Summary
Capital One Financial Corporation reported net income of $1.3 billion for the third quarter of 2019, a decrease of $169 million compared to the same period in the prior year. This decline was primarily driven by an increase in the U.K. Payment Protection Insurance (PPI) customer refund reserve, higher provision for credit losses, and increased non-interest expenses related to technology investments and the Walmart partnership. Despite these headwinds, the company saw growth in its loan portfolios and a slight increase in net interchange fees due to higher purchase volumes. Capital ratios remain strong, with the Common Equity Tier 1 capital ratio at 12.5% as of September 30, 2019. The company also announced a $2.2 billion stock repurchase program and repurchased approximately $466 million in the third quarter. The company also disclosed a significant cybersecurity incident that affected approximately 100 million individuals in the U.S. and 6 million in Canada. While the incident is expected to incur incremental costs, Capital One anticipates these will be at the lower end of their initial estimate and a significant portion will be covered by insurance. Management believes the incident will not negatively impact the company's long-term strategy or financial health.
Financial Highlights
42 data points| Revenue | $6.96B |
| Operating Income | $4.36B |
| Interest Expense | $1.34B |
| Net Income | $1.33B |
| EPS (Basic) | $2.71 |
| EPS (Diluted) | $2.69 |
| Shares Outstanding (Basic) | 469.50M |
| Shares Outstanding (Diluted) | 471.80M |
Key Highlights
- 1Net income for Q3 2019 was $1.3 billion, down from $1.5 billion in Q3 2018, primarily due to higher U.K. PPI reserves and increased credit loss provisions.
- 2Total net revenue remained flat at $7.0 billion for Q3 2019 compared to Q3 2018, supported by growth in loan portfolios and higher interchange fees.
- 3The provision for credit losses increased by 9% year-over-year for the quarter, driven by a smaller allowance release in the domestic credit card portfolio and energy sector charge-offs.
- 4Non-interest expense increased by 3% year-over-year for the quarter, influenced by technology investments, the Walmart partnership, and the U.K. PPI reserve build.
- 5Capital One announced a $2.2 billion stock repurchase program, repurchasing approximately $466 million of shares in Q3 2019.
- 6The Common Equity Tier 1 capital ratio stood at a strong 12.5% as of September 30, 2019.
- 7A cybersecurity incident was disclosed, affecting approximately 106 million individuals, with expected incremental costs to be partially offset by insurance recoveries.