CAPITAL ONE FINANCIAL CORP Quarterly Report for Q2 Ended Jun 30, 2024

Summary

Capital One Financial Corporation reported a net income of $597 million for the second quarter of 2024, a significant decrease from $1.43 billion in the same period last year. This decline was primarily attributed to a higher provision for credit losses, largely due to increased net charge-offs in the Domestic Card segment and an allowance build related to the termination of the Walmart program agreement. Additionally, non-interest expenses rose, mainly driven by increased marketing spend. Despite these headwinds, total net revenue saw a 5% increase to $9.5 billion, driven by higher net interest income, which benefited from increased asset yields and growth in the credit card loan portfolio. The company's Common Equity Tier 1 (CET1) capital ratio remained strong at 13.2% as of June 30, 2024, indicating a solid capital position. During the quarter, Capital One continued its capital return program, declaring and paying $234 million in common stock dividends and repurchasing $150 million of its shares. The company also highlighted the significant pending acquisition of Discover Financial Services, which is progressing, though subject to regulatory and shareholder approvals. The integration expenses related to this acquisition were $31 million in the quarter.

Key Highlights

• 1Net income decreased by 58% year-over-year to $597 million in Q2 2024.
• 2Provision for credit losses increased by 57% to $3.9 billion, driven by higher net charge-offs and an allowance build.
• 3Total net revenue increased by 5% year-over-year to $9.5 billion, primarily due to higher net interest income.
• 4The net charge-off rate increased to 3.36% in Q2 2024, up from 2.82% in Q2 2023.
• 5The CET1 capital ratio remained robust at 13.2% as of June 30, 2024.
• 6Marketing expenses increased by 20% year-over-year to $1.06 billion.
• 7The company is progressing with its pending acquisition of Discover Financial Services.

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