10-KPeriod: FY2019

CAPITAL ONE FINANCIAL CORP Annual Report, Year Ended Dec 31, 2019

Filed February 20, 2020For Securities:COFCOF-PLCOF-PICOF-PKCOF-PNCOF-PJ

Summary

Capital One Financial Corporation's (COF) 2019 10-K report highlights a strong performance characterized by growth in loan portfolios and stable credit metrics, despite a significant cybersecurity incident. Total net revenue reached $28.6 billion, with net income at $5.5 billion ($11.05 per diluted common share). The company successfully integrated the Walmart credit card portfolio acquisition, adding $8.1 billion in domestic credit card loans. Key financial indicators show a 2% increase in net interest income, driven by higher asset yields and loan growth, and a 10% rise in purchase volume in the credit card segment. The company's capital position remains robust, with a Common Equity Tier 1 ratio of 12.2%. The report also details ongoing investments in technology and infrastructure, contributing to a rise in non-interest expense, and outlines the company's strategic outlook, including expected modest improvements in operating efficiency ratios through 2020-2021. The cybersecurity incident, while resulting in $72 million in incremental expenses (partially offset by insurance recoveries), is not expected to impact the company's long-term financial health.

Financial Highlights

41 data points
Beta

Revenue

$28.59B

Net Income

$5.55B

19.4% Net Margin

EPS (Diluted)

$11.05

Total Assets

$390.37B

Cash & Equivalents

$13.75B

Free Cash Flow

$15.75B

Financial Statements
Beta
Revenue$28.59B
Operating Income$5.53B
Interest Expense$5.17B
Net Income$5.55B
EPS (Basic)$11.10
EPS (Diluted)$11.05
Shares Outstanding (Basic)467.60M
Shares Outstanding (Diluted)469.90M

Key Highlights

  • 1Total net revenue of $28.6 billion and net income of $5.5 billion ($11.05 per diluted common share) for 2019.
  • 2Acquisition of Walmart's credit card portfolio added approximately $8.1 billion in domestic credit card loans.
  • 3Net interest income increased by 2% to $23.3 billion, driven by higher yields on interest-earning assets and loan growth.
  • 4Credit card net interest income grew 2% to $14.5 billion, supported by the Walmart portfolio acquisition.
  • 5Common Equity Tier 1 capital ratio remained strong at 12.2% as of December 31, 2019.
  • 6The company repurchased approximately $1.4 billion of common stock under its 2019 Stock Repurchase Program.
  • 7Cybersecurity incident resulted in $72 million of incremental expenses in 2019, with ongoing investments in cybersecurity.

Frequently Asked Questions

In 2019, Capital One reported net income of $5.5 billion ($11.05 per diluted common share) on total net revenue of $28.6 billion, compared to net income of $6.0 billion ($11.82 per diluted common share) on total net revenue of $28.1 billion in 2018. The decrease in net income was primarily due to higher non-interest expenses from technology investments and the Walmart partnership, and a higher provision for credit losses.

The most significant event was the cybersecurity incident announced on July 29, 2019, which involved unauthorized access to personal information. The company also completed the acquisition of Walmart's credit card portfolio in October 2019, adding approximately $8.1 billion in loans.

Capital One maintained a strong capital position. The Common Equity Tier 1 (CET1) capital ratio was 12.2% as of December 31, 2019, exceeding regulatory requirements. The company also announced a stock repurchase program of up to $2.2 billion.

Capital One expects modest improvements in its full-year operating efficiency ratio in 2020, with a more significant improvement anticipated by 2021, aiming for a ratio of 42%.