01—Abstract
Summary
Summary of the 10-K filed February 24, 2023. Cited figures are marked; the original filing is the authoritative source.
Capital One Financial Corporation reported a net income of $7.4 billiona for 2022, a decrease from $12.4 billion in 2021, primarily driven by a higher provision for credit losses and increased non-interest expenses related to marketing and technology investments.
Despite this, total net revenue grew to $34.3 billionb, supported by higher net interest income due to increased loan balances in the credit card segment and stronger interchange fees from higher purchase volumes. The company's loan portfolio grew by $35 billion to $312.3 billion, with a corresponding increase in the allowance for credit losses, reflecting a normalization of credit trends and a more cautious economic outlook. Capital One maintained strong capital ratios, with its Common Equity Tier 1 (CET1) capital ratio at 12.5% as of December 31, 2022, exceeding regulatory requirements.
The company repurchased $4.8 billionc of its common stock during the year, reflecting its commitment to returning capital to shareholders. Management highlighted continued investment in technology and digital capabilities as key to future growth and competitiveness. The company's business segments, Credit Card, Consumer Banking, and Commercial Banking, all experienced varying degrees of growth and challenges, with Credit Card and Consumer Banking facing increased provisions for credit losses, while Commercial Banking saw growth in loan balances and yields.
02—Key points
Key Highlights
- Net income decreased to $7.4 billion in 2022 from $12.4 billion in 2021, primarily due to a higher provision for credit losses and increased non-interest expenses.
- Total net revenue increased to $34.3 billion in 2022 from $30.4 billion in 2021, driven by higher net interest income and interchange fees.
- Loans held for investment increased by $35.0 billion to $312.3 billion as of December 31, 2022, with significant growth in the Credit Card segment.
- The net charge-off rate increased by 48 basis points to 1.36% in 2022, attributed to credit normalization in consumer businesses.
- The Common Equity Tier 1 (CET1) capital ratio remained strong at 12.5% as of December 31, 2022, exceeding regulatory minimums.
- Capital One repurchased $4.8 billion of its common stock in 2022, demonstrating a commitment to capital return to shareholders.
- The company continued to invest in technology and marketing, leading to an increase in non-interest expense.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2022filed February 24, 2023Financial Statements
FY2022 against FY2021
| Line item | FY2022FY2021 | Change |
|---|---|---|
| Revenue | $34.25B$30.43B | +12.5% |
| Operating Income | $7.36B$12.39B | −40.6% |
| Interest Expense | $4.12B$1.60B | +158.0% |
| Net Income | $7.36B$12.39B | −40.6% |
| EPS (Basic) | $17.98$27.04 | −33.5% |
| EPS (Diluted) | $17.91$26.94 | −33.5% |
| Shares Outstanding (Basic) | 391.80M442.50M | −11.5% |
| Shares Outstanding (Diluted) | 393.20M444.20M | −11.5% |
05—Questions
Frequently Asked Questions
What was Capital One's financial performance in 2022 compared to 2021?
In 2022, Capital One Financial Corporation reported a net income of $7.4 billion ($17.91 per diluted share) on total net revenue of $34.3 billion. This represents a decrease in net income from $12.4 billion ($26.94 per diluted share) in 2021, primarily due to a higher provision for credit losses and increased non-interest expenses. However, total net revenue saw an increase from $30.4 billion in 2021, driven by growth in net interest income and higher interchange fees.
How did Capital One's loan portfolio perform in 2022?
Capital One's loans held for investment grew by $35.0 billion to $312.3 billion as of December 31, 2022, up from $277.3 billion in the prior year. This growth was observed across all business segments, with the Credit Card segment contributing $23.0 billion to this increase. The company also saw an increase in its net charge-off rate to 1.36% and a rise in its 30+ day delinquency rate to 3.21%, reflecting a normalization of credit trends and a more cautious economic outlook.
What is Capital One's capital position, and how is it returning capital to shareholders?
Capital One maintained a strong capital position throughout 2022. Its Common Equity Tier 1 (CET1) capital ratio was 12.5% as of December 31, 2022, comfortably exceeding regulatory requirements. The company demonstrated its commitment to returning capital to shareholders by repurchasing approximately $4.8 billion of its common stock during 2022, following authorizations totaling $10 billion from its Board of Directors.
What were the key drivers of the increase in non-interest expense?
The increase in non-interest expense in 2022 was primarily driven by higher marketing spend and continued investment in technology. Salaries and associate benefits also increased due to a rise in employee headcount.
06—Continue