10-QPeriod: Q2 FY2023

CAPITAL ONE FINANCIAL CORP Quarterly Report for Q2 Ended Jun 30, 2023

Filed July 27, 2023For Securities:COFCOF-PLCOF-PICOF-PKCOF-PNCOF-PJ

Summary

Capital One Financial Corporation reported a net income of $1.43 billion for the second quarter of 2023, a decrease from $2.03 billion in the same quarter of the prior year. This decline was primarily driven by a higher provision for credit losses, reflecting credit normalization and an allowance build in the credit card portfolio, as well as increased non-interest expenses, largely due to higher salaries and benefits. These factors were partially offset by a $596 million increase in net interest income, driven by higher average loan balances in the credit card portfolio. The company maintained a strong Common Equity Tier 1 capital ratio of 12.7% as of June 30, 2023, exceeding regulatory requirements. Despite the year-over-year decrease in net income, the company returned capital to shareholders through dividends and share repurchases.

Financial Highlights

42 data points
Beta

Revenue

$9.01B

Net Income

$1.43B

15.9% Net Margin

EPS (Diluted)

$3.52

Total Assets

$467.80B

Cash & Equivalents

$42.05B

Free Cash Flow

$3.15B

Financial Statements
Beta
Revenue$9.01B
Operating Income$2.39B
Interest Expense$3.05B
Net Income$1.43B
EPS (Basic)$3.53
EPS (Diluted)$3.52
Shares Outstanding (Basic)382.80M
Shares Outstanding (Diluted)383.70M

Key Highlights

  • 1Net income for Q2 2023 was $1.43 billion, down from $2.03 billion in Q2 2022, primarily due to higher provision for credit losses and increased operating expenses.
  • 2Net interest income increased by 9% year-over-year to $7.11 billion in Q2 2023, driven by growth in credit card loan balances and higher asset yields.
  • 3The provision for credit losses more than doubled to $2.49 billion in Q2 2023, reflecting continued credit normalization and an increase in the allowance for credit losses.
  • 4The net charge-off rate significantly increased to 2.82% in Q2 2023 from 1.18% in Q2 2022, primarily in the credit card and auto loan portfolios, and also impacted by the commercial real estate portfolio.
  • 5Total deposits grew by $10.7 billion to $343.7 billion as of June 30, 2023, driven by the national consumer banking strategy.
  • 6Capital One's Common Equity Tier 1 capital ratio stood at a strong 12.7% as of June 30, 2023, well above regulatory minimums.
  • 7The company repurchased $150 million of its common stock in Q2 2023 and paid $233 million in common stock dividends.

Frequently Asked Questions

Capital One reported a net income of $1.43 billion for the second quarter of 2023, a decrease from $2.03 billion reported in the second quarter of 2022. This represents a year-over-year decline primarily driven by higher provision for credit losses and increased non-interest expenses.

The provision for credit losses increased significantly in the second quarter of 2023 compared to the prior year, driven by continued credit normalization in loan portfolios, particularly credit card and auto loans. The company also experienced higher losses in its commercial office real estate portfolio, contributing to the increased provision and allowance build.

Capital One's total deposits increased by $10.7 billion to $343.7 billion as of June 30, 2023. This growth was primarily attributed to the company's national consumer banking strategy, which included offerings like periodic limited-time time deposit promotions.

Capital One maintained a strong capital position. The Common Equity Tier 1 (CET1) capital ratio was 12.7% as of June 30, 2023, which is well above the regulatory requirements and indicates a robust capital buffer.