our card portfolio shows improving delinquencies and payment rates. While some consumers feel inflation pressure, overall, the consumer is in good shape. Recent spend trends show stable growth, with some uptick due to Easter timing and retail spending. We remain vigilant about economic uncertainties. Andrew Young, CFO, added that the allowance release was tempered by downside economic risks and uncertainties.

Q: How should we think about the timing of achieving synergies from the Discover acquisition? A: Andrew Young, CFO: We are assuming the same synergy estimates as announced, just shifted back by about six months due to the later closing date. We will maintain our current capital return pace until we close the transaction and complete our analysis.

Q: Can you discuss your marketing strategy and how you balance growth investment with risk management, especially in subprime? A: Richard Fairbank, CEO: Our marketing investments focus on customer growth, winning at the top of the market, and building our national bank. We leverage technology for tailored solutions and expand channels for new accounts. We continue to invest in experiences for high-end customers and our national bank's digital capabilities. We are vigilant in monitoring subprime risks but continue to lean into marketing opportunities.

Q: How will the Discover acquisition enhance Capital One's national banking strategy? A: Richard Fairbank, CEO: The acquisition provides vertical integration benefits, allowing us to leverage Discover's network and enhance our national bank's margins. Our strategy focuses on digital-first banking with leaner economics, aggressive pricing, and no fees. The Discover acquisition will help us scale and invest more in building our national bank.

Q: What are the technology integration plans for Discover, and how do the tech stacks compare? A: Richard Fairbank, CEO: Discover will benefit from Capital One's technology transformation, leveraging our modern tech stack. Discover's mainframe and data centers will be integrated over time, with a focus on modernizing their network. The transition will take several years, especially for the global network, but we are well-prepared for this integration.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.