What was the primary reason for the decrease in net income compared to the previous year?

The decrease in net income was primarily driven by lower non-interest income, largely due to the absence of a net gain from the sale of the consumer home loan portfolio in the prior year, and higher non-interest expenses, which included increased marketing and operating expenses associated with investments in technology and the Walmart partnership.

What is the company's outlook for its net interest margin?

Capital One expects deposit mix changes to continue having a negative impact on its net interest margin during 2019.

What is the potential financial impact of the disclosed cybersecurity incident?

Capital One expects incremental costs of approximately $100 million to $150 million in 2019 related to the cybersecurity incident, primarily for customer notifications, credit monitoring, and technology remediation. The company carries insurance with a $10 million deductible and a $400 million coverage limit, but the ultimate magnitude of expenses is uncertain and may not be fully covered by insurance.

How is the company managing its capital?

Capital One's Common Equity Tier 1 capital ratio was 12.3% as of June 30, 2019, exceeding regulatory minimums. The company's capital plan was not objected to by the Federal Reserve, allowing for a new stock repurchase program of up to $2.2 billion and the continuation of its quarterly dividend.

CAPITAL ONE FINANCIAL CORP 10-Q Quarterly Report Q2 FY2019

Summary

Capital One Financial Corporation (COF) reported net income of $1.6 billion for the second quarter of 2019, a decrease from $1.9 billion in the same period of 2018. This decline was primarily driven by lower non-interest income, notably the absence of a gain from a prior period consumer home loan portfolio sale, and higher non-interest expenses, including increased marketing and technology investments, particularly those related to the Walmart partnership. Despite these headwinds, net interest income saw an increase, supported by higher yields on interest-earning assets and loan portfolio growth, while net interchange fees also improved due to higher purchase volumes. A significant development disclosed in the filing is the cybersecurity incident that occurred in March 2019, impacting approximately 100 million U.S. and 6 million Canadian individuals. The company expects incremental costs of $100 million to $150 million for 2019 related to this incident. The company's capital position remains strong, with its Common Equity Tier 1 capital ratio at 12.3% as of June 30, 2019, exceeding regulatory requirements. Additionally, Capital One announced a new stock repurchase program of up to $2.2 billion, signaling confidence in its financial health and commitment to returning capital to shareholders.

Financial Highlights

41 data points

Beta

Revenue

$7.12B

Net Income

$1.63B

0.2% Net Margin

EPS (Diluted)

$3.24

Total Assets

$373.62B

Cash & Equivalents

$15.82B

Free Cash Flow

$4.01B

Financial Statements

Beta

Revenue	$7.12B
Operating Income	$3.03B
Interest Expense	$1.33B
Net Income	$1.63B
EPS (Basic)	$3.26
EPS (Diluted)	$3.24
Shares Outstanding (Basic)	470.80M
Shares Outstanding (Diluted)	473.00M

Key Highlights

1Net income for Q2 2019 was $1.6 billion, down from $1.9 billion in Q2 2018, impacted by lower non-interest income and higher non-interest expenses.
2Net interest income increased by 4% year-over-year to $5.75 billion, driven by higher asset yields and loan growth.
3A significant cybersecurity incident, occurring in March 2019, impacted approximately 106 million customers and is expected to cost $100-$150 million in 2019.
4The company announced a new stock repurchase program of up to $2.2 billion, authorized by the Board of Directors.
5Total net revenue for Q2 2019 was $7.12 billion, a slight decrease of 1% from $7.19 billion in Q2 2018.
6The Common Equity Tier 1 capital ratio stood at a strong 12.3% as of June 30, 2019, up from 11.2% at the end of 2018.

CAPITAL ONE FINANCIAL CORP Quarterly Report for Q2 Ended Jun 30, 2019

Summary

Financial Highlights

Key Highlights

Frequently Asked Questions