01—Abstract
Summary
Summary of the 10-K filed February 21, 2018. Cited figures are marked; the original filing is the authoritative source.
Capital One Financial Corporation (COF) reported a net income of $2.0 billiona for 2017, a decrease from $3.8 billion in 2016, largely due to charges associated with the Tax Cuts and Jobs Act of 2017.
Total net revenue for 2017 was $27.2 billionb, an increase from $25.5 billion in 2016. The company's net charge-off rate increased to 2.67% in 2017 from 2.17% in 2016, primarily driven by higher charge-offs in the domestic credit card portfolio.
Capital One announced its decision to cease new originations of residential mortgage and home equity loan products within its Consumer Banking business. The company's Common Equity Tier 1 capital ratio remained strong at 10.3%c as of December 31, 2017.
02—Key points
Key Highlights
- Net income for 2017 was $2.0 billion, impacted by $1.8 billion in charges related to the Tax Cuts and Jobs Act.
- Total net revenue increased to $27.2 billion in 2017 from $25.5 billion in 2016.
- The net charge-off rate rose to 2.67% in 2017 from 2.17% in 2016, driven by credit card portfolio seasoning.
- Capital One ceased new originations of residential mortgage and home equity loan products.
- The company acquired credit card assets from Cabela's Incorporated on September 25, 2017.
- Common Equity Tier 1 capital ratio was 10.3% as of December 31, 2017.
- The company maintained a strong liquidity position, with liquidity reserves increasing to $84.3 billion as of December 31, 2017.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2017filed February 21, 2018Financial Statements
FY2017 against FY2016
| Line item | FY2017FY2016 | Change |
|---|---|---|
| Revenue | $27.24B$25.50B | +6.8% |
| Operating Income | $2.12B$3.77B | −43.8% |
| Interest Expense | $2.76B$2.02B | +36.9% |
| Net Income | $1.98B$3.75B | −47.2% |
| EPS (Basic) | $3.52$6.96 | −49.4% |
| EPS (Diluted) | $3.49$6.89 | −49.3% |
| Shares Outstanding (Basic) | 484.20M504.90M | −4.1% |
| Shares Outstanding (Diluted) | 488.60M509.80M | −4.2% |
05—Questions
Frequently Asked Questions
What was the primary reason for the decrease in net income in 2017 compared to 2016?
The primary reason for the decrease in net income was the impact of the Tax Cuts and Jobs Act of 2017, which resulted in charges totaling $1.8 billion. Additionally, higher provision for credit losses and increased operating expenses also contributed to the decrease.
What strategic changes did Capital One make in its business segments during 2017?
Capital One announced its decision to cease new originations of residential mortgage and home equity loan products within its Consumer Banking business. The company also completed the acquisition of credit card assets from Cabela's Incorporated.
How did Capital One's credit quality metrics perform in 2017?
The net charge-off rate increased to 2.67% in 2017 from 2.17% in 2016, primarily due to the growth and seasoning of recent domestic credit card loan originations. The 30+ day delinquency rate also increased to 3.48% from 3.27%.
What was Capital One's capital position at the end of 2017?
Capital One maintained a strong capital position, with its Common Equity Tier 1 capital ratio at 10.3% and its Tier 1 capital ratio at 11.8% as of December 31, 2017, both exceeding regulatory minimums.
06—Continue