10-KPeriod: FY2023

CAPITAL ONE FINANCIAL CORP Annual Report, Year Ended Dec 31, 2023

Filed February 23, 2024For Securities:COFCOF-PLCOF-PICOF-PKCOF-PNCOF-PJ

Summary

Capital One Financial Corporation (COF) reported a net income of $4.9 billion ($11.95 per diluted common share) for 2023 on total net revenue of $36.8 billion. This represents a decrease from $7.4 billion in net income in 2022. The decline was primarily driven by a higher provision for credit losses and increased non-interest expenses, including a significant FDIC special assessment, partially offset by higher net interest income. The company announced a significant development: an agreement to acquire Discover Financial Services in an all-stock transaction, subject to regulatory and shareholder approvals. This merger is a key strategic move that will shape the company's future operations and market position. The report also highlights an increase in the net charge-off rate to 2.70% and a rise in the 30+ day delinquency rate to 3.99%, reflecting continued credit normalization, particularly in the domestic credit card portfolio. Capital and liquidity positions remain strong, with CET1 capital ratios exceeding regulatory minimums.

Financial Highlights

41 data points
Beta

Revenue

$36.79B

Net Income

$4.89B

13.3% Net Margin

EPS (Diluted)

$11.95

Total Assets

$478.46B

Cash & Equivalents

$43.76B

Free Cash Flow

$19.61B

Financial Statements
Beta
Revenue$36.79B
Operating Income$4.89B
Interest Expense$12.70B
Net Income$4.89B
EPS (Basic)$11.98
EPS (Diluted)$11.95
Shares Outstanding (Basic)382.40M
Shares Outstanding (Diluted)383.40M

Key Highlights

  • 1Agreement to acquire Discover Financial Services in an all-stock transaction.
  • 2Net income decreased to $4.9 billion in 2023 from $7.4 billion in 2022, primarily due to higher provision for credit losses and increased non-interest expenses.
  • 3Net interest income increased by $2.1 billion to $29.2 billion, driven by higher average loan balances and asset yields, partially offset by higher funding costs.
  • 4Net charge-off rate increased by 134 basis points to 2.70% in 2023, reflecting credit normalization in the credit card portfolio.
  • 530+ day delinquency rate increased by 78 basis points to 3.99% as of December 31, 2023.
  • 6Common Equity Tier 1 (CET1) capital ratio stood at 12.9% as of December 31, 2023, well above regulatory minimums.
  • 7Total assets increased by $23.2 billion to $478.5 billion, driven by higher cash balances and growth in the credit card loan portfolio.

Frequently Asked Questions

The most significant event disclosed is Capital One's agreement to acquire Discover Financial Services in an all-stock transaction. This merger, which is pending regulatory and shareholder approvals, is expected to significantly reshape the company's market presence and future operations.

Capital One's net income decreased from $7.4 billion in 2022 to $4.9 billion in 2023. This decline was primarily attributed to a higher provision for credit losses and increased non-interest expenses, including a significant FDIC special assessment. However, net interest income saw an increase due to higher loan balances and asset yields, partially offset by increased funding costs.

The filing indicates a deterioration in credit quality metrics. The net charge-off rate increased by 134 basis points to 2.70%, and the 30+ day delinquency rate rose by 78 basis points to 3.99% as of December 31, 2023. This is attributed to loan growth and continued credit normalization, particularly in the domestic credit card portfolio.

Capital One's capital position remains strong. The Common Equity Tier 1 (CET1) capital ratio was 12.9% as of December 31, 2023, which is well above the regulatory minimum requirements and the applicable well-capitalized standards.